In a move that will provide university economics professors with another example of poor public policy, the Washington, D.C. council approved last week a new "Living Wage" bill that will require certain large retail employers to pay $12.50/hour ($4.25 higher than the current D.C. minimum wage). Due to the exemptions in the bill, it appears that the only firm to be immediately impacted is Wal-Mart who had plans to open six new stores in D.C. in the coming years.
What was Wal-Mart's reaction? According to The Washington Post, Wal-Mart has warned district officials that if the bill becomes law (which still requires approval from the Mayor and a Congressional review) then the large retailer will take its stores, and the thousands of jobs and low prices they bring, elsewhere.
No surprise there. In fact, this is exactly what we tell our Principles of Microeconomics students happens when the government imposes a price floor above the equilibrium wage. In such cases, some employers (not all) will find that fewer jobs are financially viable. As a result, they are willing to hire less.
For many D.C. residents, this is bad news. While Wal-Marts are not universally popular (existing D.C. retailers and labor unions don't like them), it is undeniable that they provide immense benefits to the communities they serve. For consumers, Wal-Mart provides significant cost savings...effectively boosting real family income. For workers, Wal-Mart stores provide hundreds of jobs. Yes, the jobs are primarily (although not entirely) low-paying jobs, they are still jobs people want. After all, a low-paying job is better than no job.
In the end the D.C. council's action threatens to hurt some of the very people who most need their help. In recent years I've been very critical of the willingness of some on the right to ignore basic economics. The actions from the D.C. council last week show that the left is willing to ignore those basic principles sometimes too.
No comments:
Post a Comment