Set A Minimum Wage for Maximum Prosperity

Today, it is four years since the federal minimum wage was raised.

This is not exactly a happy anniversary. But it is a good time to take stock of what the minimum wage means to so many Americans – including District residents – and to focus on raising it to a more reasonable level.

It is time, too, to reframe the discussion from “minimum” wage to a true “living” wage.

There has been a lot of talk lately about living wages. The Large Retailer Accountability Act (LRAA), passed by the Council of the District of Columbia by an 8-5 margin, will require large retailers (those with annual revenues in excess of $1 billion, and with outlets in the District exceeding 75,000 square feet) to pay compensation totaling $12.50 an hour (including benefits) to all employees, including part-time workers. The bill has inspired vigorous discussion, from local dinner tables all the way to international media.

The DC Council passed the LRAA for several reasons. One is that large corporations are able to pay higher wages. Another is that paying higher wages to working-class people increases the amount of money in the local economy, setting up a virtuous circle that benefits everyone. A third is that some large retailers who pay low wages actually stress the local economy by requiring their workers to rely on the public benefits system for health care, housing, and food.

The bill has not moved to Mayor Gray’s office as of this writing; rumor has it that the Mayor is considering a veto.

One Councilmember who opposed the Large Retailer Accountability Act is Tommy Wells (Ward 6). He believes that the LRAA will discourage businesses from locating in areas of the city most in need of economic development.

Wells plans to introduce legislation to raise the minimum wage for all workers when the DC Council reconvenes in September. The legislation, still in the conceptual stage, would include four features:  (1) a higher minimum wage, phased in over a few years; (2) an increased standard deduction for DC taxpayers who do not itemize; (3) tax incentives for small businesses to mitigate some of the impact of a higher minimum wage; and (4) a mechanism to ensure businesses contribute in some way to providing basic health care coverage to their employees.

Wells deserves credit for deepening and extending the minimum wage discussion. While the bill is still being developed, and the devil certainly will be in the details, it is a good step in the right direction.

But Wells’ bill is not a substitute for the Large Retailer Accountability Act. Because large retailers have a disproportionately large impact on local economies, it is reasonable to hold them to a higher standard. Requiring large retailers to pay higher wages will interrupt the race to the bottom, a race that ultimately harms workers and the local economy.

Higher wages paid to workers at the lower end of the income scale contribute directly and immediately to the local tax base. Workers spend their wages on necessary goods and services, generally in their neighborhoods. This increases sales tax income to the District at the same time it increases revenue to large and small businesses alike. Higher wages help more families climb out of poverty, reducing stress on the public benefits system.

The Large Retailer Accountability Act and the Wells bill are both good ideas. We should not have to choose between them.

Cross-posted from Marina Streznewski’s post the D.C. Jobs Council Blog.

Marina Streznewski is the Executive Director of the DC Jobs Council, a coalition of workforce development service providers seeking to strengthen the workforce system in the District of Columbia so that it meets the needs of all residents, with a focus on those facing the highest barriers to employment or re-employment. It accomplishes this by advocating for an effective and efficient workforce system, building the capacity of workforce development service providers, and ensuring alignment between employer needs and workforce preparation. Its vision is a District of Columbia where every resident has the job training and education necessary to succeed in jobs that pay wages that lead to economic stability and that meet the skill needs of local employers.