Laboring Over Pay

D.C.’s “living wage” proposal reinflates an economic debate.

Walmart and Washington have become the newest combatants in the war over wages. On July 10, the D.C. council passed a “living wage” bill requiring nonunion retailers with more than 75,000 sq. ft. of space and parent-company revenue of $1 billion or more to pay workers a minimum of $12.50 an hour. Guess which company fits the bill. In response, Walmart has vowed to cancel three planned Washington-area stores and halt construction on three others if the bill becomes law, leaving 1,800 jobs in the lurch.

Since Baltimore pioneered the idea in 1994, living-wage laws have spread to more than 140 jurisdictions. Washington Mayor Vincent Gray, who is mulling a veto, finds himself at the center of a long-running economic debate. Is a wage floor on labor a working-class savior or an albatross that prices unskilled workers out of the job market? The debate is now set within an economy that desperately needs both real-wage growth–there’s been none in a decade–and job growth.

Economists are split. In a recent survey of economists by the University of Chicago, a small majority said raising the federal minimum wage would make it harder for low-skilled workers to find a job. Yet a substantial majority thought it was worth raising the figure.

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