D.C. minimum wage law forces bean counters to face harsh reality

ANALYSIS/OPINION:

The city’s chief bean counters have revealed the winners and losers of the District’s minimum wage legislation, which gradually ratchets up the floor to $15 an hour.

The tallies from bean counters are critical in such economic matters. In Iowa, cities and counties are torn on the issue, as each has different needs and some are passing the buck to the state government.

In Baltimore, Mayor Catherine Pugh is straddling the fence, trying to decide if she should pull out her rubber stamp on minimum wage legislation that the city council approved this week. If she needs an assist on Democratic campaign promises that shortchange city residents, Ms. Pugh should take a look a little south, where D.C. residents are going to be whacked by the minimum wage bully stick.

See, the mandatory D.C. wage increases begin kicking in on July 1, and by the time they hit the $15 mark in 2021, several heretofore undisclosed things happen — projections that should have been highlighted before legislative and City Hall deliberations on the issue.

Here’s the reality of the grim situation, courtesy of none other than the Office of the Chief Financial Officer in a new economic analysis:

— D.C. residents lose jobs because out-of-staters, i.e. commuters, already have the upper hand.

The CFO notes: “The commuter effect is the main reason that D.C. residents will lose 82 percent of all jobs lost in D.C. due to the minimum wage increase. Our model predicts by the year 2026, 2,489 total jobs will be lost, with 2,046 of those jobs previously being held by D.C. residents. Without the commuter effect, our model still estimates that there would be job losses as businesses and consumers react to changes in prices due to the minimum wage increase, but the commuter effect concentrates the losses on D.C. residents.”

— Who wins, who loses?

The CFO notes: “Most of the impacted District residents (those earning between $8.25 and $18) will see an increase in their wages over the baseline of up to $5,100 in 2021 (one year after the policy hits the $15 per hour mark). About 1,200, or 2 percent of the 61,000 residents, however, may face job loss by 2021. This number increases to (and caps out) at around 2,000, or 3.4 percent, by 2026.

“For all D.C. residents impacted by the minimum wage policy (including those who lose their job), net total earnings in the city increase by about $140 million in 2021. There’s about $190 million generated in new earnings by the higher wage, but $40 million is offset by those who lose their jobs and another $12 million is lost by those earning above the minimum wage who see a slight slowdown in subsequent wage growth as employers try to shift some of the new, higher labor costs.”

When Mayor Muriel Bowser was in full-throttle campaign mode in 2014, she supported increasing the city’s minimum wage. Ms. Pugh, a former Maryland state lawmaker, supported boosting the minimum wage during her run for mayor.

Back then, candidate Pugh told the Metropolitan Baltimore AFL-CIO, “When it reaches my desk, I will sign it.”

Now come her concerns about how the legislation will affect “people who have no job experience.”

Beans labeled “no job experience” have not been under the purview of legitimate bean counters. So neither Ms. Pugh nor Ms. Bowser is off the hook.

That’s why D.C. residents are in a quagmire. Instead of counting beans, leaders were too busy trying to placate people who reap the rewards of working here and taking their tax dollars elsewhere. Yes, many of them work in D.C. but they live in Baltimore and elsewhere in the region.

The bottom line: The next time elected officials start spouting off about the benefits of raising the cost of doing business in the city, remind them of for whom the ka-ching tolls.

• Deborah Simmons can be contacted at dsimmons@washingtontimes.com.