Washington DC needs jobs. When D.C. Mayor Vincent Gray made this point at a press conference this week, he may not have realized he was making a strong case in favor of the Large Retailer Accountability Act.
Consider the status quo. Right now, we allow large and profitable companies to get away with paying so little that their employees can’t afford to make ends meet. The low wages undermine the foundations of our economy. Workers don’t have enough money to spend on food, transportation, and other basic expenses, leaving local businesses without a customer base. The jobs that could have been sustained by employees’ consumer spending instead wither away. This dynamic explains a good deal of what’s happening in many of Washington’s neighborhoods – and in the nation as a whole.
Families living in or near poverty spend nearly all of their income just to meet their basic needs, and when these employees receive an extra dollar in pay, they are likely to spend it immediately, spurring local job growth. A study by Demos found that if the nation’s big retail companies paid their lowest-wage employees at least $25,000 per year for a full-time, year-round work (a figure close to the $12.50 an hour required by the D.C. legislation) the economy would grow, GDP would increase by billions, and 100,000 or more new jobs would be created nationwide.
The study also found that the cost of a wage increase to consumers would be just cents more per shopping trip, on average.
And what about Walmart’s threat to not open three planned new stores in D.C. if the city requires it to pay its employees enough to live on? A 2007 study by economists at the University of California Berkeley Labor Center found that when a new Walmart store opens in a county, new jobs are not necessarily created. Instead, better paying retail jobs are replaced with lower-paying ones. At the same time, competitive pressure from Walmart pushes down wages in competing businesses. Earnings as a whole suffer and workers have less money to spend sustaining jobs in their communities.
