Baltimore Business Journal
Daniel J. Sernovitz
City Councilwoman Mary Pat Clarke wants to require “major retailers,” those with gross sales of $10 million or more, to pay their workers an hourly rate set by the city’s Wage Commission.
The move is meant to apply to national chains like Walmart and Best Buy, but some local firms including Santoni’s Supermarket in Highlandtown would also fall within the threshold. Those companies would be forced to pay their workers $10.57 an hour, compared with the state minimum wage of $7.25 an hour. The state’s minimum wage is tied to that of the federal government, which is also $7.25 per hour.
Proponents, including the local AFL-CIO, say it is only fair to require large retailers to pay their workers enough to make ends meet.
But opponents fear it’s the wrong time to put up another roadblock for merchants after the City Council passed a wave of new taxes and fees with its 2011 budget. Further, some say, it could undercut the city’s efforts to attract large retailers to Baltimore.
“It basically penalizes them and provides a disincentive to expand in the city,” said Stanley S. Fine, an attorney with Rosenberg Martin Greenberg LLP of Baltimore who represents a group of city developers. “It puts them in an unfair position with respect to smaller retailers who might sell the same goods across the street.”
Both sides will face off at a public hearing scheduled for July 22.
City Council President Jack Young supports the concept of living wages but has not yet taken a position on the bill, spokesman Lester Davis said. Young wants to make sure the bill addresses wage issues for city residents, but not at the expense of other groups such as business owners.
Many governments across the country, Baltimore included, require contractors doing business with the city to pay their workers a “living wage.” But Clarke’s bill would dictate to private businesses how much they are required to pay their workers even if they are not benefiting from city contracts or financial aid.
Clarke introduced the bill after neighborhood groups opposed building a Walmart and Lowe’s Home Improvement in Remington. She said those businesses could hurt smaller, independently owned stores. But she said she does not oppose the plan, nor was the living wage bill drafted to scare Walmart or Lowe’s away. Clarke sees a growing number of national retailers looking to open stores in Baltimore. If they want the city’s business, she said, those companies should pay their workers enough to survive.
“Let them pay a living wage so people that work there can work one job instead of three,” Clarke said.
The Remington project’s developer, Richard Walker, declined to comment.
The policy is supported by the AFL-CIO’s, which believes the workers needed to operate the new stores should be paid fairly for their labors. The union also supported Clarke’s efforts in 1994 to get a living wage for city workers and contractors.
But Steven Restivo, a spokesman for Walmart, said the company opposes the bill because it unfairly discriminates against companies like Walmart.
“It is unfair to impose mandates on some businesses and not others and this proposal would only slow growth and development in the city,” Restivo said. “The jobs we offer already include competitive pay, quality benefits and a real opportunity to build a career.”
Baltimore is one of several cities across the country considering living wage requirements for large retailers as those companies seek out locations for new stores.
The Chicago City Council voted earlier this month to require Walmart to pay its workers a living wage in exchange for a zoning change it needs to open on the city’s south side. And several community groups in Buffalo, N.Y., are calling for a similar requirement for retailers that want to open at the Erie Canal Harbor.
But the measure could backfire in Baltimore, where city leaders have been trying for years to get the attention of the same national retailers they are now seeking to tax, said Donald C. Fry, CEO of the Greater Baltimore Committee. That is because it would increase the cost of doing business in Baltimore, potentially to the point where those companies may look outside the city to open new stores. What’s more, he said, it could force some retailers already here to close.
“I think this does not send the right type of message,” Fry said.
The bill strikes a raw note with some city merchants, weeks after a contentious battle with City Hall over a proposed 4-cent bottle tax. The tax on bottled beverages was cut in half and adopted June 24.
Robert Santoni Jr., chief financial officer at Santoni’s Supermarket, said the living wage bill would be yet another obstacle to doing business in the city. Santoni opposed the bottle tax and is gearing up to fight the living wage bill because of its potential impact on his store.
“We’ll be ready to go to battle on it,” Santoni said. “I think it’s a ridiculous bill.”
Santoni said the requirement will force retailers to reassess their entire pay scale, as there will be less of a gap between entry-level workers and the superiors they work under.
Several groups oppose the bill, including the Maryland Retailers Association, the Downtown Partnership of Baltimore Inc. and the Baltimore Development Corp.
In a letter to City Council, BDC President M.J. “Jay” Brodie said the bill is poorly timed as the region’s economy struggles to emerge from the recession. The bill could make it harder for developers to find the tenants they need for their projects, he wrote, which could mean fewer construction and permanent jobs are created in the city.
“While most would agree that the goal of increasing the household income of all working families in the City of Baltimore is one that we should aspire to, it is our view that this legislation is not the most prudent to reach that goal, and is being introduced at a most inopportune time,” Brodie wrote.
Clarke said she expected there would be some concerns over the proposal, but she said she thinks it is an important step in ensuring the quality of life for city residents.
“I’m sure that representatives of developers will say that the world is coming to an end, things are bad already and now you’re making it worse,” she said. “There’s never a good time to do something so change-making.”