How To Help Low-Wage DC Workers

A blog about business and economics.
July 10 2013 11:20 AM

How To Help Low-Wage DC Workers

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Fishing is not a great DC-area career, but perhaps a fun hobby.

Photo by BRENDAN SMIALOWSKI/AFP/GettyImages

I'm not enthusiastic about the Walmart living wage bill, but the impulse from some of the Council members to want to do more to help low-wage workers living in the District is obviously admirable. But the starting point for analysis here has to be the fact that low wages are just the tip of the iceberg of a larger labor market problem. If you look at the DC metropolitan area it has one of the strongest labor markets in the country with just a 5.6 percent unemployment rate. That kind of low unemployment ought to be laying a foundation for rising wages. But unemployment in the District proper is much higher at 8.3 percent and that unemployment is broadly segmented by education level (PDF) with college graduates facing an unemployment rate of 3.4 percent or lower while those with no college education face an unemployment rate that's more like 20 percent.

That's a disaster. Clearly the local economy is not creating many job opportunities for working class people even at a time when the regional economy is doing well.

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So you have to think about what kind of measures would create working class job opportunities. We're not realistically going to start sprouting factories, but given the high price of land in the city we could easily sprout skyscrapers if the rules were changed. In the short-term, that's construction jobs. In the longer-term, it's more jobs staffing the buildings and the much larger quantity of ground-floor retail that a higher-density downtown would support. A particularly job-heavy kind of downtown structure would be more hotels. DC has a lot of great free tourist attractions thanks to our status as national capital, but it's a very expensive hotel market which deters visitors or pushing them into remote places. The city should also knock off the liquor licens moratoriums and instead act to streamline the permitting process to get new bars and restaurants off the ground. We could go even further by upzoning in residential neighborhoods which would create even more construction jobs and reduce the cost of living.

All that stuff would also have the benefit of increasing tax revenue, which could be used to cut the regressive sales tax and to hire more bus drivers—both moves that will boost low-income living standards as well as directly creating a few jobs. A modest across-the-board minimum wage increase (as opposed to the large but extremely narrow one in the Large Retailer Accountability Act) is worth considering.

But if we have 20 percent unemployment for people who haven't gone to college even while the market for college-educated labor is booming, there's something fundamentally wrong with the labor market. There are lots of simple free steps the city government could take to boost employment in the construction, hotel, food service, and retail sectors that would do a lot to close this gap.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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