Wal-Mart and Washington D.C. in minimum wage showdown

District of Columbia Mayor Vincent Gray could decide as early as this week whether to sign a minimum wage bill that could discourage Wal-Mart Stores Inc , the world's biggest retailer, from opening stores in the U.S. capital.

The bill, approved by the City Council two months ago, would require big retailers to pay a 50 percent premium on the local minimum wage of $8.25 per hour, with backers saying that Wal-Mart and others can easily afford it to get into the District of Columbia's fast-growing market.

"We're glad (Wal-Mart has) finally recognized the value of the District of Columbia," said Councilmember Vincent Orange, a backer of the bill.

"But we also recognize the value of our residents, and the value of one hour of our residents' time is greater than $8.25," Orange said on Wednesday.

Wal-Mart has been the target of nationwide demonstrations calling on the company to provide better pay and working conditions. In New York on Thursday, three dismissed Wal-Mart workers were arrested in a protest outside the office of Chrisopher Williams, a Walmart director, organizers said.

Gray, a Democrat, has not said if he will sign the "living wage" bill or veto it. A spokeswoman said a decision is likely to come this week. But Orange said he thought the mayor would take all the time allotted to make his decision. Gray has 10 business days from September 3 to decide.

If he approves it, Wal-Mart could scrap plans to bring six stores - and 1,800 jobs - to the Washington market, while unemployment is on the rise in the District of Columbia.

While some cities such as San Francisco and Santa Fe, New Mexico, have approved across-the-board minimum-wage hikes, the bill would make Washington D.C. the first city to single out big-box retailers.

The city's Large Retailer Accountability Act targets non-unionized stores with more than 75,000 square feet (7,000 square meters) of interior space and whose parent companies have yearly revenues of $1 billion a year.

They would have to pay a minimum wage of $12.50 an hour, while the federal minimum is $7.25. The bill gives a four-year exemption to big retailers already in the District of Columbia.

BROUGHT UP SHORT

The City Council's 8-5 vote in July approving the measure brought up short years of efforts by Walmart, Wal-Mart's main U.S. unit, to expand into the U.S. capital.

Steven Restivo, a Walmart spokesman, said that if the measure took effect the company would halt plans to build three stores awaiting the start of construction. They include two that were set to be built in impoverished neighborhoods east of the Anacostia River.

"We'll take a hard look at the three stores that are under construction from a financial and legal perspective to see what our next steps might be," he said on Tuesday.

Business leaders and the Washington Post have widely criticized the measure. They claim it creates an uneven playing field for Wal-Mart and will give the District of Columbia an anti-business reputation.

Executives from six major U.S. retailers, including Target Corp and Home Depot Inc , wrote Gray a letter in July urging him to veto the living wage bill.

"You don't go change the deal (with Wal-Mart). This is a bait and switch," said Barbara Lang, president and chief executive of the District of Columbia Chamber of Commerce.

Chicago's City Council approved a similar measure in 2006 requiring Wal-Mart and other big retailers to pay much higher wages, but Mayor Richard Daley vetoed it. Wal-Mart now has nine stores in Chicago.

The faceoff over Wal-Mart and wages comes as federal budget cuts have increased Washington's joblessness, marring an economic upturn that has seen 1,000 people a month move into the U.S. capital and generated a budget surplus.

District of Columbia unemployment rose to 8.6 percent in July, from 8.4 percent in December and a percentage point above the U.S. average.

Orange, the city council member, said supporters of the bill were seeking one more vote on the 13-member council to be able to override a Gray veto.

(Editing by Carol Bishopric and Grant McCool)