The District of Columbia City Council recently passed the Large Retailer Accountability Act that the mayor still needs to sign.
As part of the bill, retailers who are part of a larger company with revenue over $1 billion per year and occupy more than 75,000 feet of retail space, would be expected to pay all employees at least $12.50 an hour. In effect, the City Council has decided Walmart should be required to pay better wages than the $8.25 minimum wage everyone else is required to pay.
Economic conditions in retail for the District of Columbia suggest possible surprises for the City Council. As of 2012, the District has only 19,000 jobs in retail (or 2.5% 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 and 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 $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 about 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. So far the public discussion of the $12.50 Walmart wage minimum remains typical: all politics and public relations.
About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com
