Wage Increase Targeting Wal-Mart Vetoed by Washington Mayor

Washington Mayor Vincent Gray vetoed legislation requiring Wal-Mart Stores Inc. (WMT) and other large retailers to pay workers at least 50 percent more than the capital city’s minimum wage, saying it would hurt economic development.

Stores larger than 75,000 square feet that lack collective-bargaining agreements would have to pay employees at least $12.50 an hour in wages and benefits under the bill. Washington’s minimum wage is $8.25 an hour. The District of Columbia Council, which approved the measure in July, may override the veto.

“The bill is a job-killer, because nearly every large retailer now considering opening a store in the District has indicated that they will not come here or expand here if this bill becomes law,” Gray said in a statement. “It would do nothing but hinder our ability to create jobs, drive away retailers, and set us back on the path to prosperity for all.”

Washington would have been the first U.S. city to force retail chains to pay a higher minimum wage than smaller rivals, according to the National Employment Law Project, a New York non-profit that advocates laws that help low-wage workers. The effort was opposed by retailers including Wal-Mart, which said it may back out of plans to build stores in the city if it becomes law.

Photographer: Chip Somodevilla/Getty Images

Demonstrators rally before marching outside a Wal-mart store on Sept. 5, 2013 in Hyattsville, Maryland. Close

Demonstrators rally before marching outside a Wal-mart store on Sept. 5, 2013 in Hyattsville, Maryland.

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Photographer: Chip Somodevilla/Getty Images

Demonstrators rally before marching outside a Wal-mart store on Sept. 5, 2013 in Hyattsville, Maryland.

Cities Divided

Efforts elsewhere to boost pay at targeted businesses have divided city officials. In 2006, then-Chicago Mayor Richard Daley vetoed a bill similar to the one passed in Washington, and New York Mayor Michael Bloomberg this year prevailed in a court challenge to a law that would have raised wages for workers at buildings that receive government subsidies or where the city is a tenant.

About 120 cities have laws requiring businesses receiving government contracts or subsidies to pay higher wages, according to the National Employment Law Project.

Such efforts have drawn criticism from businesses that say it will lead them to curb hiring, an argument that resonates with some municipal officials eager for investment in their communities.

Shares of Wal-Mart, the world’s largest retailer, fell 14 cents to $73.91 at the close in New York.

The measure in Washington pitted labor unions against retailers, including Wal-Mart, Target Corp. (TGT) and Macy’s Inc. (M), that urged Gray to veto it. Municipal officials were divided over whether it would create better-paying jobs or set back redevelopment efforts by pushing the retailers away.

Wal-Mart Victory

The mayor’s decision is a victory for Bentonville, Arkansas-based Wal-Mart, which said the law would cause it to reconsider opening as many as six stores. Its planned stores include some in economically struggling neighborhoods bypassed by development.

“Mayor Gray has chosen jobs, economic development and common sense over special interests -- and that’s good news for D.C. residents,” Steven Restivo, a Wal-Mart spokesman, said in a statement. “Now that this discriminatory legislation is behind us, we will move forward on our first stores in our nation’s capital.”

The bill, which the council approved 8 to 5, applies only to retailers with revenue of $1 billion or more that aren’t covered by union contracts, and would have given retailers already in the city four years to comply. An override would require the support of nine council members.

Council Chairman Phil Mendelson, plans a Sept. 17 vote on whether to override the mayor’s veto, said Karen Sibert, a spokeswoman for Mendelson.

To contact the reporter on this story: William Selway in Washington at wselway@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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