More often than not, local officials are accused of bending over backward to accommodate a retailer that’s considering locating to their community. That’s why what the Washington, D.C., City Council did earlier this summer came as a surprise to many: The council passed a law it knew might thwart development plans from a major retailer.
It wasn’t just any retailer. It was Walmart. And it wasn’t just any law. It was a “living wage” requirement that would force the store to pay employees $12.50 an hour—$4.25 more than the city’s minimum wage.
The legislation had been on the back burner for several years as Walmart pursued plans for six stores inside the city limits. But when discussion of the legislation heated up this summer, Walmart issued an ultimatum: If the law takes effect, the retailer said it would scrap plans for three stores and reconsider three others already under construction. The council passed the measure anyway. Council member David Grosso says city leaders felt they didn’t have to accept low-paying jobs. “Let’s be a little bit picky,” he says. As of mid-August, Mayor Vincent Gray had not decided whether to veto the bill.
Across the country, more than 140 municipalities have living wage laws that require some employers to pay workers at rates above the minimum wage. But most of those laws apply to businesses receiving government contracts or some other kind of special treatment from a locality, says Harry Holzer, a professor at Georgetown University. In fact, Holzer says, he doesn’t know of any city that’s singled out a specific employer the way D.C. has. “This is a different kind of living wage.” (In 2006, Chicago lawmakers passed similar legislation, but then-Mayor Richard Daley vetoed it.)
Many anti-Walmart advocates are portraying the D.C. Council’s action as a major victory and are hoping other cities will follow the district’s lead as Walmart and other retailers—having saturated the suburbs—pursue a strategy of urban growth. But council member Muriel Bowser, who voted against the legislation, says it threatens development, especially in poorer parts of the city. “I think there is this confused notion that, because we’re a growing city and we have economic development happening, that all parts of Washington are really sought after areas to develop,” she says. “We just know that’s not the case.”
The law is targeted at stores with 75,000 square feet and parent companies earning $1 billion or more in gross sales, which critics contend arbitrarily singles out big box stores for special treatment. Opponents are also frustrated with the timing of the bill, which was passed well into Walmart’s construction process. “It certainly sends a message to the development community,” says Joe Rinzel, vice president for state government affairs at the Retail Industry Leaders Association, “[that] the rules can change at any minute.”
But Grosso says Walmart and other big box stores shouldn’t be treated exactly like every other business. Their sheer size make them a whole different category of employer, and their low wages can depress pay rates across the city. With $444 billion in gross sales last year, Grosso says, Walmart can afford to pay workers $12.50 an hour.
Grosso also doesn’t buy the argument that creating low-paying jobs is better than losing out on new jobs altogether, since low-paying retail jobs ultimately put a burden on taxpayers, who have to cover the cost of providing Medicaid and other public assistance to some workers. “We definitely considered whether they’d pull out,” Grosso says. “Some of my colleagues would say they’re bluffing. I don’t really care if they pull out.”