Effects of raising low wage are murky
Vincent C. Gray may not have said whether he will or will not run for a second term as mayor, but he certainly dipped his toes into the murky Democratic pool on Friday by proposing to raise the minimum wage.
A move that surely would shore up union support should he decide to run, the mayor wants to increase the current minimum hourly rate of $8.25 to $10, a smaller boost than the one included in a measure that a D.C. Council panel is scheduled to vote on Monday.
The council bill would not only raise the hourly rate to at least $9.50 in July and set $1 automatic increases every year, but it also would set subsequent annual increases based on the Consumer Price Index beginning in 2017.
In a letter to council member Vincent B. Orange, chairman of the Committee on Business, Consumer and Regulatory Affairs, the mayor made his arguments for a minimum-wage increase.
More important, to the mayor’s credit, he also laid out cogent arguments against automatic minimum-wage increases.
As conservatives and libertarians also have argued, raising the minimum wage can be risky, especially while the economy continues to struggle toward a sustained rebound from the recession.
This is surely important as the District and the rest of the D.C. region still depend on the federal government as both a revenue generator and job provider. Also, the federal government shutdown and the District spending millions in rainy day funds to stay open didn’t help matters.
The U.S. Labor Department reported Friday that D.C. unemployment stands at 8.9 percent, a stark reminder that lawmakers should move cautiously on burdening small businesses.
As the mayor’s letter says, “Extensive research on mandatory minimum wage rates show that increasing the minimum wage leads to decreased employment opportunities and District policymakers should not proceed with automatic increases without knowing the impact on the District’s labor market. Moreover, there is considerable doubt that Maryland and Virginia will increase their minimum wage rates and, without a corresponding action on their part, the District’s regional competitiveness is threatened.” Why specify Maryland and Virginia? Well, Virginia is a right-to-work state and it follows the Dillon Rule. The former essentially neutralizes union bullying and the latter essentially means localities can only do what the state allows them to do.
The mayor singled out Maryland because, although the so-called Free State is a next-door neighbor like Virginia and the three jurisdictions cooperatively work on such pertinent issues as transportation and environment concerns, the three jurisdictions have always — and will always — compete for revenues.
The most significant among those revenues are income, business, sales, gas and property taxes.
That is why Virginia did not participate in what is mistakenly called a regional minimum-wage effort that the District and Maryland put together.
The measure now before Mr. Orange’s committee would stub the toes of current small-business owners and those who are considering setting up shop in the nation’s capital — whether they are hair salons and barbershops and small eateries, or small law, medical, communications, high-tech firms and other professional businesses.
The ambitious Mr. Orange, at-large Democrat, has wanted to be mayor for a long time, and his 2014 bid isn’t his first.
But even he knows that no one knows what the Consumer Price Index will be next year, let alone in 2017.
With unions closely watching the council vote, Mr. Gray has willingly dipped his toes into murky waters.
The lawmakers to watch are not so much Mr. Orange, but the other Democrats who want Mr. Gray’s job.
A speed camera sits in the center median along Bladensburg Road in Northeast on Sunday. It is one of 100 new traffic cameras set up to catch violators.