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Monday, July 17, 2006

In search of employment

Will Chicago aldermen suffer an outbreak of good sense and reject a city wage law?

By Dennis Byrne
Chicago Tribune

We suburbanites will have to send Chicago City Council members our thanks if they make it harder for big retail stores to operate in the city.

It'll mean more sales and property tax revenue for our local governments, more jobs for our residents, more money for us.

Obviously (to everyone but the aldermen), Chicago aldermen would better serve their constituents by welcoming the business of the Wal-Marts, Targets, Kmarts and other "big box" retailers into depressed city neighborhoods whose residents really need the jobs.

But some aldermen are poised to adopt an ordinance on July 26 telling retailers with Chicago stores of more than 90,000 square feet or more than $1 billion in gross sales how much to pay their employees who work more than five hours a week. (They'd also tell them they couldn't refuse to hire convicts.)

For the "nonpartisan" Economic Policy Institute--which regularly supports such liberal causes--the ordinance is of global importance. Chicago, it exclaimed, is in the "throes of fundamental debate about the future direction of the American economy and its workers, one that touches on our most pressing concerns, from globalization to the role of government."

For this Washington-based group, it should be no big deal for Chicago to slit its own throat by adopting an ordinance that would require a minimum starting wage of $10 an hour and $3 an hour of health-care benefits by 2010. Its "analysis" said it would merely increase the price of a pair of $1 Wal-Mart socks less than a cent. Or reduce its profit margin by less than a percentage point.

"A more logical course of action by a well-run company would be to reduce their work force by 20 percent," responded David Vite, president of the Illinois Retail Merchants Association. The trade group figures that the ordinance would increase labor costs 40 percent to 50 percent in stores that have an average profit margin of just 1 percent to 2 percent. It also argues that any government-imposed increased labor costs should be across-the-board nationally, to avoid discriminating against larger businesses or certain geographic areas.

But it doesn't really matter whether prices increase a penny, nickel or dime. What counts is what the retailers think, because they are free to open or close stores wherever they want. This does not make them evil, no more than shopping for the best bargain or searching for a higher-paying job makes you evil. It makes them businesspeople, although in some people's eyes, that automatically makes them evil. If they conclude that the economics of doing business in the city won't work, then they won't do business in the city. Simple as that.

And if they decide to take their business elsewhere, who will that hurt? Chicago's unemployed citizens who live in neighborhoods with high joblessness. Those with limited skills who are looking for entry-level jobs. The city's employed who, again, will have to find a way to get to the more numerous suburban jobs. Chicago shoppers who will have to go the extra mile to find a wider, better and more affordable selection of merchandise. But nuts to them; the aldermen have bigger fish to fry.

You'd think that the aldermen would have learned by now. A few years ago, they rejected a Wal-Mart proposal to build two stores in Chicago. The council only allowed one--on the West Side--forcing the company to find a site in Evergreen Park. Some 25,000 people applied for the 325 jobs in the store, which produced about $1 million in sales and property taxes for the suburb. Money and jobs Chicago could have had.

Why are aldermen acting so stupidly? To placate organized labor, which wants government to do the union's work for it by enforcing wage and work rules that it can't bargain into place by itself. As usual, its handmaidens are aldermen who value the political organizing muscle and campaign contributions that labor provides more than the good of their city.

But, you never know when a majority of aldermen might suffer an outbreak of good sense and reject the ordinance. So let's get in touch with them now, to encourage them to do what's good for the suburbs. We suburbanites also should encourage organized labor to keep up its pressure on the aldermen. Because that's how the "city that works" works so well for suburbanites.


Copyright © 2006, Chicago Tribune

7 comments:

Anonymous said...

Mr Byrne: I could not agree with you more. I think the big-box proposal is even worse than you suggest though. The substitute version on Joe Moore's (Alderman) home page seems to indicate that the ordinance kicks in for stores that have both 90,000 sf facilities AND $1Billion in revenues. This completely excludes Walgreens, McDonald's, Starbucks, etc..notwithstanding the fact that in the case of Walgreens, that store alone probably has over 100 outlets in the City - clearly more than a million square feet of space. Limiting this proposal to the size of one store is the most stupid thing I have ever heard. If City Council wants to try to raise local wages they should do it across the board, like San Francisco does, and see where the chips fall....This version must go....

Jonathan K. said...

You fail to address the real reason why aldermen seek to raise the wages of employees in the first place: namely that 'Bix Box' companies have tendencies to staff their workers just under full-time so they're not eligible for benefits. Instead you say that their motivation is to:

"To placate organized labor, which wants government to do the union's work for it by enforcing wage and work rules that it can't bargain into place by itself. "

To that I ask you, "What Union?" Walmart doesn't have a union. (check out their own webpage at:
http://www.walmartfacts.com/wal-mart-union.aspx

"Due to our amicable relationships between our associates and managers and executives, we believe there is no need for third-party representation."

Somehow the 1.5 million women, who formed the largest class action discrimination suit against managers didn't get that message. (Check out http://www.forbes.com/2003/07/22/cz_mf_0722wmt.html)

Furthermore, your attempt to portray this matter between the aldermen and the 'big box' retailers, as completely obvious and lacking in "good sense," is not an effective method for convincing a public about your weak argument.

Anonymous said...

Funny that a suburbanite would be so obsessed over a Chicago issue. You might enjoy your sea of parking lots and Wal-Marts but that is not what Chicago is about.

Also, you are very naive if you think that big boxes will bring more employment and taxes to Chicago.

1) Employment- Wal-Mart and its ilk are hyper-productive companies meaning they employ less people per revenue than other companies currently located in Chicago. Therefore for every dollar transfered to these stores there is less employment.

2) Taxes- Due to lower prices taxes will also decrease as Wal-Mart lower priceses are substituted for stores currently in Chicago.

If you like your big boxes so much keep them. We do not want them.

T.W. said...

What findings, and from what sources, have you come across that lead you to believe that the Wal-Mart's of the world won't continue to open stores in places like Chicago because they have to pay what will still be below a "living wage?"

You should also thank your nearest "union member" for the sacrafices the he/she and all those who came before them have made that have secured a 5-day work week, employer sponsored health insurance plans, work place safety requirements, etc. etc. etc.

Stephen Schade said...

Mr. Byrne:

Ex-cons, having paid their debt to society, deserve a second chance. If they are denied jobs, their only recourse is to return to a life of crime to support themselves.

As for Wal-Mart, they have committed a host of crimes for which they must be held accountable. On the home front, they have been convicted of predatory pricing, used eminent domain to force people to sell their property, and engaged in union busting. Overseas, they claim they do not use child labor, yet they refuse to allow auditing of their records to confirm it. Are jobs really worth such a steep price?

Anonymous said...

To All of you who support the Big Box Wage Ordinance:

Do you understand that this law would only effect stores with 90,000 square feet or more? Do you know how stupid that is? Walgreens has well in excess of 100 stores in the City alone and billions of revenues. They would not be effected. McDonald's can continue to pay whatever they want. Starbucks, CVS, Bed, bath % Beyond can pay whatever they want, and on and on.

PLEASE READ: Did you know that Wal Mart has a new format they are trying out in the U.S. that is about 50,000 square feet? If rolled out in Chicago, it would be exempt??????

It is ludicrous to tie this wage requirement to the size of one store. I personally have nothing against trying to raise wages. The City Council could try this, across the board, and then they could see what the impacts were, positive or negative.

This 90,000 square feet version is so arbitrary I am personally embarrassed to live in a City that is considering it....

gasparutto said...

And how is this working in Detroit, the city that evacuates