Posted on 06/22/2006 4:45:10 PM PDT by HoosierHawk
Chicago would become the nation's first major city to establish a wage and benefit standard for "big-box" retailers, under a watered-down ordinance advanced Wednesday that threatens to undermine Wal-Mart's urban expansion plan.
Wal-Mart said last week that Chicago could be home to as many as 20 new Wal-Mart stores over the next five years, but only if the big-box ordinance is defeated.
On Wednesday, the City Council's Finance Committee ignored that warning, emboldened by a new poll that shows 84 percent of Chicagoans favor wage and benefit standards for retailing giants, even at the risk of losing jobs.
The version approved by a vote of 15 to 6 includes a minimum wage standard of $10 an hour that would kick in after 90 days on the job and $3 an hour in benefits that workers would receive after 180 days on the payroll.
But, instead of applying that standard to newly built and existing stores with at least 75,000 square feet of space, the store size was raised to 90,000 square feet. Small vendors renting less than 50 percent of the space inside big-box stores would be exempt.
The so-called "living wage" would apply to any employee who works more than 10 hours a week. The old version would have kicked in at five hours a week.
Prior to the final vote, business leaders reiterated their longstanding complaint that the minimum wage standard is the exclusive purview of the General Assembly.
"For equal protection reasons, this ordinance would be struck down by the courts," said David Vite, president of the Illinois Retail Merchants Association. Vite further contended that nowhere in the United States is there a living wage ordinance that applies exclusively to retailing giants and that passing one here would turn Chicago into "an island" at a competitive disadvantage.
"This ordinance will make Chicago less competitive in both the regional marketplace, the statewide marketplace and the national marketplace. And many of the folks you're trying to help will be hurt by the reduction of jobs, the elimination of plans to bring new jobs to the city and to what end? To the end of helping some people get an increase."
Wednesday's vote is a big victory for organized labor and another legislative defeat for Mayor Daley.
It culminates months of debate on a volatile issue that threatens to alter the landscape in a Chicago economy growing more and more service-oriented every day.
Daley has challenged aldermen who oppose Wal-Mart's 20-store expansion to describe how they would replace the 8,000 lost jobs.
But, the mayor did not flex his diminishing legislative muscle to try to stop the big-box ordinance, continuing a hands-off stance to City Council issues that he has maintained in the wake of recent corruption scandals.
The law firm of Daley & George -- which once included Mayor Daley and still counts his brother, Michael, as a partner -- represented Wal-Mart on the West Side zoning change that paved the way for Wal-Mart's entry into the Chicago market.
Ping to socialism at its finest.
I've always had a great deal of trouble swallowing this.
It would require that Chicago shoppers suddenly begin spending sufficient new amounts of money that the additional retail sales will support this many new jobs.
In reality, these 8,000 "new" jobs at Wal-Mart are likely to be "purchased" at the cost of the loss of 8,000 jobs at other retailers.
Given the undoubted fact that Wal-Mart is a more efficient retailer, it is even likely that other retailers will lay off more than 8,000 employees when Wal-Mart opens up.
You can only buy so much underwear.
I realize that Wal-Mart's lower prices allow additional spending elsewhere, but that is not what the article is talking about.
Also, it seems realistic that Wal-Mart would have to construct an additional distribution center and consequently hire workers and drivers to maintain it.
The bottom-line here is that Chicago is a union city, and all players must pay. The problem is that the legislation is so narrowly tailored that only one player, maybe several, will be outlawed.
If that happened that would only reinforce the point that Wal-Mart must be providing sufficient incentive to cause people to leave their current jobs for one at Wal-Mart, which, by the way, is the main thrust of this article. (that Wal-Mart should pay more and be required by law to do so.)
I am not a retailer or an MBA, but I suspect a key measure of retail sales efficiency is sales per employee, or perhaps sales per wage dollar.
I have no idea what this amount is for Wal-Mart, but I'd bet a significant sum on it being higher than for just about any other retailer out there.
Thus $1B in sales by Wal-Mart represents fewer jobs and fewer wage dollars than the same amount sold by other retailers.
Since Wal-Mart prices are lower, the disproportion is even greater.
The point is that WM jobs are concentrated and visible, while those lost when WM comes to town are dispersed among all other retailers in town and therefore invisible. Most of the lost jobs here are by attrition, not by firing.
A small town on the Great Plains might indeed get new jobs when a WM opens, but this is at the cost of pulling sales dollars from other towns that don't have a WM yet.
NEW retail sales don't appear out of nowhere when WM arrives. Most or all of those dollars would have been spent elsewhere if WM weren't available.
BTW, I like WM and shop there all the time. But they don't create "new" jobs, certainly not a new job for every employee.
What are they smoking on Chicago City Council?????.....oh wait they all ready banned smoking in public places and private businesses........
WalMart PING!!!!!!!
I understand where you are coming from, but I don't particularly agree with your premise. Everywhere I see a WalMart I also see all kinds of new stores popping up all over the place, and older retailers actually expanding because WalMart draws different folks to an area.
We're talking total jobs, not where individual people choose to work. It is ludicrous to think that 8,000 "new" jobs in retailing appear in the city of Chicago when WM opens.
WM employs 1.3M people in America. Its American sales are $245B a year.
Does anybody seriously think that if WM had not been invented that the total number of people employed in retail stores would be 1.3M fewer? Or that Americans would be spending $245B a year less in retail stores?
Absolutely. But do you think those people weren't spending their money somewhere else before WM came to the area? You're seeing a diversion of economic activity from one location to another, not (primarily) new economic activity.
WM may expand the total retail pie slightly, but it mostly expands by making its own slice bigger. By definition this means other retailers slices don't grow proportionately, or that they actually shrink.
I don't say this is a bad thing, but it is very real.
I also see all kinds of new stores popping up all over the place, and older retailers actually expanding because WalMart draws different folks to an area.
I've seen it as well. Also, those of us who live an hour from any real stores tend to shift some mail order buying to Walmart when they come to town.
You continue to talk about things that don't have a lot to do with the theme of the article, which is that the Chicago City Council is dictating to a private employer what they must pay their employees.
Even the fed or state governments don't tell private employers how much they must pay in benefits, with the sole exception of the state of Maryland and their socialist law will be stricken down.
Told you I live in a leftist city. That's why retiring away from here is appealing.
This is only fair if all employers are required to match the pay/benefit increases. Would that kill alot of mom and pop shops? Yup. Is that a good thing? Nope. Is it better to leave this up to the consumer/employee? Yup.
This is pure socialism bs selectively targeted to take sales from the "rich" companies and redistribute them to the "poorer" companies.
I know for a fact that when a Walmart opens, like in my town, all the surrounding companies within a mile see signifigantly higher traffic.
Walmart is an economic benefit for a variety of reasons seen and unseen.
8,000 new paychecks to tax vs fighting small business tax right-offs. hmmmmm,,, tough choice for Chicago politicians.
3 years ago, around the corner from my current house was virtually nothing. A Super Wal-Mart was built. In came Kroger, Home Depot, and 75 other businesses in the strip mall complexes they created. And around that. You guessed it. Even more businesses including gas stations, an Aldi, and surprise surprise, better than 400 new homes in 2 subdivisions, and there still not done building them.
Did Wal-Mart cause this to happen? I would venture a qualifed Yes.
Possibly yes. The numbers might be even bigger. Take a look at my post above. People always complain that Wal-Mart puts mom & pop out of business. But wherever a Wal-Mart goes in, mom & pop businesses attach to the Wal-Mart anchor. And soon a whole shopping, eating, and entertainment complex is up and running.
I have yet to see a single Wal-Mart anywhere I have traveled in this country that is not surrounded by businesses that didn't exist prior to Wal-Marts building on that location and wouldn't exist if Wal-Mart hadn't been built there.
Why would any Wal Mart want to open in Chicago proper, with its city tax, when it could do so in a nearby suburb without that tax?
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