It's not profitable to break a bunch of leases and close shop, either. If your competition must pay the same wages, then a better solution is to jack up your prices and blame the City for increasing the minimum wages. It's the same problem Walmart has in Maryland. They aren't going to leave the state just because the state requires health insurance. They are going to increase their prices and use the health insurance requirement as an excuse to do so. If you don't like the higher prices, then your recourse is to vote out the idiots who voted for it.
Dear Brilliant,
In Maryland, the Dems were shrewd enough to pass a law with a standard that Wal-Mart was pretty much already meeting.
The law in Maryland requires that Wal-Mart spend 8% of its payroll on health care. Prior to the law, Wal-Mart was spending over 7% of payroll on health care. Thus, the increased spending mandated by law was trivial, representing a small fraction of one percent of its sales in Maryland. Raise the price of that $10.97 item to $10.99, and they're done.
Or worse, permit wages to fall from an average, in Maryland, from $10.60 to perhaps $10.40, divert the savings to health insurance costs, and there you have it! I can't say that this has been Wal-Mart's intention, but I noticed that the average hourly wage paid in Maryland by Wal-Mart did actually decline a little bit from before the law was passed till the time after the law was passed.
However, the Chicago legislation mandates that Wal-Mart raise its minimum starting pay from $7.25 to $10 per hour. In that average pay in these stores is only $10.99 per hour, the net effect would be to bump the entire pay scale up by a couple of bucks per hour. That's not an increase in payroll costs of a fraction of one percent, but rather an increase likely of around 20%. Combined with the mandated $3 per hour in benefits, and suddenly, Wal-Mart has just seen the government of Chicago destroy its business plan in the city.
As well, Wal-Mart isn't speaking about breaking leases and stuff. Wal-Mart's threat is:
"Wal-Mart has threatened to cancel plans to build as many as 20 Chicago stores over the next five years if retailers are required to pay employees at least $10 an hour and $3 in benefits by July 1, 2010."
They'll just spend their finite development capital elsewhere.
Finally, even in Maryland, the extremely small burden the legislature put on Wal-Mart has had consequences. For the sake of less than a penny on the dollar of payroll, Wal-Mart has more or less decided not to locate a major distribution center on the Eastern Shore in Maryland. That center, with hundreds of jobs, along with its payroll taxes and other benefits to the government, will now likely be located in Delaware, or perhaps Virginia.
sitetest
Not sure how Target does business but Wal-Mmart buys their properties, so they have no leases to break.