This could be the week when Washington, D.C. Mayor Vincent Gray signs into law a minimum wage measure passed by the D.C. City Council two months ago. The Large Retailer Accountability Act would require stores that are larger than 75,000 square feet and whose parent companies have yearly revenues of $1 billion to pay their workers 50% more than the current local minimum wage of $8.25 per hour. Proponents of the new law cite the need for Walmart and other employers to pay a “living wage.” Detractors of the measure, including the liberal Washington Post, correctly claim it will give the nation’s capital an anti-business reputation which will continue to hinder job growth in the District.
Naturally, the Post’s analysis is spot-on, as Walmart has threatened to scrap plans to build up to six stores in the D.C. area if the law is passed. Altogether, 1,800 jobs would be lost including at two locations in impoverished neighborhoods. Nevertheless, backers of the measure are stubbornly sticking to their dogma.
Last week, Councilman Vincent Orange, in a statement reflecting serious economic imbecility, stated, “We’re glad Walmart finally recognized the value of the District of Columbia, but we also recognize the value of our residents, and the value of one hour of our residents' time is greater than $8.25."
Wow, what does that mean? Is Orange claiming that he and other council members are smart enough to determine the worth of every single worker in the nation’s capital? Wasn’t this same hubris found to be fallacious in the collapsed Soviet Union?
It is bad enough that there is any minimum wage in D.C., let alone an attempt to produce a double-tiered system. Minimum wage laws are, as the economist Murray Rothbard put it, “compulsory unemployment.” Rothbard explained it well: “The law says it is illegal, and therefore criminal, for anyone to hire anyone else below the level of X dollars an hour. This means, plainly and simply, that a large number of free and voluntary wage contracts are now outlawed and hence that there will be a large amount of unemployment. Remember that the minimum wage law provides no jobs; it only outlaws them; and outlawed jobs are the inevitable result.”
But besides Rothbard’s cogent economic argument against minimum-wage laws, the two-tier system developed in D.C.is un-American. How can there be two different sets of rules for different players in the marketplace? Would there not be outrage if the government provided bailouts to two car manufacturers while the third which managed its business responsibly was not rewarded with federal largesse? Even the liberal Washington Post understands that the law will create an “uneven playing field” for Walmart and other big box retailers.
Unfortunately, for workers in D.C., the council was more interested in scoring political points than actually listening to wise advice from their fellow liberals. If Mayor Gray signs the bill into law the city will be out 1,800 jobs.