Tuesday, September 17, 2013

Minimum wage sanity prevails in Washington, DC – for now

Mayor Vincent Gray vetoed a bill on Thursday that would force Wal-Mart Stores and other large retailers to pay their employees at least $12.50 an hour, calling it a “job-killer” that would not advance the goal of providing a living wage for workers in the District of Columbia.

The city council passed a bill saying large retailers would have to pay $12.50 per hour as a minimum wage.  Their mayor, thankfully for society, vetoed the bill.  If this was passed, Wal-Mart indicated they would not build as many stores.  Other stores surely wouldn't build in Washington as well. 

For those businesses that stay, they would also both try to rely more on machines (self-scanning machines, for example), and also not hire the less productive ($8-$10 per hour value ) workers and instead hire those who actually are worth $12.50 or more per hour to the firm’s profits.  This is one of the few good news stories about minimum wage that I've heard recently.

Unfortunately, the council still could override the mayor’s veto.  


  1. This whole thing seems a little silly to me. Why would a retail company or any type of business even consider doing business where their required to pay 12.50 an hour..A lot of large retail establishments would just choose to close up shop rather than pay everyone that works for them 12.50 an hour.

  2. MR Rousu's in your post above you mentioned that companies that stayed in washington DC {thats big box retailers that would have been required to pay 12.50 an hour under the law in Washington DC that was Vetoed by the mayor and would attempt to stay in washington DC in spite of the law if it had passed. I cannot see how a lot of retail establishments could ever operate profitably in that kind of environment regardless of how much labor saving technology they used to save money. Or regardless of the quality of the personal they employed. Most retail companies have very small profit margins grocery stores only make a profit of one or two percent even wallmarts profit margin is only around three percent.

    One other thing about wages that I would like to add is this the whole idea that raising minimum wages causes companies to automate production something that I have head rather frequently whenever minimum wages are discussed. An example often used is self service at the pump. Come on the reason that you do not have a sixteen year old pumpimg your gas today is not because of the minimum wage its simply because the technology that is used today to pump your gas is much more user friendly than it was fifty years ago. The pumps than were clumsy hard to hande even dangerous for a customer to operate that was the reason why you needed a sixteen year old to pump gas. The business has changed dramatically form what it was than. Today the majority of the merchandise sold at a gas station is not gas but everything else their more like convenience stores . I would venture to guess that theirs two or three times the number of persons employed at gas station convenience stores today than their were years ago but their employees no longer pump gas.

    And what about this would it not make a lot more sense to automate high skilled jobs that pay three or four times the minimum wage. Rather than lower wage jobs. A company would save a lot more money if it could automate a fifty thousand dollar a year job than a job that pays fifteen thousand dollars a year.

    MR Rousu's I think a lot of companies underestimate the potential of their employees. Theirs two types of companies at least in theory. Theirs those companies that simply look upon the employees as a liability an expense and nothing else. While the other type of companies look upon their employees as valuable assets not so much as just another expense on their balance sheet. The real key to higher wages is higher output per worker. Some companies just do not pass on their increasing productvity to their employees. Higher productivity could also take the form of lower prices for products or services instead of increased profits.