Another Wal-Mart bill?

Our view: Forcing higher minimum wages on large Baltimore retailers is potentially counterproductive and ill-timed

May 04, 2010

Five years ago, we chastised the Maryland General Assembly for attempting to single out one retailer, Wal-Mart Stores Inc., with a law requiring the company to spend more on health benefits. That mandate was eventually struck down by the federal courts.

Well, here those Maryland politicians go again. Baltimore City Councilwoman Mary Pat Clarke this week introduced a measure to require the city's largest retailers to pay their employees a "living wage," (currently about $10 an hour). The effort is clearly aimed at the Walmart proposed for the former Anderson Automotive site on Howard Street in Remington.

The difference is the original Wal-Mart bill was ingeniously crafted to appear general but to target just the world's largest retailer. Ms. Clarke's bill is a bit more scattershot. Her proposal would force higher wages on all retailers whose volume of sales exceeds $10 million (including a parent corporation). That would no doubt extend to most every chain store in the city, from Home Depot to Rite Aid.

An argument can certainly be made for a higher minimum wage generally. When inflation is factored in, the nation's minimum wage still hasn't caught up with what it was during the Eisenhower administration. We have also supported local living wage laws that require higher wages of government vendors — if only to protect taxpayers from having to subsidize through government programs (Medicaid, for example) the welfare of workers who aren't paid enough to support basic needs. The city was a pioneer in enacting such a law 16 years ago.

But why apply this new standard only to retailers? What about McDonald's or Starbucks? Why only those that sell more than $10 million? And why now, as the city is trying to recover from the worst economic recession since the 1930s?

Wal-Mart's business practices have drawn much criticism over the years. The giant retailer is no friend to unions, has destroyed much of its competition, has promoted the sale of cheaper, foreign-made goods to the detriment of U.S. manufacturers, and has provided salaries and benefits that are often relatively low even by retail standards.

But this measure, much like the infamous Wal-Mart bill before it, goes over the line to pick winners and losers in the marketplace. Why should one company have to pay its workers 25 percent more than a smaller firm selling the same products across the street? Simply because it can? That just doesn't pass the fairness test.

This is not only the wrong approach, but it's also coming at the worst possible time. The state and federal governments recently approved tax credits to encourage employers to hire. The city wants to discourage job creation right now? It appears some folks at City Hall haven't noticed Baltimore's March unemployment rate of 10.6 percent, by far the highest in the central part of the state.

Large retailers are not villains. Many have simply succeeded in making goods and services more affordable to the public. That's a good thing. And consumers always have the final say in choosing what stores to patronize. Not everyone is a fan of big box retailers.

Baltimore is not an island. The more the city chooses to penalize large firms, the less likely that such businesses will locate within its political boundaries. That could be a triumph for some small employers, but it could also mean higher prices for consumers and an opportunity for Baltimore County retail outlets that will no doubt be only too happy to take the business.

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