April 30, 2012

D.C. hurts its poorest citizens through regulations

By: AFF Editors

From Flickr user Anthony M. Sanchez

Columbia Heights, my Washington, D.C., neighborhood, has seen a boom in growth over the last few years. New condos and apartments attracted a younger, upwardly mobile populace which has in turn attracted businesses of all stripes. Once ravaged by crime and riots, 14th Street, the neighborhood’s main thoroughfare, is now dotted with an impressive mix of new, hip restaurants, bakeries turning out fresh bread, holdover liquor stores and corner shops, and the occasional funeral parlor. But the unintended consequences of hyper-local bureaucracy are standing in the way of progress.

One prime location remains unfilled. Festooned with signs mockingly promising an opening in Summer of 2011, Z Burger has yet to open. Despite massive renovations on the inside and expensive signage outside, the restaurant remains closed, held hostage by D.C.’s arcane Advisory Neighborhood Commission (ANC) system.

The fight, which was summed up nicely by a local neighborhood blog, essentially revolves around whether or not the restaurant can put a fence around the outdoor patio. The ANC—comprised of several smalltime elected bureaucrats—insists there should be no fence. Never mind the restaurant’s desire to keep bums from setting up shop or to keep little kids from running out of the patio area and into a heavily trafficked street — fences would be tolerated.

We’re talking about dozens of jobs and hundreds of thousands of dollars in sales and income tax revenue. This, in a city where more than one in every two teens is unemployed and there is a projected $172 million budget hole. These opportunities are going down the drain because some local bureaucrats have decided that fences for a restaurant are unacceptable.

Now, I won’t get into the history of corruption and profligacy in DC’s ANC system—which has a pretty big say in most zoning decisions—other than to note it’s a bizarre artifact of my home city’s history and often has the effect of dampening business. Commission roadblocks only hurt the people who rely on these jobs and make potential businesses wary of setting up shop in DC.

The ANCs aren’t the only hindrance for local businesses and their would-be employees. Remember those unemployed teenagers? One reason for their indigence is D.C.’s minimum wage, which is $8.25, one dollar higher than the federal minimum wage of $7.25.

Last summer, Michael Saltsman of the Employment Policies Institute told CNSNews what has happened since the last minimum wage increases began in 2007:

The 50.1 percent figure is almost double the average teen unemployment rate in June 2007 in the District, when it was 26.2 percent, according to Saltsman.

Since 2007, the rate has increased each year: 29.5 percent in June 2008, 44.7 percent in 2009 and 48.8 percent in 2010, based on EPI’s analysis.

“We’re in the midst of the third summer in a row where teen unemployment has been above 20 percent,” Saltsman said when he announced his report on July 8.

Though a contentious issue in some quarters, the majority of studies show that minimum wage increases hurt unskilled workers (like teens) in the job market. Instead of serving as a boost for poor families, minimum wage hikes simply keep certain vulnerable people out of the job market altogether.

Unintended consequences aren’t limited to ANCs and the food service industry.

Consider that D.C. limits one month’s rent as a security deposit. No big deal you think, right? But what if a landlord wants to charge a deposit for pets—not unreasonable, given the damage dogs and cats, even well-behaved ones, can do to domiciles.

Unable to charge a refundable deposit to cover pet damages, the landlords who do allow pets instead charge a non-refundable fee. In my apartment building, it’s $500. That’s $500 gone, forever. The unintended consequence of deposit limits for renters—to ensure that those with limited incomes aren’t locked out of housing—is to make it more expensive for those same renters with dogs or cats find a place to live.

Unintended consequences are by no means limited to DC. Poke around long enough in your hometown and you’re sure to find some of your own.

Sonny Bunch is managing editor of the Washington Free Beacon.