TOPICS > Economy

D.C. Picks Fight With Walmart Over Higher Wages for Low-Income Workers

July 17, 2013 at 12:00 AM EDT
When the D.C. City Council approved legislation requiring large retailers to pay hourly rates 50 percent higher than local minimum wage, Walmart threatened to abandon planned stores. Judy Woodruff gets two views on living wage from David Madland of the Center for American Progress and Stephen Moore of The Wall Street Journal.

JEFFREY BROWN: Now, what constitutes a decent wage?

Citing growing economic inequality, campaigns are under way around the country to pressure employers to boost workers’ pay. Some cities, like San Jose and San Francisco, have raised their minimum wage. Washington, D.C., is trying a different approach.

Judy Woodruff has the story.

JUDY WOODRUFF: It looks like any other routine construction site, but the work at this location in Washington, D.C., is at the center of a major fight over wages that is capturing national attention. When completed, the building is set to become the first Wal-Mart in the nation’s capital, one of six stores it says it plans to eventually open in D.C.

But now a battle over a living wage could derail that plan. Last week, the D.C. City Council approved legislation that would require select employers to pay an hourly rate that’s almost 50 percent higher than the city’s current minimum wage.

If signed into law, the measure, called the Large Retailer Accountability Act, would force businesses to pay workers at least $12.50 an hour.

The bill applies to stores with operating space of 75,000 square feet or greater and with annual corporate revenues of at least $1 billion. Unionized stores like the area grocery chain Giant would be exempt. Wal-Mart officials have said plans for three of the six D.C. locations would be dropped if the bill is signed, and could jeopardize the other three currently under construction.

Just before last week’s vote, Wal-Mart’s regional general manager criticized the bill in a piece in The Washington Post. “From day one,” he wrote, “we have said this legislation is arbitrary and discriminatory and that it discourages investment in Washington.”

The fight in D.C. is the latest in a growing number of battles and smaller demonstrations around the country to call for higher wages for lower-income workers. Just last week, employees at Smithsonian museums who work for contracted franchises like McDonald’s went on a one-day strike over pay.

JOHN ROSS, protester: Now, I don’t expect to make $70,000, but as an American, I expect a living wage. I’m a single father, and I make $10,000 a year.

JUDY WOODRUFF: Yesterday, workers rights groups spotlighted pay at McDonald’s by calling attention to a new budgeting tool made for employees. As seen in this video, it acknowledged workers may need to hold a second job.

In D.C., Mayor Vincent Gray has not said whether he will sign or veto the city’s wage measure. He had supported bringing in Wal-Mart.

We get two views on this battle over wages and what’s at stake. David Madland is the director of the American Worker Project at the Center For American Progress. And Stephen Moore is the senior economics writer for The Wall Street Journal’s editorial page.

Gentlemen, welcome to you both.

STEPHEN MOORE, The Wall Street Journal: Hi.

JUDY WOODRUFF: So, David Madland, let me start with you.

First of all, how is the dollar amount of a living wage arrived at, and why should some retailers be required to pay it, and not others? 

DAVID MADLAND, Center for American Progress: Well, usually, the standard is trying to get to something above a poverty level wage where you can really start to pay — pay all your bills and not rely on kind of government assistance.

And so I think that’s partly how this standard, $12.50, for the D.C. bill is set. And the law applies to large retailers, and I think that’s a start. The idea here is that more — larger, more profitable businesses can afford to pay this higher wage. I think, ultimately, you want to apply it to all classes of employers, but it’s a start.

JUDY WOODRUFF: Stephen Moore, why shouldn’t big, successful retailers be asked to pay more?

STEPHEN MOORE: Well, I think one of the problems here for an area like Washington, D.C., which has a very high unemployment rate — and, by the way, I live in Washington, so I know what’s going on there — is that there’s little question that from the historical evidence that if you raise the wage rate from $7.25 to $12.50, which is an enormous increase, by the way, that you are going to increase unemployment.

The effects of this will be that stores like Wal-Mart will hire fewer workers. Now, the big issue with respect to Washington, D.C., Judy, is whether Wal-Mart will face even move into Washington as a result of this. They have six stores that are planned and they have basically said we may not — three of those stores which aren’t under construction yet may not happen.

Now, if that — if they don’t move in, you’re talking about the loss of hundreds of jobs and maybe thousands.

JUDY WOODRUFF: David Madland, what about that argument that if you impose this on a big retailer, they’re just not going to come here? And in fact Wal-Mart has said that about Washington.


So, I think it’s hard to know exactly what Wal-Mart is going to do. But the studies that look at when cities or states raise their minimum wages, the studies — the best studies, they will compare like a county in one adjacent — one adjacent county to another or adjacent state to another. They show that raising minimum wage have no effect on unemployment.

Studies have also looked at what happens when Wal-Mart comes to town, also no effect on employment. So, they create some jobs with Wal-Mart, but they also simultaneously destroy some jobs at some smaller competitors. So there’s no net impact on jobs here.

The question really is whether Wal-Mart is going to pay a living wage so that its employees and — make a living wage. Not only Wal-Mart, but other large retailers can pay a living wage.

JUDY WOODRUFF: Stephen Moore, he is basically saying the evidence is that it doesn’t hurt employment.

STEPHEN MOORE: Yes. We must be looking at totally different studies. I have been studying this for 25 years.

I think there’s general agreement among economists that when you raise the minimum wage, it causes more unemployment. The question is, are the benefits worth costs of this?

Look, I will just give you one example. I have two teenage sons. I guarantee — I love them — but they’re not worth $12.50 an hour.

And these…

JUDY WOODRUFF: They may not…

JUDY WOODRUFF: Now, these Wal-Mart jobs we’re talking about that pay $7 or $8 an hour, these are starter jobs.

And one of the things I really worry about with respect to these super minimum wage laws is what you do when you raise that wage rate is some people are going to benefit because they will get a higher wage, but the people unquestionably that are hurt the most are the least skilled, the people with the least education, the people who don’t have a job now and want that starter job.

What the minimum wage essentially does, it cuts off the bottom rungs of the ladder. That’s very harmful.

JUDY WOODRUFF: What about that?

DAVID MADLAND: Well, really, what we have is a debate about what is the best theory to grow the economy?

And Stephen is arguing for what I would call trickle-down economics, this idea that if you make the laws as easy as possible on businesses and the wealthy, that wealth will trickle down to everyone else. I think that’s been — the experience we have had for the past 30 years shows that it’s a failure.

Instead, the right way to grow an economy is from the middle out. You raise wages and benefits, so that you have a strong middle class that really has the purchasing power that you need to drive the economy. And core problem with today’s economy is that workers do not have the purchasing power they need.

That means that businesses are not investing. So, by raising the minimum wage in D.C. and other states, that is part of a high-road strategy to really build a strong economy.

STEPHEN MOORE: Well, except let me make another point that I think is important here.

It is my belief — and there are a lot of economists who have done studies that confirm this — that the most successful anti-poverty program in the last 50 years has been Wal-Mart, because what Wal-Mart does is provide low prices, affordable prices to everything from toothpaste to tricycles to cell phones for low-income people who would not otherwise be able to afford them.

JUDY WOODRUFF: And you are talking about across the country?

STEPHEN MOORE: Exactly. And you’re talking about tens of billions of dollars of gain.

And one thing I could never understand is why liberals hate Wal-Mart so much. I’m not here to apologize to Wal-Mart. There are things not to like about Wal-Mart, but it is a very effective anti-poverty program.

JUDY WOODRUFF: But to keep this on the question of the living wage, Stephen Moore, what about the other argument here that, especially in the big cities, where this has become an issue, the cost of living is higher?

It’s harder to make it on a minimum wage in a city like Los Angeles, Chicago, New York, or Washington, than it is in other parts of the country.

STEPHEN MOORE: OK. So, here’s — I guess my response would be this, that if you look at where is the unemployment rate the highest in the country, it is clearly in central cities, in Chicago, in New York, in Washington, D.C., where unemployment rate is 8.5 percent.

These have been playgrounds for liberal ideas for 50 years, one of them being the super minimum wage laws. I do think that this — look, there’s a lot of reasons for the high unemployment there, but my point is the last place you want to impose these really high wage requirements is in places that already have tens of thousands of people who don’t have a job.

DAVID MADLAND: Well, look, Mississippi has just about the highest unemployment rate in the country. No minimum wage. Vermont, one of the highest minimum wages in the country, has one of the lowest unemployment rates.

Really, the evidence on the minimum wage is it doesn’t affect employment. That’s really…

STEPHEN MOORE: If that were the case, why not raise the minimum wage to $15 or $20 an hour?

DAVID MADLAND: At the levels we have seen, the minimum wage doesn’t have an effect.

But the point — the reason you raise the minimum wage is three reasons. First, it ensures that workers who work full-time are not in poverty. That’s a key moral imperative. The second key thing is, it’s good for the economy. It really is part of a strategy to ensure that we have purchasing power we need in the economy.

And the last is that it’s good for taxpayers, because when you don’t impose these kinds of wages, you actually end up subsidizing low-road employers, because you have to pay for things like food stamps and Medicaid.

STEPHEN MOORE: Except the problem, I think, look, remember, we’re not talking about a national minimum wage, which is a different debate. We’re talking about whether a city or a state should have a minimum wage.

The problem for Washington, D.C., is it borders right on Maryland or Virginia. And the problem is, if they raise this minimum wage — and you’re right — we don’t know what Wal-Mart is going to do. Maybe they’re bluffing. Maybe they’re not.

But if that minimum wage goes up to $12.50 and they don’t build those stores, you’re talking about the loss of thousands of jobs.

And, by the way, you talked about tax revenues. It’s estimated that each Wal-Mart store would generate about $1 million of tax revenues for a city that really needs tax dollars.

JUDY WOODRUFF: You’re not worried about the loss of jobs if…

DAVID MADLAND: Well, the best-case scenario here is that Wal-Mart comes to D.C. and pays the higher wage. That way, everyone wins. That’s what we’re — that’s what I think the real goal here is.

If they don’t come, really, as I said, most studies show that when Wal-Mart comes to town, it has no net effect on jobs.

JUDY WOODRUFF: All right, we’re going to leave it there.

David Madland with the Center for American Progress, Stephen Moore, editorial page of The Wall Street Journal, we thank you both.


DAVID MADLAND: Thanks very much.