Portside

WASHINGTON -- A bitter standoff between Walmart and

Washington, D.C., officials over the city's effort to

impose a higher minimum wage on big-box retailers is

fueling a wider debate about how far cities should go

in trying to raise pay for low-wage workers -- and

whether larger companies should be required to pay

more.

Walmart Stores Inc., the nation's largest private

employer, is fuming about a ''living wage'' bill

approved by the D.C. Council that has an unusual twist:

It would apply only to certain large retailers, forcing

them to pay at least $12.50 an hour, nearly 50 percent

higher than city's minimum wage of $8.25.

The measure is being cheered by unions and worker

advocates, who have long complained about Walmart's

wages and working conditions. Opponents call it an

unfair tactic that will discourage companies from doing

business in the city.

Walmart has threatened to cancel plans for three of the

six stores it hopes to build in some of the city's

poorest neighborhoods. The measure is now before Mayor

Vincent Gray.

Some economists say targeting large retailers or

industries that can afford to increase wages may be an

effective way to raise pay to even higher levels than a

broad-based minimum wage. The district's bill applies

to stores of 75,000 square feet or larger and annual

corporate revenue of at least $1 billion.

''A large retailer can more easily absorb a pay hike

than a corner store,'' said Arindrajit Dube, an

economics professor at the University of Massachusetts

Amherst and a prominent supporter of raising the

minimum wage. Large stores are ''less likely to shut

down or cut back on employment'' in response to an

increase, he said.

But Dube cautioned that a targeted hike might make it

harder for Walmart and other big-box stores to pass on

the wage hike as a price increase, since smaller

retailers could still keep prices low.

The capital's minimum wage already is higher than the

federal rate of $7.25 an hour. Other cities and states

that have sought to raise the minimum wage have applied

the hike to all businesses. San Francisco's rate of

$10.55 an hour is the highest in the nation.

Still, no other city has singled out certain

businesses. The Chicago City Council tried to pass a

similar measure seven years ago, but it was vetoed by

then-mayor Richard M. Daley.

President Obama has proposed raising the federal

minimum to $9 an hour and boosting it annually to keep

pace with inflation.

Many Walmart workers already make $12.50 an hour -- the

rate set by the district's bill -- or more, but the

average sales associate earns $8.81, according to

IBISWorld, an independent research group.

Walmart spokesman Steven Restivo questioned why the

D.C. measure excludes unionized stores such as Safeway

and Giant, suggesting the bill is targeting nonunion

stores. He said most of the company's 1.4 million

employees work full time, and about 75 percent of

management started as hourly associates.

David Neumark, an economics professor at the University

of California Irvine, has argued that raising the

minimum wage is bad for workers because it discourages

employers from hiring and leads to fewer jobs. He said

Walmart's low prices are more important to helping

low-income workers.

''We can talk about wages, but if you can lower prices,

that's as good as raising wages,'' Neumark said. ''And

of course helps a lot more people.''

Forcing Walmart to raise wages could create gradual

pressure on smaller businesses to boost wages over

time, said Michael Reich, an economics professor at the

University of California Berkeley.

''A lot of people would be trying to get jobs at

Walmart,'' he said. ''That labor market pressure is

going to raise wages at smaller stores, just because

Walmart is such a big employer.''

But business groups call the idea outrageous and

unfair.

''By any analysis, this is a really flawed proposal

that's also very discriminatory,'' said David French,

senior vice president of the National Retail

Federation.

''The assumption is that retailers make a lot of money,

therefore they can pay higher wages and therefore you

can impose higher costs by fiat. That doesn't

necessarily reflect reality.''

Typically, retailers are low-margin businesses, French

said.

The district's measure could also affect other

retailers like Best Buy and Macy's.

Business groups are also concerned a precedent-setting

law in Washington could trigger similar measure

elsewhere.

''The political forces that have brought the D.C.

Council to the brink of economic suicide are the same

political forces at work in other cities,'' said

French.

More than 140 cities and counties have laws that

require businesses receiving government contracts or

subsidies to pay a rate higher than the federal or

state minimum wage.