Mayor Gray vetoes ‘living wage’ bill aimed at Wal-Mart, setting up decisive council vote

By , Washington Post

District Mayor Vincent C. Gray vetoed legislation Thursday that would force the city’s largest retailers to pay a super-minimum wage to their workers, ending two months of uncertainty over the controversial bill’s fate and setting up a decisive override vote at the D.C. Council as early as Tuesday.

The debate over the bill, the Large Retailer Accountability Act, has polarized local leaders while garnering national attention and putting focus on the low wages many retail chains pay their workers.

Gray (D) announced his veto in a letter to Council Chairman Phil Mendelson delivered Thursday morning that explained his opposition to the bill and disclosed his intention to seek a minimum-wage hike for all employers, not just large retailers.

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Mendelson said he was “disappointed” by the mayor’s decision, which he said is “not good for workers.”

In the letter, Gray said the bill was “not a true living-wage bill, because it would raise the minimum wage only for a small fraction of the District’s workforce.” He added the bill is a “job-killer,” citing threats from Wal-Mart and other retailers that they will not locate to the city if the bill becomes law.

“If I were to sign this bill into law, 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,” he said.

Gray did not say what minimum wage he would seek except that there should be a “reasonable increase.”

The bill would require retailers with corporate sales of $1 billion or more and operating District stores of at least 75,000 square feet to pay their employees a “living wage” — no less than $12.50 an hour in combined wages and benefits. The proposal includes an exception for employers who collectively bargain with their employees, and existing employers have four years to come into compliance under the law.

The city’s existing minimum wage is $8.25 an hour. The bill would raise the annual earnings of a full-time employee making the lowest legally permissible wage from about $17,000 to $26,000.

While the bill’s supporters repeatedly insisted it was not targeted at Wal-Mart, the debate was inextricably tied to the retail giant’s plans, announced in late 2010, to open as many as six stores in the city in the coming months and years.

The union exemption and square-footage requirement rankled Wal-Mart officials, who said those provisions created an uneven playing field — particularly with respect to the unionized grocery chains they plan to compete with in the city.

A day ahead of the bill’s final passage last month, Wal-Mart told council members andthe public that it would abandon plans for three of the six stores and explore options for withdrawing from the others should legislators proceed. The ultimatum changed no votes on the council.

Wal-Mart spokesman Steven Restivo called the veto “good news for D.C. residents,” saying Gray chose “jobs, economic development and common sense over special interests.”

Restivo said the company will move forward with its first stores in the District: “We look forward to finishing the work we started in the city almost three years ago.”

Wal-Mart’s entry into the city has prompted a political identity crisis for many elected officials, forced to reconcile their liberal, pro-union sentiments with the desire to create jobs and better retail options for their constituents.

Key council members, including Mendelson (D) and Business Affairs Committee chair Vincent B. Orange (D-At Large), were unabashed in support of the bill, giving it momentum that similar measures had lacked in prior council terms.

But Gray made no secret in recent months that, for him, jobs and retail took priority.

Wal-Mart’s entry into the city was an early political coup for Gray, and he personally lobbied — some say threatened — top company executives to commit to a store at the Skyland Town Center development not far from Gray’s home in Ward 7.

The Skyland store is among those Wal-Mart has threatened to abandon should the living-wage bill become law. The developer of the project, Gary D. Rappaport, has said the project cannot move forward at this time without Wal-Mart’s commitment.

If the council fails to override the veto, Restivo said, “all stores are back on.”

Gray gave little indication in recent weeks that he was seriously entertaining signing the bill. His deputy mayor for planning and economic development, Victor L. Hoskins,warned after the council vote that the bill would devastate the city’s retail development efforts, and his communications staff shared letters urging a veto — and none encouraging him to sign it. In interviews, Gray was quick to cite arguments against the bill but rarely acknowledged supporters’ point of view.

The coalition of labor unions, city clergy and progressive political activists backing the bill have over the past six weeks canvassed neighborhoods and held media events in hopes of pressuring Gray into signing the bill. Wal-Mart and other large retailers, they argued, could pay their workers better wages without significantly harming their bottom lines.

Some said they considered Wal-Mart’s ultimatum a bluff; others said they would rather see the retailer walk away than accept its “poverty wages.” Wal-Mart has pushed back on the notion that its wages are considerably less than other retailers, saying its pay would be “competitive” and accusing the grocery workers’ union of signing a contract that pays some of its members wages that would not comply with the living-wage law.

Business groupsother retailers and even former mayor Anthony A. Williams urged Gray to veto the bill, citing the potential job losses, the effect on grocery access, “retail leakage” to the suburbs and potential harm to the city’s business reputation.

Gray’s decision sets up a final political showdown with the council, which can override the veto with a two-thirds vote within 30 days. Mendelson told his colleagues Thursday that the override vote will take place Tuesday, at the council’s first legislative meeting since giving the bill final passage in July.

An override would require the approval of nine of the council’s 13 members. The bill passed last month by an 8-5 margin, and no member has acknowledged since that their vote could change.

The District’s living wage measure has followed a nearly identical trajectory to a similar bill taken up by the Chicago city council in 2006. With Wal-Mart planning its first stores there, lawmakers passed the bill, sending it to Mayor Richard M. Daley, who vetoed it. An override vote narrowly failed.

Wal-Mart now operates 10 Chicago stores.


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