The flip side of selective "living wage" laws

Living wage laws, which mandate wages above the legal minimum wage, are all the rage. Take Washington DC, where a minimum wage law has passed a local legislative hurdle:

Walmart’s efforts Tuesday to deter Washington D.C’s city council from passing a bill that would require certain large retailers to pay their employees at least $12.50 — a significant bump above the city’s minimum wage of $8.25 — didn’t work. Despite the big box company telling lawmakers it’d scrap plans for three stores in the area and take a close look at the three already underway, council members passed the bill by a vote of 8 to 5 yesterday.

Note that the bill only applies to CERTAIN retailers. And no, the city council didn't write a rule that only applied to companies that happen to be based in Bentonville, Arkansas and were founded by people whose last names begin with the letter W. But clearly, some companies are subject to the living wage rule, while some are not:

[A]ny new retail outlet affiliated with a parent company having yearly revenue of $1 billion or more would be subject to the wage requirement, regardless of the size of the store. A draft report mentions Apple and Nike as among the retailers that might be affected. Franchisees and subcontractors, however, would be exempt.

So the easy workaround is for the big companies to pull out and, in some instances, get small businesses to front for them. Thus, an Apple Store would pull out, and a small "DC Insanely Great" store, with a minority investment from Braeburn Capital, would replace it. The businesses of Washington DC, with extensive experience in small business set-asides, can play the game better than anybody. But it probably wouldn't work with a Walmart.

Despite these potential workarounds, some business organizations object to the selective nature of the bill, including Barbara Lang of the D.C. Chamber of Commerce:

Lang said she is especially concerned because the bill would “pit small businesses against large businesses” in the competition for employees. A more worthwhile debate, she said, would consider the merits of raising the District’s minimum wage. “Let’s have that discussion and that debate, rather than be discriminatory toward one part of the business community,” she said.

If you think about it, proponents of a living wage emphasize that such a wage is necessary for someone to survive.

Which leads to the uncomfortable conclusion that the D.C. City Council has determined that Walmart workers deserve to live, while people who work at small independent organic soul food restaurants deserve to die.

And once people realize this, they will decry the efforts of the evil big box firms that are stealing employees from smaller companies. And activists will demand that the city mandate a cap on the wages that big box firms pay, in order to protect the small business owners.

In truth, I'm lying. No such effort will happen, because small independent organic soul food restaurants cannot hire lobbyists. Big businesses can, and big unions can, but small businesses don't have the bucks.

So the small business employees won't get a living wage because they don't deserve it, and (if Walmart proceeds with its threat) big business employees won't get a living wage because there won't be any big businesses in DC. And Walmart could proceed with its threat; after all, Cracker Barrel still refuses to establish restaurants in California and Nevada.

To be continued.