Targeting Wal-Mart

28 July 2006



Chicago City Council Passes “Big-Box Store” Minimum Wage Law

The Chicago City Council, usually a rubber stamp for whatever guy named Daley is mayor, voted 35-14 against the Mayor on Wednesday to force “big-box stores” to pay their employees almost double the national minimum wage. The 38 retailer stores affected by the bill want a mayoral veto, but Mr. Daley is being coy at the moment. After a federal investigation uncovered City Hall contracting and hiring fraud, he may not have the power to stop the law. It takes 34 votes to over-ride any mayoral veto.

The Chicago Tribune said “The so-called ‘big-box’ ordinance applies to stores of at least 90,000 square feet operated by firms with $1 billion or more in annual sales. It provides that beginning next July, employees will be paid a minimum of $9.25 an hour in wages and $1.50 in fringe benefits, figures that will rise to $10 and $3, respectively, by 2010. Automatic annual cost-of-living increases will apply thereafter.” The federal minimum wage is $5.15 an hour, and the Illinois state minimum is $6.50 an hour. In all, David Vite, president and CEO of the Illinois Retail Merchants Association, said 8,000 people work in the affected stores. Chicago has a quarter of a million retail workers.

Mr. Vite’s group put up the usual complaint that paying workers more by government fiat hurts the unskilled low income workers most. That is demonstrably untrue in study after study; business has very inelastic demand for people who unload trucks, clean bathrooms, and stock shelves. If the price is a couple extra dollars an hour, it gets lost in the $1 billion of annual sales.

Lowe’s Home Improvement Center, which has 3 stores that would be affected, said,” We are evaluating additional sites [for stores] within the Chicago metropolitan area,” and the new ordinance would be a factor. Home Depot pointed out that it already pays more than the median wage in the retail market in Chicago and offers medical, dental and vision insurance. Wal-Mart is opening its first store in Chicago this fall and thus far, has not said anything. Target, which has three new stores planned, has put new stores on hold, and has suggested that its existing stores might close. This ordinance, some fear, is a disaster for Chicago.

Except, Costco already meets the standards in the proposed law. Ken Snyder, coordinator of the Grassroots Collaborative, told the Chicago Jobs Council, “In Chicago, Costco offers a starting wage of at least $10 per hour. Costco is … a profitable company that pays a livable wage and offers affordable health care benefits.” So, it Costco can do it, the other must be able to do it, too. Or their shareholders will want to know why.

The truth is these stores need Chicago and the other big cities of America. Professor Annette Bernhardt at NYU Law School and Professor Nik Theodore of the University of Illinois at Chicago, wrote in a Chicago Tribune Op Ed “Wal-Mart and other large retailers absolutely need Chicago. Having built up in rural areas and suburbs to the point of overcapacity and stagnant sales, retailers are now hungrily eyeing cities.”

In the end, the problem is one that Henry Ford knew he had to solve. Capitalism can only function if the workers can afford to buy the products that businesses create. That means paying more than $5.15 an hour in Chicago, where the train fare on the “L” $2, each way.

© Copyright 2006 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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