Posted on 07/18/2006 4:26:26 PM PDT by Graybeard58
Connecticut politicians should monitor closely a controversy brewing 900 miles to the west. Wal-Mart and Target say they will scrap plans to build two dozen stores and create at least 10,000 jobs in Chicago over the next five years if the City Council fulfills its pledge to mandate wage and benefit floors for big-box retailers.
Target says it will pull out of the market entirely. The Home Depot and Circuit City are among other companies mulling whether to expand in Chicago in the face of the council's tyranny. Meanwhile, Wal-Mart is so adamant about not being dictated to that it would be willing to finance a system of shuttle buses to transport Chicago residents to its suburban stores. The companies are willing to do all this knowing it will cost them billions in potential revenues.
As a sop to Big Labor, councilmen on July 26 are expected to approve a resolution establishing a "living wage" of $10 per hour -- 55 percent above the Illinois minimum -- plus $3 per hour in medical benefits for employees of retail companies with $1 billion or more in sales. In other words, Wal-Mart, Target, The Home Depot, etc.
The proposal is blatantly discriminatory and would have a domino effect on the city's economy. Yet councilmen are resolute. "It's an idle threat," one councilman said.
This is not whether big-box retailers can afford to pay their people more. Rather, it's the market value of the work the employees do. Most retail jobs are not meant to be careers. They give unskilled, untrained workers a start on the ladder of success. Dictating pay and benefits beyond the value of the work being done destroys market dynamics, not to mention vital entry-level jobs.
The controversy is relevant to Connecticut because one of the main platform planks of the two Democratic gubernatorial candidates is mandating that Wal-Mart pay its employees more and provide them with health benefits equivalent to those of public employees; if it doesn't, as New Haven Mayor John DeStefano is wont to say, the state will provide the coverage "and send Wal-Mart the bill."
If Connecticut goes there, don't be surprised if the bill comes back as undeliverable because Wal-Mart has left the state and taken its jobs with it.
Soon all business will be evil, even the local mom and pop store that's been around for the past 40 years.
Could they spin off some kind of franchise operation, keeping the same supply chain but separated from the parent company for sales figures?
That would make somebody a fine tag line.
The council probably prefers them to leave so that smaller local businesses can take their places. That's probably all it's about.
I was already out of highschool in 58? Can I call you a whippersnapper?
You're about 5 years my senior, so go ahead.
They'd call it Amway.
FYI:
I was just in New Orleans.
McDonalds there is paying $10 per hour, plus a $5000 HIRING BONUS (no typo) for starting workers.
The problem is that the workers are in the wrong places.
I was in New Orleans once, that's enough for me. Nice enough city but I wouldn't want to live there.
Quick math. If a company has over $1 billion in sales, and they have a profit of, lets say 10%, that would be $100 million. If that company has 1000 employees making $3.50 an hour more than they would normally, plus another $3.00 per our for insurance, thats $6.50 an hour per person, or $6,500 per hour for the entire Chicago market. Multiply that by 2000 hours worked in the year, and that comes out to $13 million a year in added labor costs.
These numbers would be based on about 4 stores hiring 1000 people.
Things to look at.
1: The $1 billion dollar sales figure Chicago is using, is a national sales number. So the $100 million dollar profit number I used, is also a national number.
2: What are the sales numbers for the area stores? If the hypothetical 4 stores each had $20 million in sales, with a 10% profit margin, based on normal labor costs, that would be a profit of $8 million. Subtract $13 million from $8 million, and you have A LOSS OF $5 MILLION a year for doing business in Chicago.
3: How much does it cost to even open 1 store in the Chicago area? Lets say the land costs $1 million dollars. (Probably quite low, for the size of the lot needed, in the type of area required for a store of this type). Add to that another $1 million to build the store. And now add what, another $6 million dollars in merchandise, just to open the doors?
4: Theft. What about theft? I've heard on the news here, of how the major food stores have closed stores in certain neighborhoods, because of theft problems.
5: Back to the national sales number vs. local sales. Imagine if all cities or states required this of Walmart, then Walmart would have no profit anywhere, to syphon off to pay Chicago employees. In other words, Walmart and its investors (big AND small investors) would be bankrupt. And $1.6 million people would be out of jobs.
Stats:
According to an independently-certified study, Wal-Mart saves the average American household more than $2,300 per year.
At a recent store opening in Evergreen Park, Illinois, more than 25,000 people applied for 325 available jobs!
11,000 apply for 400 openings at retailer's new Oakland store
Wal-Mart employs 1.8 million associates worldwide, including 1.3 million in the United States.
Wal-Mart donated more than $245 million to charitable organizations last year, the majority of which was given at the local level.
Mark for later
Silly Chicago folks... You want your town to look like Detriot in ten years flat? You want your city limits to define urban blight, like 8-mile Road? You must know that places like Circuit City are naturally suburban by nature anyway; If you pass such a law, all the welfare (excuse me, SSI folks these days) will have to travel to the suburbs to buy their plasma TVs!
Seriously, I'm not as rabidly anti-minimum wage as some conservatives. I don't believe, for instance, as was argued in Massachusetts a few years ago, that people would travel out of state to pay 79 cents for a burger instead of 89 cents. But $13 an hour wages and benefits? You ain't talking flipping burgers and fries! You're talking serious money. I do think people will travel out of the city to pay $79 for a CD player instead of $89.
In the city of Chicago, not only do you have the regular state sales tax on things, there is also a county tax, and Chicago tax. Total is near 10%
I live in the NW suburbs, where our sales tax is 8.5%. If I drive 8 miles north, I'm in Lake county, where sales tax is 6%.
Imagine buying something like a plasma tv. If it costs $2000 tax in Chicago would be near $200, meanwhile 30 miles away it would be $120. Reason enough for the drive.
Of course, buy it on the internet, and you might not have any taxes at all.
YET.
Who? The cities of Chicago and New Haven? Ok. I'll go along with that.
There is not one sane person in the U.S. who does not understand that some jobs should not be worth as much as other jobs. Unfortunately (like in my old home town of La Crosse, Wisconsin which recently passed such a stupid law) the insane get elected to the office of mayor and other city offices. Who can be dumb enough to believe that someone working part-time should get a "living wage"? Only economics-challenged libs are stupid enough to enact these crazy laws.
It's only around $5 in South Florida, but I think they can shoot you if you actually light one.
Any way plenty of illegals happy to work for next to nothing.
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