Housing Complex

Workers’ Advocates Win the Minimum-Wage War After Losing a Battle

Workers here might earn slightly less than they would have under the living wage bill, but on the whole more workers will benefit from the latest minimum wage hike.

Workers here might earn slightly less than they would have under the living wage bill, but on the whole more workers will benefit from the latest minimum wage hike.

It's been a roller-coaster year for advocates of a higher minimum wage in the District. In June, the D.C. Council passed the Large Retailer Accountability Act, which would have required stores with more than 75,000 square feet and parent companies that gross at least $1 billion per year to pay a "living wage" of $12.50 an hour to their employees. In September, Mayor Vince Gray vetoed it. In anticipation of and immediately following the veto, several members of the D.C. Council presented alternative minimum-wage bills, and earlier this week, the Council unanimously passed legislation to raise the minimum wage gradually from $8.25 to $11.50 by 2016. Although Gray was pushing a $10 minimum wage that wouldn't increase with inflation, as the Council-backed one does, he says he'll sign the bill.

So the question is: Was this a half-win salvaged from an earlier defeat, or was it an even bigger victory for workers' advocates than the living wage bill would have been? Comparing an immediate $12.50 minimum to an eventual $11.50 would seem to indicate the former. But a look at the number of workers affected makes a strong case that the successful bill is in fact a far better outcome for labor activists.

The D.C. Fiscal Policy Institute's Elissa Silverman (a former City Paper staffer), who's studied and advocated for a higher minimum wage, did some back-of-the-envelope number crunching to show just how many more workers will benefit from the approved minimum wage. Using data from the Center for Economic Policy Research and Congressional Budget Office inflation projections, Silverman found that the 10th percentile of workers who live in D.C. will earn about $10.85 an hour and the 15th percentile will earn $12.50. So around 12 percent of working D.C. residents will be making under $11.50 in 2016. In other words, 12 percent of working D.C. residents will benefit from the $11.50 minimum wage in that year.

According to the Office of the Chief Financial Officer, there are 334,000 workers living in D.C. That means slightly more than 40,000 D.C. residents are likely to see a higher wage as a result of the new law.

Compare that to the living wage bill. Only about six large retailers would have been affected at first by that bill, Silverman says. The first two D.C. Walmart stores together employ 600 people, and the company claims that 68 percent of those employees, or about 400 people, are D.C. residents. If each of the other stores also employs about 200 D.C. residents, then even if Walmart opens the three to four additional stores it has planned, we're still unlikely to see more than 3,000 D.C. workers getting a wage boost by 2016.

Yes, $12.50 is more than $11.50. But 40,000 higher-paid residents is a whole lot more than 3,000. On the whole, it seems, the failure of the living wage bill and the success of the across-the-board minimum wage hike is good news for D.C.'s low-paid workers.

Photo by Aaron Wiener

  • jack

    in your back of the envelope #s are you accounting for restaurant and service workers who are exempt from minimum wage laws in DC? often included in wage data and missed in this sort of bare bones accounting and DC has a significant service industry

  • MBG

    40,000? Probably not.
    Real statistics:
    http://www.bls.gov/cps/minwage2012tbls.htm#3
    Table 3. Employed wage and salary workers paid hourly rates with earnings at or below the prevailing federal minimum wage by state, 2012 annual averages

    state: District of Columbia
    Total paid hourly rates 103,000
    At or below minimum wage (total): 5,000
    At minimum wage: 1,000
    Below minimum wage: 4,000

  • Fearing Dystopia

    Sorry. As welcome as the minimum wage increase is, I cannot follow the math. How do we know what proportion of the workers who will benefit will be be residents of DC?

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  • SEis4ME

    @FearingDys

    Because Silvermann says so. She's smart. She's a lobbyist for the DC Fiscal Policy Institute. We should listen to her especially since she won her seat on the council.

    Oh wait! Nevermind

  • Elissa Silverman

    Anyone who would like the Center on Economic and Policy Research's median wage percentiles for DC residents should email me at silverman@dcfpi.org. Happy to go through the numbers with you. Elissa.

  • Jacob

    Glad to see the minimum wage rise here. Even the Economist, a decidedly free-market publication, thinks moderately set minimum wages will boost standard of living without reducing the number of jobs. However, they argue that the minimum wage should be set by non-political technocrats, who adjust the minimum wage regularly and in a way that prevents job loss and is adjusted for inflation.

    http://www.economist.com/news/leaders/21591593-moderate-minimum-wages-do-more-good-harm-they-should-be-set-technocrats-not?zid=309&ah=80dcf288b8561b012f603b9fd9577f0e

  • Mike not Ike

    Isn't the fact that Ms. Silverman is a former council candidate (and hopefully she stays that way) writing on council actions something that should be disclosed in the article itself? I realize the City Paper has an agenda to push but you wouldn't tolerate that from the WP, would you?

  • huh?

    Its clearly stated that Ms Silverman is an advocate for a particular position. I do not see how her run for the City Council is relevant - I am under the impression she held the same position on this issue prior to running for Council.

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  • James

    This assumes that not a single worker will be laid off or have their hours reduced by a business that either can't afford higher wages or is unwilling to accept reduced profit margins.

  • jorge

    MBG, you're confused. AW is basing that on the number of people making under the new wage--which is what you have to do if you're trying to figure out how many workers are affected.

    The number of people making at or below minimum wage is in no way a good proxy for the number of workers affected by an increase. In fact, if an employer is currently getting away with paying someone under minimum wage, it doesn't seem likely that a higher wage, per se, will suddenly make them decide to comply. So you could say you're using exactly the wrong number.

    The workers affected by the minimum wage will generally be the ones with employers in compliance with minimum wage laws who would otherwise be paying a lower wage than $11.50 when the new minimum comes into effect.

    AW, I'm not sure why you're talking about the minimum wage and the large retailer act as if they were mutually exclusive. It would have made perfect sense to achieve that victory for workers at large retail establishments, then move on to a lower, broader minimum wage across sectors. You could argue that the minimum wage bill was propelled in part by councilmembers trying to make peace with progressives after giving into Walmart, but I really doubt passing the large retailer act would have ended the movement for higher wages for service workers in the DC region. I would be very surprised if it ended even now, after passage of the 11.50 wage. (For example, see: ballot initiative for 12.50 wage)

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