On Tuesday, the City Council of Desert Hot Springs, Calif., voted to table a measure mandating a high minimum wage that would only affect Walmart and similar companies. Councilwoman Yvonne Parks called the plan "an absolute killer for economic development." She's right.
“Unions routinely push higher minimum wages to raise the cost of labor, and then seek to carve out exemptions for themselves.”
The proposal would require large new retailers such as Walmart to pay minimum wages of $10.20 per hour, 13 percent higher than the current California minimum of $9. The wage would go up to $12.20 by 2018 and be tied to inflation after that. Exempt from the higher minimum would be smaller businesses, existing large retailers, franchises — and unionized workers.
The plan is a boon for unions, which have long sought to organize Walmart's workers. The measure's exemption for collectively-bargained agreements means unionized workforces are exempt from the new minimum wage requirement. If Walmart were to agree to allow union representation, it would not have to pay the new minimum wage.
Unions routinely push higher minimum wages to raise the cost of labor, and then seek to carve out exemptions for themselves. This has occurred in Seattle-Tacoma, San Jose, and Chicago, among others. In Los Angeles earlier this year, union leaders sought an exemption from the citywide $15 minimum wage they campaigned for.
High minimum wages with exemptions for unions give an unfair advantage to unionized businesses, which can then pay their workers less. This encourages businesses to unionize (or close), adding to the membership rolls of national unions whether in workers' best interests or not.
The measure specifically targets Walmart, which owns land in the city and is considering opening a store there. A higher minimum wage for Walmart, or the threat of unionization, makes the company less competitive, which could force it to raise prices for consumers or abandon the city altogether.
The Desert Hot Springs drama is the latest installment in a saga of local governments fighting nonsensical wars with Walmart. In 2013, the Washington, D.C. Council voted to pass a minimum wage law brazenly targeting the retailer. In response, Walmart nearly scrapped plans to open stores in the city. Eventually, then-Mayor Vincent Gray vetoed the proposal, and two new Walmart stores opened in the District. Two other stores in the city's poorest neighborhoods still do not have an opening date.
Fighting Walmart and other large retailers hurts the poor most of all. Walmart is a valuable source of jobs for low-income residents. At the two D.C. Walmarts that opened in 2013, some 23,000 people applied for 800 job openings — making for a lower acceptance rate than Harvard. Walmart would support 300 jobs in Desert Hot Springs.
Low prices at Walmart make food and other necessities more affordable for poor families. This is especially important in so-called "food deserts" in D.C. and other cities, where the lack of grocery stores forces poor residents to buy food at more-expensive corner stores and fast-food outlets.
“Some think that the higher minimum wages will benefit workers — but they really just serve to reduce employment and encourage unionization.”
Like D.C., Desert Hot Springs stands to gain from Walmart's presence. According to the city's economic development plan, the lack of retailers within city limits forces residents to shop elsewhere, sending $196 million of consumer dollars to other cities.
City governments continue to oppose Walmart despite its economic benefits. Some think that the higher minimum wages will benefit workers — but they really just serve to reduce employment and encourage unionization.
To spur economic growth, cities from Desert Hot Springs to D.C. should welcome businesses like Walmart and refrain from passing more government mandates riddled with exemptions for favored interest groups.
This piece originally appeared in Washington Examiner.
This piece originally appeared in Washington Examiner