WASHINGTON (Reuters) - Washington Mayor Vincent Gray on Thursday vetoed a bill that would have forced big retailers to pay a premium over the local minimum wage, calling it "a job killer" for a city trying to lure Wal-Mart and other big-box stores.

The bill, approved by the city council two months ago, would have required big retailers to pay a roughly 50 percent premium on the U.S. capital's minimum wage of $8.25 per hour. Backers said that Wal-Mart Stores Inc, the world's largest retailer, and others could easily afford it to enter the District of Columbia's fast-growing market.

Major U.S. retailers, including Target Corp and Home Depot Inc, had opposed the bill.

Wal-Mart has proposed opening six stores in the capital, which were forecast to employ 1,800 people. Had the bill passed, Washington would have become the first city to require big-box retailers to pay higher wages than other businesses.

"The bill is a job killer, because nearly every large retailer now considering opening a store in the District has indicated that they will not come here or expand here if this bill becomes law," Gray, a Democrat, said in a statement.

Hit by federal budget cuts, the District of Columbia's jobless rate rose to 8.6 percent in July, a percentage point above the U.S. average.

Gray's veto was praised by Wal-Mart, as well as the National Retail Federation and the Greater Washington Board of Trade.

"Now that this discriminatory legislation is behind us, we will move forward on our first stores in our nation's capital," Wal-Mart said in a statement.

OVERRIDE ATTEMPT AHEAD

Backers of the bill will try to override Gray's veto in a council hearing on Tuesday, said Denise Tolliver, chief of staff for Council President Phil Mendelson, who had supported it.

The measure had passed the council in an 8-5 vote. Nine votes are needed to override a veto.

"We're not sure whether we have the votes for an override but the chairman will be working on it between now and then," Tolliver said in an email.

Proponents said the measure would have been a positive for the city.

"This bill would have positive ripple effects across the entire District economy, because studies have shown that low-wage workers are more likely to spend extra money on local goods and services," said Sarita Gupta, executive director of the labor group Jobs with Justice.

The bill had targeted non-unionized stores with more than 75,000 square feet (7,000 square meters) of interior space operated by companies with annual revenue of $1 billion a year.

They would have had to pay a minimum wage of $12.50 an hour. The District's $8.25 an hour minimum wage already exceeds the $7.25 federal minimum. The bill would have given a four-year exemption to big retailers already in the District of Columbia.

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 has nine stores in Chicago.

(Reporting by Scott Malone and Ian Simpson; Additional reporting by Chris Francescani; Editing by Maureen Bavdek, Leslie Adler and Richard Chang)