On July 26, 2006 the City Council of Chicago approved by a vote of 35 – 14 an ordinance requiring higher wages for workers in “big-box” stores. The ordinance would require stores of at least 90,000 square feet operated by companies with $1billion or more a year in sales to pay employees a minimum of $10 an hour and $3 in fringe benefits by 2010. Mayor Dailey has threatened a veto of the legislation, which must occur no later than September 13, 2006. A veto override will require 34 votes, meaning that Daley needs to change the minds of only two Aldermen to thwart the legislation.
The proposed Chicago “Big Box” legislation is just the latest of several attempts to stop the expansion of Wal-Mart in large cities. In October, 1999 California Legislators tried unsuccessfully to pass a law banning all new construction of big box retailers over 100,000 square feet in the state. A Maryland law that would have required Wal-Mart to spend more on employee health care was overturned by a Federal Judge last July. The court ruled that Wal-Mart was being singled out to pay health care costs that other competitors did not have to pay. It also ruled that it was not proper to make Wal-Mart track and allocate benefits for its Maryland employees in a different way than it does in all other states.
One might expect that legislators from California, the District of Columbia and New Jersey would oppose Wal-Mart, but would hope for more in the fine city of Chicago. Chicago has historically supported businesses and the jobs and prosperity that accompany them. Furthermore, Chicago has a history of adopting essentially a “free market” economic philosophy. New York City has suffered continual and substantial housing shortages due to the passage of rent control legislation. Chicago never instituted rent controls and has predictably avoided housing shortages. This latest move by Chicago aldermen to prevent big box stores in the city goes counter to the economic freedom and lack of political interference that has made Chicago one of the world’s most viable and thriving cities.
Politics is almost always the antithesis of sound economics and Chicago’s “Big Box” legislation is no exception. Big unions such as the United Food and Commercial Workers Union can get out the vote on Election Day and they have threatened Chicago’s Aldermen to punish Wal-Mart, Target, and Lowe’s. They claim that the Big Box stores have low wages, poor benefits and bad working conditions. Of course, if the wages, benefits, and working conditions were that bad, none of the Big Box stores would be able to find employees, but common sense reasoning has been lost in the stench of bad Chicago politics.
Mayor Daley is threatening a veto and has told Chicago’s citizens that, in the absence of the property taxes paid by the big box stores, Chicago’s already strapped homeowners will have to bear the difference in terms of higher property taxes. Daley also needs to emphasize that Chicago’s poor neighborhoods desperately need the additional jobs that can be provided by the Wal-Mart’s, Target’s, and Lowe’s of the world. It should also be noted that residents of Chicago’s poorest neighborhoods are paying much higher prices now than they would be if they had a Wal-Mart in their neighborhood. Studies have shown that a typical poor urban family can save over $2,000 a year by shopping at Wal-Mart. There is no government program that adds even close to that amount of purchasing power to the income of a poor family.
The effect of Chicago’s pending Big Box legislation has already been felt in the windy city. Target is now putting on hold its plan to construct a Super Target on the north side of Chicago. Lowe’s and Wal-Mart have also halted their plans for retail outlets in the city. This economist strongly urges Mayor Daley to veto Chicago’s Big Box legislation on or before September 13th. Moreover, Chicago’s aldermen should re-educate themselves about the practical benefits that the Big Box stores can bring to their city and it’s citizens. It is not too late for them to reinstate the fine city of Chicago as a bastion of free-market activity and progress.