As I’ve written before, I really hate minimum wage laws. What I hate more, however, is when government not only gets it completely wrong, but does so in trite, populist terms; exactly what Chicago’s City Council has done this week, passing on Wednesday an ordinance that enforces a “living wage” for the city’s employees.
The measure aimed to “get the largest companies in America to pay decent wages”, according to Alderman Toni Preckwinkle. Minimum wage in Illinois is already $6.50, substantially more than the federally-mandated rate of $5.15; under these measures, however, retailers would be forced to pay their employees at least $10 an hour plus $3 in fringe benefits, a staggering increase over the federal minimum wage.
This would mean that huge employers such as Wal-Mart — who already voluntarily pay their employees more than minimum wage, usually more than $7 an hour and averaging $11 — could afford to employ fewer workers, and would in turn discourage them from investing in the city.
Earlier this year, Wal-Mart were apparently desperate to invest within Chicago, applying to open a large store in the city’s South Side; after the city rejected these plans, Wal-Mart opened a store in a nearby suburb, driving jobs and revenue to the area at the expense of the city itself. The move left many city officials angry at the way the city was turning away what they saw as much-needed investment.
Alderman Howard Brookins Jr., for example, was furious: “It makes you go ballistic. When you look at the revenue stream that we’re losing and the property taxes and sales taxes there and you look at the opportunity, we’re not going to stop these people from going to shop at Wal-Mart.”
Many observers and officials fear that Wednesday’s wage increase will have a similar effect, further hampering investment in the city. Mayor Richard M. Daley voiced concerns that the living wage would drive jobs and much-needed investment out of the city, leading to hope that he might veto the measure; however, the resolution passed 35-14, and only 34 votes are required to override a Mayoral veto, so there is little hope of overturning the measure even if Daley exercises his power of veto.
Companies affected by the ordinance are expected to challenge the measure in court, although it is unclear whether they will succeed. If this measure stands, it will surely be another nail in the coffin of investment in Chicago, and that is most definitely the last thing the city needs. As Jerry Roper, president of the Chicagoland Chamber of Commerce, sums up perfectly:
“The aldermen who voted in support of this . . . helped put the sign up really big that development in Chicago is dead.”
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Michael Hampton
Jul 28, 2006
The south side of Chicago is a predominantly black, and quite poor, section of town. A Wal-Mart would have benefited that community greatly and improved their standard of living.
A minimum wage which applies only to certain companies is likely to fall in court due to not applying to everyone equally. Maryland tried to do something like this earlier this year, forcing Wal-Mart to pay 8% of its revenues to employee health care, (when it already spent 7.5%) and it got shot down by the courts for that reason.
Troy Banther
Jul 28, 2006
The only way to reduce the amount of wally worlds `is` to pay people more so they `can` afford to shop elsewhere.
It’s not funny to watch people suffer or to watch politicians, most of whom, have never a day of economic hardship a day in their lives.
Rob Miller
Jul 28, 2006
Except Walmart’s ability to offer low prices to consumers is much more of an economic aid than welfare or minimum wages are. Walmart’s low prices boost welfare by up to $50 billion a year, something that is going to go away if you force them to pay their workers a ridiculous amount as this legislation attempts to.
Dana
Jul 28, 2006
I think minimum wage increases affect those who are earning it the most dramatically. When they go up, retail prices at places paying minimum wage are most directly affected. People shopping at Calvin Klein are not so directly affected.
And while “living wage” sounds good, what does it really mean? I paid my way through college, living in a cheap little apartment on a minimum wage job. Most people working with me were teenagers or stay at home moms looking for a little extra income. I was one of two actually living off the check, but I didn’t starve.
Kevin Fields
Jul 31, 2006
I’m all for “living wage” increases when they make sense. In Chicago’s case, it makes NO sense at all. Employees are already paid above minimum wage by state law, this is just pure greed.
Wal-Mart won’t make-do with using fewer employees. Wal-Mart and other retail stores need all the employees they can get. Instead they will move their operations to where they can afford the employees.