Taking Stock

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Super Minimum Wage, Bottle Taxes Part Of Ongoing Trend Of Poor Legislation 

It’s has not yet been passed into law, but the Washington, DC council’s preliminary decision to require large non-union operators (and future operators) to pay a “living wage” is another example of how recent legislation in major cities has unfairly made retailers the prime target.

Whether it’s added tax money to bridge a budget shortfall or penalizing a segmented group because of its size or union affiliation, the takeaway is the same: these laws are unfair and prejudicial (and perhaps unconstitutional, if they were tested).

In the case of DC’s so-called living wage legislation (officially known as the Large Retailer Accountability Act), the DC Council voted 8 to 5 late last month to force a super minimum wage of $12.50 an hour –  well above the District’s standard $8.50 minimum – on retailers reporting at least $1 billion in annual corporate revenue and operating in spaces of 75,000 square feet or larger. Those retailers affected would be required to comply within four years. A final vote is scheduled for this month.

The proposed legislation, which is being supported by organized labor, would not only affect stores already operating in our nation’s capital (Macy’s, Home Depot and the recently opened Costco), but would also apply to any new retailers that would fit the criteria (think Wal-Mart, which plans to build six stores in the District over the next several years, with three currently in development).

Ah, Wal-Mart. Nobody has been more critical of the Behemoth’s hypocritical corporate behavior over the past 15 years than me. But this has nothing to do with Wal-Mart’s report card as a corporate citizen. The fact is that the world’s largest retailer plans to make a significant investment in the city and open some of its stores in underserved area, bringing jobs and adding to DC’s tax base.

Add to that the fact that Giant and Safeway would be exempt from this potential law, and it gets back to the point of the sheer unfairness of creating legislation specifically targeting certain groups while exempting others.

What’s interesting about this case is that DC Mayor Vincent Gray was arguably the key individual in convincing Wal-Mart to entering the District in a major way. And Gray lobbied the boys from Bentonville aggressively to build a new store at the Skyland Town Center project near Gray’s home in Anacostia (Southeast DC). According to published reports, Gray has not yet decided if he will veto the Council’s vote.

At least Gray’s got some skin in the game and sharper business acumen than Baltimore’s Mayor Stephanie Rawlings-Blake, who successfully spearheaded a five cents per bottle tax in BaltimoreCity last July.

This targeted legislation is costing food retailers in Baltimore City millions of dollars of business as consumers opt to purchase their beverages in adjacent counties.

Whether it’s the proposed super minimum wage in DC, the Baltimore bottle tax, or legislation that narrowly failed to be passed into law in other cities (Philadelphia Mayor Michael Nutter’s attempt to pass a bottle tax two years ago or New York City Mayor Michael Bloomberg’s effort to limit soft drinks containers to 16 ounces), expect the hypocritical trend to continue because the companies that provide a vital tax foundation for cities to even function are also the easiest targets to pursue.

Sadly, it’s become the new American way of conducting business: biting the hand that feeds you.