Tuesday, July 16, 2013

D.C.'s 'Super Minimum Wage' Is a Super Bad Idea

By Nita Gehi

Wal-Mart swiftly announced the abandonment of plans to open at least three stores in the District of Columbia following a vote by the city council to pass the Large Retailer Accountability Act, which effectively mandated a super minimum wage of $12.50 an hour that applied only to Wal-Mart. As a result, the residents of D.C.'s Ward 7– with a poverty rate of 34 percent and an unemployment rate of 17 percent – will now be denied a source of new jobs and inexpensive groceries and goods.

That consequence might have been unintended, but it was entirely foreseeable. Increasing the minimum wage beyond the productivity of the worker inflicts damage on the poor and the unskilled – the very people it is ostensibly designed to help.
Proponents of a higher minimum wage make at least three errors. The first is that they fail to realize that it is possible for such a law to increase wages beyond the value of what the worker contributes. Big box retailers like Wal-Mart make a profit by selling large quantities at low profit margins. Forcing up labor costs drives down that already narrow profit margin; a large mandated increase in labor costs means that it no longer makes sense to sink millions of dollars into a store that will fail to return reasonable profits.
The result in D.C.'s Ward 7 is that blighted sites will remain empty. Poor residents will have to continue to spend their scarce resources on transportation to reach cheaper options in neighboring jurisdictions, or to pay higher prices than Walmart would have been able to offer.
Second, advocates of a higher minimum wage incorrectly assume that the increase will help many people that are supporting a family. In fact, many minimum wage workers are teenagers or people with second or third jobs in the household. The minimum wage job is rarely the primary source of income for an adult supporting a family.


  1. Check out The Ultimate Pro-Walmart Article on mises.org (from 2006) for another good read on Walmart.

  2. The law wasn't to help the poor; it was to punish Wal-Mart for being non-union.

  3. It's so ridiculous to think that I may have to go to Wal-mart to get a raise. I worked retail over 30 some years ago and made minimum wage, $2.65 an hour. It was a stepping stone until I decided which way I wanted to direct my life. Fast food, retail, merchandising all minimal skill labor should be just that a stepping stone to a better life or used as a second job if needed. Now there will be thousands who will not have an opportunity to better their lives because of political B.S.. I don't know when the Democrats are going to realize that their party doesn't have their best interest in mind. The only things that have changed since George Bush is we are deeper in debt, healthcare is out of control and our President is taking advantage of a vacation every couple months while you struggle. Oh, and sorry, the stock market has gone up, which means the rich are getting richer.

  4. Jobs like Wal-mart and fast food or other minimal skill jobs should be used as stepping stones to other opportunities or as second jobs. I keep wondering when the Democrats of this country are going to realize that their party doesn't have their best interest at heart. What has changed since George Bush? Overwhelming debt, out of control healthcare and the stock market has gone up, insuring that the rich are getting richer. Now they have cost thousands of much needed jobs to an area desperately in need. Start asking why?? Don't blame Wal-mart either. They are a business trying to do business which will do more for the economy than any government program