Living Wages for Large Retail Workers
The person at the coffee shop who pours your favorite morning brew probably earns about $11 an hour. The person at the drugstore who rang up your toothpaste and hand cream also makes about $11 an hour. That’s because retail workers in DC typically earn $11 an hour, according to federal government statistics. Even with full-time employment -- a rarity in retail – that adds up to just $22,000 a year. Low retail wages in DC translates into a retail worker poverty rate that is three times higher than for workers in other industries.
The DC Council is poised to do something about that, by requiring large retail corporations to pay their workers at least $12.50 an hour. Opponents say that this will hurt retail in the city and lead to fewer jobs for the very people the legislation is intended to help. Yet their evidence – a business-backed analysis -- has been discredited by economists, who find that raising minimum wages leads to higher take-home pay without causing job losses.
The living wage opponents offer no solution to the fact that an entire industry is built heavily on poverty-level jobs. And they don’t have an answer to the question of how some retailers, such as Costco, can pay wages well above industry norms and still be wildly successful.
Efforts to raise wages for DC’s working poor, such as the Large Retailer Accountability Act, are important to ensuring that the District remains affordable to all residents and that the benefits of DC’s economic boom are widely shared.
Who Works in DC Retail and Why Do They Earn So Little?
Retail workers are not just teens trying to earn spending money. The typical retail worker in DC is 34, and nearly three-fourths work full-time. In other words, most retail employees are adults trying to support themselves and, in many cases, a family.
In a high cost of living city such as the District, where a resident needs to earn $29 an hour to afford a typical two-bedroom apartment, a retail salary makes it nearly impossible to pay for basic necessities such as housing, transportation, and food costs.
There is no easy explanation for the low wages in retail. Even after taking into account factors such as education level and age, workers in retail in DC earn one-third less than other workers. Nationally, worker productivity in retail grew faster over the past decade than in the overall economy, yet the average retail wage fell after adjusting for inflation.
Making Retail Work Pay: The Large Retailer Accountability Act
The DC Council is attempting to address these concerns by requiring large retail corporations to pay workers at least D.C.’s living wage, which is currently $12.50 an hour. Initially, the legislation set this requirement only for retailers with large stores -- those with 75,000 square feet or more -- but the legislation later was changed to cover a broader group of retail corporations, those with gross revenue exceeding $1 billion nationally.
The bill exempts franchisees and workers who are covered under a collective bargaining agreement. For large retailers who currently operate in the District, the bill gives a four-year period to raise starting wages to $12.50 an hour.
The legislation is important for several reasons. Full-time work at $12 an hour would lift about two-thirds of DC’s working-poor families out of poverty. Lifting families out of poverty means that they will be less reliant on taxpayer-funded programs. Full-time work at the living wage would be enough to help a family move off welfare entirely.
The District’s economy also would benefit, because lower-wage workers spend their earnings at local businesses. Higher wages will go right back into the local economy, creating more jobs.
Retailers also stand to benefit. Costco, whose parking lot at its recently opened store in Northeast DC always seems full, understands the benefit of paying living wages to its workers who are the public face of the company to customers. Its starting wage is at least $11.50, and company officials report an average wage of $20 helps keep good employees and prevents high turnover.
Living Wage Opponents “Unequivocally Misrepresented” Minimum Wage Research
Two economists examined the impact of city-level minimum wages in DC and two other cities, and their 2011 study concluded that “citywide minimum wages can raise the earnings of low-wage workers, without a discernible impact on their employment.”
Yet a new report, commissioned this spring by the DC Chamber of Commerce, relies on this earlier research to conclude that the Large Retailer Accountability Act could lead to large job losses and adverse economic impact. That would be funny if the new report, by the Sage Policy Group, weren’t being used to challenge the proposed retail living wage.
The Sage report’s estimates of job losses rely entirely on research conducted by John Schmitt and David Rosnick in 2011.They found that raising the minimum wage in two of the three cities studied—San Francisco and Santa Fe—improved the take-home pay for workers without resulting in job losses. The findings for DC were less clear, however. And the report did not “allow us to draw conclusions about the employment effects of binding citywide minimum wages.” Yet Sage Policy Group cherry-picked one piece of data from the Schmitt and Rosnick report to come to a conclusion that the authors had not made.
In a statement issued on June 17, 2013, Schmitt concludes that the “Sage Policy Group’s report does not accurately reflect our conclusions and should not be used as an argument against the implementation of a living wage for retail workers in the District.”
Raising Wages Allows Everyone to Benefit from DC’s Retail Boom
The Large Retailer Accountability Act comes at a time when the District is experiencing a population boom, and when development in many neighborhoods is attracting national retailers. Many national retailers want to be in DC because of our thriving economy. The DC Council should act to ensure their workers can afford to live and thrive in our city, too.
Silverman is Communications Director and Policy Analyst at the DC Fiscal Policy Institute (www.dcfpi.org), which conducts research on tax and budget issues that affect low- and moderate-income DC residents.