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Off Target

(Photo: Just can’t help themselves or not just their fault?)

Everyone has a right to a living wage. But just what that wage should be — or who should have to pay it — is a debate that has been raging through Chicago’s city council this summer, possibly with disastrous consequences. On July 26, the council will vote on a bill, sponsored by Alderman Joe Moore (49th Ward), to require big-box retailers doing business within the City of Chicago — but not the smaller local stores that employ the bulk of Chicago retail workers — to pay their employees a minimum wage of $10 an hour with benefits, eventually rising to $13 an hour. On the face of it a beneficial idea for workers, if it can be put into practice without workers losing their jobs.

Unfortunately, Chicago’s most popular big-box chain, Target Corp., has threatened to cancel several planned new stores in the city, and even to consider closing its existing Chicago stores, with Walmart following with similar threats, triggering an avalanche of criticism aimed at retailer and city council alike (see Chicago Tribune coverage of the controversy here and here, and Crain’s Chicago Business coverage here).

Quoted in the Tribune, Ald. Freddrenna Lyle (6th Ward) called the threat “disingenous and disrespectful of city residents,” and said that, with $1 billion in untapped purchasing power in underserved Chicago neighborhoods, big-box retailers will remain in Chicago because “the money is here.” However, some South Side community members quoted in the same article are not so sure. Said Dr. Leon Finney of the Metropolitan Apostolic Community Church, “I’m more interested in having a job than a living wage.” More pointed criticism is to be had from Bishop Arthur Brazier of the Apostolic Church of God, also on the South Side: “This is going to be very harmful to the city of Chicago, to the African-American people who want jobs and Wal-Marts.”

Opinions on the proposed legislation are no less conflicted on the national level. As noted on Washington communications consultant Sarah Massey’s progressive blog, Own the Press, even the liberal Economic Policy Institute (EPI) was pushing for less of an increase during this summer’s failed attempt to raise the federal minimum wage. EPI sought a more modulated increase from $5.15 to $7.25 by 2009, to be applied equally to all employers. However, an Op-Ed piece appearing on the EPI website actually supports Chicago’s proposed $10 wage, essentially saying that Walmart is big enough to afford the higher pay scale, while sidestepping entirely the proposal’s discriminatory impact.

I wouldn’t be caught dead in a Walmart ( I emerged from the one visit I ever made to the downmarket, messy-shelved retailer in far-west suburban Wisconsin feeling positively dirty), but I don’t see how much economic harm their presence could do in a hypothetical depressed far South Side Chicago community where many other local businesses pulled out years ago. I also can’t imagine not being able to hop on a downtown ‘L’ and head to my beloved South Loop Target on Roosevelt and Clark for…well for just about anything really. Whether for employment, convenience, or price, in the right locations both of these retailers have their place in Hogtown. I wouldn’t want them everywhere in town, but I definitely recognize the benefit of their presence.

What I don’t understand is why the Chicago city council has set its sights squarely and singly on big-box retailers, instead of on all city retailers. Just because the city council thinks Target and Walmart can better afford to pay a higher wage than can a smaller local retailer doesn’t make the proposed legislation any less unfair. If Chicago Aldermen think a wage below $10 is unlivable for a Target employee, why do they think it’s acceptable for a mom-and-pop corner grocer or local fast-food outlet to pay their employees — the overwhelming majority of Chicago retail employees — $5.15 an hour? And since the $10 living wage won’t be seen by the majority of Chicago retail workers, how exactly does it fix the problem?

Moreover, why would Target or Walmart want to retain a presence in a city whose legislative body sought to levy upon them what would essentially be an extra tax to do business in the city that local retailers were exempted from? That sounds a lot like a protected market to me, and the point of a protected market is to keep outside business interests out. If I were on the city council, I wouldn’t be taking the threatened pullout of the big-boxes too lightly. A July 18 editorial in the Chicago Tribune cautioned the city council in a similar vein.

Though if anything will give pause to the city council, it will more likely be the decision handed down today in Maryland. That state sought to require Walmart to provide higher benefits for Maryland workers than the retailer provided to workers in other states. U.S. District Judge J. Frederick Motz put the reins to that state’s proposal, saying that the law would have improperly required the retailer to track employee benefits in differing manners based on location, a requirement contravened by the federal Employee Retirement Income Security Act. The echo of the Maryland judgment on the Chicago proposal remains to be seen.

No matter what, it’s undisputable that retail workers in Chicago and across the country deserve better wages, but they also deserve a political strategy that will actually achieve those wages instead of potentially losing jobs. Flipping the economic bird to a few specific retailers who’ve done nothing wrong other than to follow the pack is not that strategy. Setting rules for the entire pack to follow would be a better approach, and certainly a more just one.

Besides, if Target goes, where in the world will downtown Chicago residents shop for cheap computer desks, floor lamps, and balcony furniture? I know, at that shiny new downtown Ikea courted in a similarly backhanded fashion by the City of Chicago that recently opened.

In suburban Bolingbrook.

Categories: Chicago Big-Box Wage Debate Labor Politics

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Michael Thaddeus Doyle

I'm a NYC-native, Latino, Jew-by-choice, hardcore WDW fan in Chicago with an Irish last name. I believe in social justice, big cities, and public transit. I do nonprofit development. I've written this blog since 2005. Believe in the world you want to live in.

My Bio | My Conversion | My Family Reunion

Contact: mikedoyleblogger@gmail.com

17 replies

  1. Chicago Big-Box Wage Debate: Follow-up

    (Photo: I said ALWAYS low prices, dammit! Credit: AlterNet.) Several good points were made in the comments thread of Thursday’s post regarding Chicago’s proposed $10 big-box retailer wage that deserve a fuller airing. The Chicago city council will dec…

  2. Lamenting the New Chicago Big Box Ordinance

    Well, the Chicago city council exercised its will yesterday, passing the controversial big-box $10 wage bill by a veto-proof 35 to 14 margin. Previous discussion here on Chicago Carless examined both sides of the issue. Now, as the dust settles…

  3. Lamenting the New Chicago Big Box Ordinance

    Well, the Chicago city council exercised its will yesterday, passing the controversial big-box $10 wage bill by a veto-proof 35 to 14 margin. Previous discussion here on Chicago Carless examined both sides of the issue. Now, as the dust settles…

  4. Chicago Big-Box Wage Debate: Follow-up

    (Photo: I said ALWAYS low prices, dammit! Credit: AlterNet.) Several good points were made in the comments thread of Thursday’s post regarding Chicago’s proposed $10 big-box retailer wage that deserve a fuller airing. The Chicago city council will dec…

  5. Sarah, would part of the solution be to get our respective municipalities to stop subsidizing the big boxes? To tell them “come if you want, and we want you to come, but pay your own way to get here”? What is it that drives the subsidies, fear of economic failure…fear that Walmart will say “no” if they don’t get infrastructure handed to them on a plate?

    Sad to say, there’s a lot of thinking like that in Chicago. Look at our TIF districts that suck hundreds of millions of dollars away from education and libraries and health facilities to grease the way for companies to stay in Chicago. TO my mind that’s based on a midcentury fear that companies wouldn’t stay regardless, but times have changed for Chicago. To my mind, like in NYC, at this point in the economic life of Chicago, the companies would want to be here regardless of obscene tax breaks.

    Not to muddy the waters, but a lot of this is mindset. Perhaps our local city councils in America are not used to saying no? If nothing else, I think Chicago Ald. Fredrenna Lyle has it right whn she says that the untapped markets are here in underserved urban American communities. I think in Illinois, at least, this debate should be in Springfield.

    Of course, confidence in the state legislature in Springfield is a whole other minefield of embarrassment and broken promises. Too bad you’re not pulling for the progressives here in the heartland. Come on, think of the rent you’d save?

  6. I don’t need to demonize Wal-Mart or Target – they’ve done it for themselves and there are hundreds of communities across the country, and the globe, that are struggling against the negative impact. See: Maryland, Los Angeles, San Francisco, Santa Cruz, Queens, NY, and on and on.

    On the local issue: It’s the local governments and city councils that offer subsidies to retailers and development projects. Wal-Mart and Home Depot demand tax breaks and get them. If city council gives tax breaks, it can also use its powers to support sustainable development.

    On Indiana: in the first few days in office in 2005, the Republican Governor Mitch Daniels (http://newstandardnews.net/content/index.cfm/items/1409) rescinded the union contracts with all state employees, effectively ending union rights for thousands of workers who choose collective bargaining. Is the corporation’s right to profit more important that the people’s right to chose a union or earn decent wages?

    On the national fight (per Mikes’ note): Right, terrible time to fight for workers at the national level. Let’s not forget, though, all the national breaks Wal-Mart and Home Depot and Borders get in terms of international trade agreements, like NAFTA, like CAFTA, like China, Oman. These are national tax breaks for mega-corporations that move investment out of the U.S. We’re experiencing the worst national trade deficit in U.S. history right now. (http://www.cbsnews.com/stories/2006/07/12/ap/business/mainD8IQKJAG0.shtml) The movement to curtail the voracious Wal-Mart appetite is nation-wide, city by city, community by community, led by groups like Jobs with Justice. (http://www.jwj.org). In MD, CA, MA, this year and last, we passed state bills for large employers to contribute to health care for their workers. So, there are huge fixes in the mix.

    Gov Mitch Daniels, the leadership in Washington, CEOs of Wal-Mart, Target, Home Depot and Borders are turning back the clock on wages and workplace standards at home and abroad. We deserve better.

  7. I applaud Mike’s article and his pragmatism when it comes to this issue.

    I understand the psychology behind Jacob and Sarah’s demonizing of Wal-Mart and Target. I definetely don’t share it. Whether or not these retailers provide a ‘living wage’ or not shouldn’t be part of the issue. These big box retailers are in business to make money. The more laws/taxes/restrictions the city and for that matter the state put on them the lower their profitabilty. At some point it is no longer profitable to run a local store.

    This completely removes the human factor from the equation, but it is a sad fact of life that people have to understand. The best example of this is the recent announcement that Honda will be building a new assembly plant in Greensburg, Indiana. They chose this location because of the cost of labor, taxes, land, etc. The more the state or city legislate, the less likely companies want to do business in an area.

    Regarding the business plan of a Target or Wal-Mart, you can argue about whether it’s wrong/immoral. The fact is, once it becomes unprofitable to operate a store/business in an area, that business will just leave. And that is why Indiana is landing new manufacturing jobs (Honda) and Illinois is losing (Maytag).

  8. Jake, I don’t think the South Side pastors are being shortsighted. Who else is offering to come into their communities? And why should they or their constituents be expected to be okay with not having jobs in order help fix a national employment problem? That’s not a price I’m willing to ask my unemployed fellow Chicagoans to pay, I think things are difficult enough for them and their communities right now. Some retail corridors have come back since the burnings of the late 60s and the following decades of disinvestment (here and across the country). But many others have not. The city council pushing away Walmart while waiting for a magic redevelopment bullet to find it’s target would seem shortsighted to me.

    I totally agree with you: it is fully within the bounds of legislators to regulate big-box retailers. But as I’ve repeated, local laws in local jurisdictions simply make matters worse — locally — while not fixing the problem globally. We need national, or at least statewide, movement on this issue. City-by-city strategies just push the sales tax receipts and jobs that big-box retailers generate into other, more welcoming municipalities. As long as there are cities that wouldn’t require Target or Walmart to pay a living wage, why would they stay in a city that tried to force them to do so?

    Just because national movement on this issue is impossible right now doesn’t mean that local movement is a wise alternative.

  9. But, Sarah, if Walmart is having such a negative national effect in terms of wages — both for itself and for its suppliers — then shouldn’t the solution to the problem be a national one? I can’t see how a narrowcasted, local law, or a series of them, can really fix things. Now, I know (oh, I know) that any sort of a solution on the national level right now would have less than no legs, but incremental solutions, though easier to push through, are not always the best ones. Yes, Walmart has cruddy economic impacts. But pushing them out of Chicago, or D.C., won’t make them play fair everywhere else.

  10. Mikey:
    Good fodder, good stuff. Let me explain more about the negative externalities of Wal Mart a little more specifically, since you can’t link to the Harper’s article in any way I can figure out. (here’s a blog about it at salon.com http://www.salon.com/tech/htww/2006/06/23/walmart_antitrust/ Again, it’s not about driving out local businesses or anything at the local level. That’s competition and Wal Mart has developed a productive technology that allows it to compete better than others. No problem there.. until it begins to use its market power to affect the entire supply chain of the consumer products market. One firm having that power creates ripple affects throughout the economy that distort normal supply/demand interactions.
    You’re right, Mike that the South Side has issues. What I meant by cynical was not that you rightly say that vast areas of the South Side are retail deserts, but how alderman and pastors are looking out for their short term interests as opposed to the long term health of their communities. Walk the streets of Woodlawn, Greater Grand Crossing, Englewood, South Chicago or Lawndale or listen to Rhymesfest or other conscious rappers and you’ll hear similar stories to Nickled and Dimed and the research on the low wage labor market. It sucks. In the short term, Wal Mart jobs will get alderman re-elected and fill the coffers of church offerings. (I’d be interested in knowing how many of the pastors quoted are pastors of absentee parishioner churches (a fairly common phenomenon on the South Side) and how many are pastors of churches made up predominantly of neighborhood dwellers). The long term solution for revitalizing South Side neighborhoods has to revolve around creating jobs and at the same time revitalizing commercial corridors. Stable, middle class neighborhoods (Chatham, Avalon Park, to some extent South Shore, Chicago Lawn, Auburn Gresham, Roseland) on the South Side all have one thing in common: their commercial districts, while struggling, are viable. Setting up Wal Mart is not a good long term solution because it competes with the second leg of a viable, stable community, the strong retail district.
    So I’m not opposed per say to a Wal-Mart on the South Side or West Side. What I wanted to present was the case for why it is not out of bounds public policy to regulate Wal-Mart and other big box realtors. You’ve got to come up with a better argument then well, people need jobs and we’ve got to fill up the vacant lots with something.
    Shouldn’t we be working?

  11. Jacob made the case most eloquently! Another negative aspect of the Wal-Mart trend is what Big Boxes do to suppliers. They force suppliers to lower, lower price at all costs, forcing manufactures to flee the country to find workers without wage and hour protection – in CHINA. In IL, we’ve seen Maytag close as a result of this. I’m sure there are a ton of examples. So, IL workers lose their jobs at decent wage rates (union), because Wal-Mart pushed the manufacturer to lower prices, then Wal-Mart land grabs with incentives from local govt. promising low prices and “choice” to the community (see Jacob’s post) and puts everyone to work at low wages. This literally happened in Ohio with Huffy Bikes. Remember Huffy? That’s what the folks in Chicago and D.C. are fighting. Thanks for this important topic, Mike!

  12. Jake, do you have a link to the Harper’s article to share? I think that would inform the debate.

    I just don’t buy “negative externalities” being inserted into the Chicago market by the big boxes. We’re not a tiny rural town with a wavering street of fiscally shaky businesses cowering from the big bad retail juggernauts. The big boxes don’t (yet) account for the major retailers or the major retail employers in Chicago. They are not condition creators here, they’re just doing what everyone else already does, and in this sense I think it’s unfair to single them out.

    In terms of “starting here and now”, I’m all for that. But the point I made in the post is that we ought not start with a measure designed to drive away jobs. Nothing stops Walmart or Target from setting up shop across the city line and even, as Walmart recently threatened, to run shuttle buses into the ‘burbs for the benefit of city shoppers. That would do little good for the city’s tax coffers, not to mention for the ease of city residents actually getting to the stores to work or shop.

    In terms of being cynical about the South Side, I know you live (on the edge of) Hyde Park and need to represent. I know there are many wonderful things about the South Side. But it’s not the wonderful parts where Target and Walmart want to locate. It’s the underserved, economically fallow parts. I think your opinon here is a little too P.C. for the good of your argument. The facts on the ground remain that huge swaths of the South Side need retailers and employers in a bad way — no matter how uncomfortable it makes liberals feel to actually admit that things could possibly, indeed, be that bad. Listen to the local preachers, I would bet they know the scene a little better.

  13. Ok, here’s what I should have said when we talked about this in person. But I’m a wus

    The idea that singling out big box retailers is somehow discriminatory or unique in the history of urban politics is inaccurate. Municipalities, states, and other levels of governments routinely provide special tax incentives for individual firms (Boeing in Chicago is one example) or for specific industries in order to attract or keep big ticket firms to a locality or to create what economists call agglomeration economies. The flip side, regulating specific firms or industry sub sectors at the local level is also not unprecedented. Blue laws and smoking bans with exceptions are two examples.
    2. All levels of government have a compelling interest to regulate firms that are causing what economists call “negative externalities.” Negative externalities are social and economic costs not reflected in the price of the goods and services offered. Wal-Mart, as a recent article in Harpers brilliantly elucidates, is an example of a monopsony, a consumer version of a monopoly. Neoliberal economics has poisoned the conversation around what is a monopoly, leading us all to believe that if you can shop someplace else or buy someone else’s product it’s not a monopoly. Wal-Mart, by virtue of its extreme market power is able to dictate the behavior of suppliers, even large ones like Proctor and Gamble. The question then is how much negative externalities Wal-Mart injects into the market. The article in Harpers indicates there a quite a few. In other words, Wal-Mart especially, does not occupy a “niche” in the retail market. It is a monopsony that is skewing the natural functioning of many productive sectors of the consumer product market.
    3. To push this off on the Alberto Gonzales Justice Department, the State of Illinois or the Republican Congress or some other non-municipal level is disingenuous. There is no momentum there for any anti-trust or pro-worker legislation. As Rage against the Machine says “it has to start somewhere, it has to start now. What better place than here, what better time than now?”
    4. The question of employment versus living wage employment and your somewhat cynical playing of the race/South Side card are complex and most troubling for advocates of the measure. South Side neighborhoods are notoriously underserved by retail business, not necessarily because of economic reality. The buying power of South Side residents is comparable to other regions of the city, but is just ignored. It is great that Wal-Mart wishes to work outside of outmoded racist thinking, but there are a number of cautions. As Nickled and Dimed and the work of Susan Lambert and her associates at the School of Social Service Administration show, it’s not just the wages that are problematic at Target and Wal-Mart. The whole nature of low-wage labor is high turnover, poor working condition jobs that do not allow people to get ahead. It is well documented that it is in low wage labor employers’ interest to maintain a pool of workers who cycle in and out of their jobs and do not “move up the ladder.” Hence the appeal of Chinese manufacturers. I’m glad Devyn was able to move from minimum wage work to success. His story is an exception, I’m afraid. Current economic patterns have turned low wage workers like those quoted in your story into beggars who just want any job. The long boom in the American economy was facilitated by jobs that not only paid decent wages, but allowed for longer term employment, on the job training that led to possibilities of advancement and an unwritten contract between workers and management. Short term bottom line thinking and the ascendancy of the middle class consumer as the most important actor in the economy have destroyed this. Can’t we do better than a “let them eat the cake of crappy Wal-Mart jobs?”
    I think so.

  14. One remarkable difference between Big Box stores and small, local retailers is how they do/do not invest their income and profit in local communities. Studies show that Big Boxes, like Wal-Mart, Target, Home Depot Borders and Ikea, do not support the local community. They drive down wages and send profits back to H.Q. While locally owned businesses tend to reinvest in communities. Small, local scale is much more sustainable. These are the shops that stick around when a natural disaster hits or downturn occurs. Big Boxes always pull out, leaving vast wasteland of malls. In D.C., we’re pushing a Big Box Retail Standards bill for $11.25/hour, plus $3/hour benefits and preference to local employees. Check out Good Jobs First at http://www.goodjobsfirst.org

  15. It’s not always possible to lift yourself out of a minimum-wage job. You I know personally, and I know that you did it years ago. The problem is, many years later and the wage is still the same, but life costs a lot more. It’s harder now.

    While $10 is probably too much too quickly for employers to stomach, I do think a minimum-wage raise is in order. Just one that won’t make jobs disappear, or move to less accessible suburban locations. It would be easier to advance the agenda if every employer had to do it — and if if the law were statewide, and not simply a municipal policy.

  16. I completely agree. They will just build stores across the street from city boundaries (Like the Target on Howard) and still take all the money from the citizens of Chicago, while supporting local suburban economies. No, that is not worth paying such a small group $10.00 per hour.

    People can lift themselves out of low wage jobs with perserverance and hard work, I did.

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