Thursday, July 27, 2006

Unions Win One Against Wal-Mart

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The so-called "Big Box Ordinance" has passed in Chicago, which forces stores such as Wal-Mart, Home Depot and Lowes to increase their minimum wage to $10 per hour:

After months of fevered lobbying and bitter debate, the Chicago City Council passed a groundbreaking ordinance yesterday requiring “big box” stores, like Wal-Mart and Home Depot, to pay a minimum wage of $10 an hour by 2010, along with at least $3 an hour worth of benefits.

The ordinance, imposing the requirement on stores that occupy more than 90,000 square feet and are part of companies grossing more than $1 billion annually, would be the first in the country to single out large retailers for wage rules.

And there you have it. Take from the rich...blah, blah, blah.

To make this a political issue for short-term gain is despicable. If I were any of these stores I'd close up shop and move outside the city limits.


With this ordinance, Chicago has opened a contentious front in the growing national movement, led by labor and poverty groups, to raise the incomes of bottom-rung workers through local minimum wage and “living wage” legislation. Some economists say such measures will stifle development and deprive consumers of access to cheap goods, but many poverty experts say that local efforts elsewhere to raise wages have not choked off growth and that the expanding, low-paying retail sector can be safely pressed to raise pay.

Of course these stores will raise their prices as they have a bottom line to maintain. You don't go into business to lose money.

If the stores close up and move out to the 'burbs, it'll cost the low income earners much more than they'd make with a wage increase. Let's say that a worker would make $3 per hour more at a downtown Home Depot. Let's further suppose that the Wal-Mart that used to be located near the HD moved out to a suburb. The employee would spend that extra $3 he earned driving out to the Wal-Mart to buy lower piced goods. In other words it's a wash.

Congratulations Chicago, you have harmed your future economy for nothing more than union appeasement and short-term political gain. I hope Daley has the stones to veto it.

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