After some delay Mayor Gray of the District of Columbia decided to veto the Large Retailer Accountability Act that raised the minimum wage to $12.50 an hour for large retailers, where large retailers are part of a company with revenue over $1 billion per year that occupy more than 75,000 feet of retail space. In his veto message he cited all the dreary and sinister doctrine of economists: high wages hurt employment and so on. His veto message ignored wage data and retail employment in the District.
As of 2012 the District has only 19 thousand jobs in retail or 2.5 percent of total employment where all other states have 11 to 12 percent. The District is underserved in retail and ripe for expansion.
Even though the minimum wage is $8.25 an hour there are no jobs in the District with a median wage as low as $8.25 an hour. Nor does the Bureau of Labor Statistics wage report for the District show 25th percentile or 10th percentile wages as low as $8.25 an hour for any of 512 occupations reported for Washington DC.
The new law applies to all occupations, but will effectively apply to the two occupations that dominate retail: retail salesperson and cashier. National staffing suggests 60 to 65 percent of the jobs in large retail stores are one of these two occupations. The District of Columbia is an expensive place to live and an expensive place to commute into from suburban locations, which helps explain why the median wage for retail salespersons is already well above the minimum wage at $11.21 an hour. The median wage for cashiers is $10.38 an hour.
If Walmart opens three, up to six, stores in the District as they suggest they might it will be a significant employer of retail salespersons and cashiers. As of 2012, only 6,200 work as retail salespersons in the District and 6,900 work as cashiers. Large general merchandise stores or department stores and super centers can be expected to employ 200 or more per store. Such a large share of new hires in retail suggests they will have to offer better wages for the help they need.
Wages in the larger metropolitan area that includes Virginia and Maryland suburbs are only slightly lower at $10.57 an hour for retail salespersons and $9.56 an hour for cashiers. Given the expense and difficulty to commute into the District there is no reason to think suburban sources of labor will be any cheaper to hire for District store locations.
New Walmart stores usually displace other local retail stores, but the retail sector is so small in the District there might be room for Walmart and existing stores. If market wages were below the $8.25 an hour there would be a different story, but the prevailing markets for wages suggests the retail sector including Walmart should expect to pay $12.50 an hour, or close to it, because of markets not legislation.
Since Walmart officials know prevailing wages their opposition and threats to abandon the District suggest they always oppose minimum wages as a political decision. Defenders of the $12.50 an hour cite the need for a living wage, but ignore market conditions as though they are irrelevant. The mayor decided it is best to slobber on Walmart officials so as to get any crumbs they might hand out, but his decision is probably irrelevant. If Walmart enters the District market, they can become the District’s retailer if they choose to be; the vetoed legislation is irrelevant to that reality.