It is no secret that we at the Chamber are opposed to the Large Retailer Accountability Act (LRAA). This report by the Sage Policy Group showcases why the LRAA is not an appropriate action for our City, and why we believe the Council should reject this bill. But, you don’t have to read the report to understand why this is a bad idea.
In simple terms, the LRAA is patently unfair to major employers--but moreover, it is unfair to small businesses as well. Under the legislation as written, large retailers would be forced to pay their most junior staff a minimum of $11.75 an hour, while other businesses would still pay only $8.25. Imagine you were an unskilled worker looking for employment--where would you apply? The unintended consequence of this bill will have small businesses all over the District hurting for decent workers. As the backbone of our economy, we should be enacting policies that support small businesses, not hurt them.
The LRAA doesn’t work from a regional perspective as well. If we’ve learned anything about doing business in the Washington metropolitan region, it’s that we in the District are constantly competing with our neighbors in Maryland and Virginia. We’ve seen it time and again--if we make the cost of doing business here too high, businesses will simply set up shop right across the border. If you were a large retailer, would you build in DC where your operating costs are legislated to be 20% higher right off the bat? Or would you look for space a couple miles down the road, where you could still bring in the same customer base but be doing business in a much more friendly environment? There’s no question--the LRAA will push prospective large employers into locating elsewhere. We are sure elected officials heard this message on their recent trip to Las Vegas, where they went to attract retailers to our City.
These are the major real-world objections to the LRAA, but they certainly aren’t the only reasons this bill is wrong. To wit:
• It is inappropriate to set a separate minimum wage for one subset of the population--and possibly unconstitutional.
• This bill discourages work that's been done to stop or ameliorate the effects of "retail leakage" in DC.
• The legislation as written contains numerous errors, including conflicts with the Affordable Care legislation
• This bill is supported by unions who don’t themselves meet these wage requirements--as they have admitted in hearings on this bill.
• The First Source provision--barring large retailers from obtaining business licenses unless they agree to First Source--is totally unprecedented. We have never before required that in order to start a business in this City one
must sign a First Source agreement. That was never the intent of the First Source law, and it has never been used in this manner before.
In short, the LRAA is bad business no matter how you look at it. It hurts District small businesses, and would have a significant negative impact on our local economy. It’s inappropriate, unprecedented and possibly unconstitutional. And we will not rest until this bad idea is off the table.