Don Fry Commentary on WYPR
For elected officials who have the power to make the rules in a community, the quest for a well-meaning policy that will, by itself, accomplish a laudable social objective and broadly benefit constituents can be intoxicating.
The living-wage proposal, which proponents are seeking to resurrect in the Baltimore City Council, would require all major retailers in the city to pay their employees at least $10.59 per hour, making Baltimore one of only a handful of U.S. cities to extend such a wage mandate beyond government-funded projects and vendors.
Affected retailers would include major national stores such as Wal-Mart and Target, as well as many pharmacies, gas stations, and grocery stores.
This would be a risky policy fraught with potential unintended consequences, including retail staff reductions and reduced hours. It could also discourage popular stores from locating in Baltimore at a time when residents want more retailers and the city is seeking to attract them.
Living-wage advocates argue that large retailers can afford to pay the higher wages. But, I don’t know of any business – large or small – that these days can easily absorb a government-mandated increase of between 18 and 40 percent in a core cost of doing business.
It’s understandable for elected officials to seek ways to improve the plight of low-wage workers. But imposing a broad wage hike on a large segment of Baltimore’s private sector is counter-productive, especially given the current precarious economic circumstances.
To generate more government revenue, and to avoid repeating the city’s recent painful budget process where services were cut and taxes were raised, Baltimore needs a growing number of businesses and jobs. So why would we do anything to discourage retail business development and job creation?
The recession has reminded those in the private sector and in government of the most basic economic principle: government does not create jobs, businesses do.
For the Regional Business Report, this is Don Fry, president and CEO of the Greater Baltimore Committee, for 88.1 WYPR, your NPR news station.