Photo by dno1967b on Flickr.
Last week, the DC Council passed an act that requires big box retailers to pay a living wage, and Walmart threatened not to build 3 of 6 planned stores here. Opponents say it’s proof that the Large Retailer Accountability Act will kill jobs, but there are better, proven ways to encourage economic development.
Economic development experts know what works: a long term coordinated strategy around workforce development and business development. This approach has successfully revitalized downtown and other once-blighted corridors what works. But Deputy Mayor for Economic Development Victor Hoskins has focused on cutting deals that get headlines, whether or not they produce results.
We don’t need Walmart to revitalize DC’s underserved neighborhoods, and we can still reduce unemployment while insisting that large retailers pay their employees enough to make a decent living.
Requiring a living wage won’t increase unemployment
Earlier this month, I met with Mayor Vincent Gray for 45 minutes to discuss unemployment. He’s one of the foremost experts in unemployment in DC, and he understands that unemployment in DC is caused by poor workforce readiness, not a lack of jobs. Only 28% of DC’s jobs go to DC residents.
Gray is responsible for several initiatives that will help reduce unemployment in DC, like starting UDC Community College, reconstituting the Workforce Investment Council and One City One Hire. The job prospects of unemployed residents relies more on these initiatives than it does on Walmart. After all, even if Walmart offers new jobs, residents can’t fill them if they’re not trained to be good employees.
One challenge in addressing unemployment is job retention. DC has a far lower job retention rate than other states. Economists have demonstrated that low wages have a significant impact on job retention, and that raising the minimum wage increases job retention.
This is particularly true with low-skilled service class jobs. Leisure, hospitality, and retail jobs are the fastest growing source of jobs in DC and nationwide for low-skilled workers. But they are usually crappy jobs that offer little to no path to a living wage, let alone the middle class.
Urban researcher Richard Florida says part of the answer is to make service jobs better by requiring employers to pay a living wage:
Two kinds of jobs are growing in great cities - high—paying knowledge, professional and creative jobs, and low skill low pay contingent service jobs. Inequality is growing and our cities are increasingly divided. A higher minimum wage is an important part of a badly new urban social compact which values workers and raises wages. It can be a first step toward viewing workers as a source of innovation and creativity.
To that end, Mayor Gray has launched several little-noticed initiatives to train unemployed workers for hospitality and retail jobs. They produce the kind of workers that retailers who pay living wages and require a low-turnover, high-value workforce want to hire.
But there’s a disconnect between Gray’s workforce development strategy and the Office of the Deputy Mayor for Economic Development (DMPED), the city’s economic development agency. For all its merits, DMPED’s 5-year economic development plan says little about workforce development. The reconstituted Workforce Investment Council, while technically housed in DMPED, does not actually collaborate in DMPED projects.
Gray’s workforce experts would tell DMPED that the city needs businesses that have re-engineered their retail and hospitality positions for higher value, who will use the pipelines we are creating to train workers who can deliver that value. Many studies show that a higher minimum wage results in higher-quality service jobs, which lead to greater job stability and less unemployment.
Economic development of Ward 7 doesn’t depend on Walmart
Walmart says they will cancel 3 proposed stores if LRAA is passed: one at New York Avenue and Bladensburg Road NE in Ward 5, and one each in the Capital Gateway and Skyland Town Center developments in Ward 7. Residents have anticipated all 3 projects for years, especially Skyland.
Ward 7 resident Charles Crews says there is much more that the city could be doing. “It’s horrible how they aren’t working on beautification of the ward,” he says. “There’s trash, and the buildings are not maintained at all. This creates an attitude among residents that Walmart is the best we can do”.
But do these neighborhoods, especially those in Ward 7, need Walmart for economic development? According to councilmember and mayoral candidate Jack Evans, who led the economic development of downtown DC, 14th Street NW, and other distressed and blighted corridors, they don’t. “People are looking for the silver bullet,” Evans said, “but there is no silver bullet. You need a long term plan.”
Evans cites Georgetown as one example. “Georgetown used to be the same, trash everywhere. The way you change that is the BID concept,” he says, referring to Business Improvement Districts. He proposes creating publicly-funded BIDs in Ward 7 neighborhoods to make them more attractive to businesses, while hiring local residents to keep streets clean.
From there, he would offer targeted subsidies for retailers who want to locate there. This was hugely successful in Ward 2 and produced both economic and non-economic returns for the city. Today, Ward 7 receives fewer economic development subsidies than nearly any part of town, according to a report from the CFO’s office.
Ward 7 resident Kendrick Jackson says that the city has been unwilling to partner with small businesses, like a coworking space and a coffeeshop, who could really make a difference in his community.
"The city should be working with them with incentives and assistance, but instead they are having to deal with obstacles at DCRA [the Department of Consumer and Regulatory Affairs],” he says. “I would rather see attractive small retailers that would draw people to the area than something like Home Depot that brings a giant parking lot. But the city doesn’t see small retailers as part of their plan for ward 7.”
Evans says that after a city-led beautification and public space project, he is confident he could provide subsidies to the right retailers to set up in Ward 7. This is the type of long-term planning that results in sustained economic development, and it features prominently in a document put together by the DC Office of Planning and Bethesda-based retail consultants Streetsense last year called the Vibrant Streets Toolkit, which offers advice for DC’s struggling business districts.
Edwin Jones, pastor of Living Faith Baptist Church and resident of Ward 7, supports Councilmember Evans’ proposal. “That’s how the plan should work, instead of just accepting Walmart,” he says. “It’s that kind of plan that improves the community and includes the residents in the community.”
Will Gray challenge his economic development team to give him a real plan for Ward 7 that combines business and workforce development? Or will he perpetuate a culture in his economic development agency that reduces development to dealmaking that produces headlines?