WSJ Hypes Misleading Claim On Jobs And D.C. Living Wage Bill


The Wall Street Journal hyped the misleading claim that D.C.'s living wage bill would result in job losses when economic research shows that living wage laws result in little to no employment loss.

In a September 12 article, the Journal reported that Washington D.C. Mayor Vincent Gray vetoed a bill that would require large retailers in the District to pay higher, "living" wages of $12.50 per hour to employees, after Wal-Mart threatened to cancel plans to open six new stores in the area. The D.C. city council can override the veto, and plans to vote September 17.

The Journal's report noted growing "frustration with stagnant wages" in cities across the country, but uncritically promoted the claim that higher wages for D.C. workers would lead to job losses. The Journal quoted Gray claiming that the bill would be a "job-killer," and cited economist David Neumark saying "some job loss is bound to occur when a 'living wage' is imposed."

In fact, considerable economic evidence shows living wage bills and raising the minimum wage have little to no effect on employment.

In a March 2011 report, the Center for Economic and Policy Research (CEPR) concluded that wage increases are more likely to have a positive effect on employment. The Center for American Progress Action Fund found a growing consensus among economists and academics that raising wages results in higher pay without job loss, even during periods of recession. Finally, the Economic Policy Institute conducted a comprehensive analysis of how living wage laws affected businesses, finding "there have been either no or only small employment losses as a result of adopting living wages."

Furthermore, some economists have found that the presence of Wal-Mart stores is linked to higher poverty rates and that the opening of a new Wal-Mart can reduce employment, replacing approximately 1.4 workers in other retail outlets.

Posted In
Economy, Jobs, Wages, & Unemployment
The Wall Street Journal
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