But even if the unions' motives were pure, increasing the minimum wage by almost 50 percent would be bad for virtually everyone. Sure, some workers would see their pay go up, but other workers would have to pay for it. Wal-Mart is in business to make a profit, and they do so by offering good value to consumers while keeping their costs down. If the bill were to become law and Wal-Mart was foolish enough to go forward with its plans to open six D.C. stores, the company would have to raise its prices. Doing so would hurt Wal-Mart consumers (including many minimum-wage workers). If the company raised its prices too high, it would be uncompetitive in the market and would likely end up closing the stores, which would turn $12.50 an hour for its workers into $0.
Economists disagree on the extent to which increases in the minimum wage kill jobs, but those debates usually center on fairly modest increases, not the kind proposed in D.C. There is no question that large increases would have an effect -- and not necessarily the kind proponents favor.
A recent study by economists for the liberal Center for Economic and Policy Research evaluated the way labor markets respond to minimum-wage hikes and found that employers are often quite creative, cutting benefits and training, limiting or delaying increases for their higher-paid workers, requiring greater productivity from their minimum-wage employees, or passing on the increases to consumers. One of the only unalloyed benefits of hikes seemed to be somewhat lower turnover among low-wage workers, which helped employers manage the costs of hiring and training new employees.
Gray has done D.C. a favor by vetoing legislation that would benefit very few people and could end up hurting many more. Other cities should follow his example and reject unions' efforts to legislate what they can't achieve by organizing and bargaining for workers.
Linda Chavez is chairman of the Center for Equal Opportunity and author of Betrayal: How Union Bosses Shake Down Their Members and Corrupt American Politics .
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