Mayor Gray's veto letter

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



September 12, 2013

The Honorable Phil Mendelson

Chairman, Council ofthe District of Columbia
John A. Wilson Building

1350 Avenue, NW, Suite 504
Washington, DC 20004

Dear Chairman Mendelson:

Today, I am vetoing Bill 20-62, the "Large Retailer Accountability Act of 2013." Over the last
several weeks and months, I have listened closely to hundreds of individuals and groups on
both sides of the issue and have heard many arguments for and against the bill. I recognize that
reasonable people passionately support this legislation. And I strongly believe that all District
residents should earn a living wage. However, after careful consideration, I have concluded that
the bill, while well-intentioned, is flawed and will fail to achieve its intended goals.

Over the last two and half years, my Administration has worked tirelessly to create jobs, help
our residents obtain employment, and escape poverty. It is because of these very
commitments, in fact, that I feel compelled to veto the bill -- because it will not improve
employment opportunities or wages for the vast majority of our workforce. To the contrary, it
would result in significant harm to the residents and areas of the District most in need ofjobs,
economic development, and new amenities.

In listening to the we|l--intentioned voices expressing support for the bill, I have repeatedly
heard a number of fundamental misunderstandings about what the legislation would actually
do and what its enactment into law would mean for District residents. Specifically:

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1. The bill is not a true living-wage bill, because it would raise the minimum wage only for
a small fraction ofthe District's workforce. It would apply only to a small number of
employees employed by a small number of targeted employers. In addition -- and for no
discernible reason -- the bill exempts large retailers with labor agreements from paying
the same minimum wage as their competitors. Instead of these arbitrary and partial
attempts at insisting on living wages for only certain workers and certain sectors, I
propose that we raise the minimum wage for all District residents -- regardless of who
employs them, when their employer begins operating in the District, or whether or not
their jobs are unionized.

2. 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. The Deputy Mayor for Planning and Economic Development has
estimated that, should the bill take effect, it will cause the loss of more than 4,000
District jobs in just the first few years alone. At a time when the District's economy is
starting to feel the impact of federal budget cuts, when we are seeing significant public-
sector job losses, when our once-falling unemployment rate has stalled well above the
national average, and when Wards 5, 7, and 8 still have unemployment rates of 12%,
15%, and 22% respectively, the District cannot make a reasonable, responsible or moral
case that we don't need the jobs these retailers would bring.

3. The bill would affect far more retailers than many supporters think. While often
referred to as a Walmart bill, the bill applies to a far broader range of retailers --
including ones that many ofthe bill's supporters would likely not object to. Other large
retailers that would be affected by the bill include Target, Home Depot, Wegmans,
Lowe's, Walgreens, Harris Teeter, AutoZone and Macy's. As I stated above, these
retailers have indicated they either will not come to or will not expand in the District if
this bill becomes law. In addition, many have said they will minimize the number ofjobs
they already have in the District, thus killing employment opportunities for our

4. The bill doesn't guarantee good-paying jobs for District residents. Even if the bill did
somehow end up creating a small number of higher-payingjobs, it does nothing to
ensure that those jobs would actually be filled by District residents. Instead of creating
higher--paying entry-level retail jobs for |ower--ski||ed District residents, at best the bill
will create a very small number of higher-payingjobs, many of which will go to higher-
skilled Maryland and Virginia residents who will commute into the District. Meanwhile, I
am convinced more retailers will open stores just outside the District's borders, where
labor costs would be more than 40% cheaper for large, non--union retailers. This, of
course, would exacerbate the longstanding problem the District has had with "retail
leakage" -- to the benefit of the surrounding jurisdictions rather than to our taxpayers.
And inevitably some District residents will simply commute to Maryland or Virginia, as

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they do now, to work at the same type of lower--wage jobs the bill seeks to prevent here
in the District.

5. This bill does nothing to help underserved parts of the District. The bill will not
preserve existingjobs with local retailers in many ofthe neighborhoods where large
retailers plan to open stores, because very few retail jobs of any sort presently exist in
these neighborhoods. For example, in a recent study ofthe economic impact of
Walmart stores titled Progressive Success Story," President 0bama's chief economic
adviser noted the significant benefit large retailers bring to low-income communities by
offering low prices. He then concluded: "[J]obs at Walmart are better than opportunities
these workers would have had in the absence of Walmart, either other [|ow--ski||ed] jobs
or unemployment."

6. The bill will deal a huge blow to economic development. The bill will not modestly
delay economic development in underserved District neighborhoods long deprived of
jobs and retail amenities; it will kill economic development in these communities for a
generation. Should this bill become law, it would have a chilling effect on economic
development everywhere in our city by sending a clear message to retailers considering
the District that they are not welcome here. More immediately, it would mean that
long-stalled development projects like Skyland -- a project already delayed for more
than 20 years -- would continue to be on hold indefinitely. Those who claim it would not
be difficult simply to identify another anchor tenant to replace retailers considering
withdrawing from the District are nai've regarding the significant difficulty associated
with jump-starting such development projects and the ease with which they can fall
apart. We see this each year at the International Council of Shopping Centers (ICSC)
conference, where we engage in painstaking discussions to recruit more retail to the
District. Citing Skyland again as an example, opportunities at that site were presented to
potential retail tenants at the ICSC conference -- and the District was turned down flatly
by virtually every retailer, a number of them stating an interest in the city but noting a
preference for other areas.

Some have suggested that my decision to veto this bill would represent caving to bullying by
large retailers. Nothing could be further from the truth. Anyone who knows my history knows I
don't back down from bullies; I stand up for what is right. In vetoing this bill, I stand up for
unemployed District residents who need a job and an employment history; I stand up for the
vast majority of District residents who have weighed in on the issue, urging me to veto this
well-intentioned but misguided bill; and I stand up for the interests of the residents ofthe
District of Columbia -- especially those currently without adequate or any retail in their

I look forward to putting this debate behind us and working with the Council to do what
President Obama proposed earlier this year and what several states and municipalities have
recently done: pass a reasonable increase to the District's minimum wage for all workers.

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Meanwhile, we must remain firmly focused on my Administration's top priority of growing and
diversifying the District's economy in order to create new good-paying jobs and to better
educate and prepare our residents to obtain them. 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.



Vincent C. Gray

cc: Members ofthe Council of the District of Columbia

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