Skip to comments.Target threatens to leave city (Chicago) if 'big-box' wage rule passes
Posted on 07/14/2006 4:02:49 AM PDT by Chi-townChief
Target is putting plans to build three South Side stores "on hold" -- and making veiled threats to close existing Chicago stores -- if the City Council mandates wage and benefit standards for "big-box" retailers, African-American aldermen warned Thursday.
The saber-rattling is intensifying as the clock winds down toward a July 26 showdown vote on plans to make Chicago the nation's first major city to establish a "living wage" for stores with at least 90,000 square feet of space operated by retailers with $1 billion in sales.
Minneapolis-based Target becomes the second retailing giant to threaten to pull out of the lucrative Chicago market in a last-ditch effort to stop an ordinance championed by organized labor that breezed through the City Council's Finance Committee 15-6 and has attracted support from 33 aldermen.
The current federal minimum wage is $5.15 an hour. Illinois' minimum wage is $6.50
Most Chicago area Wal-Mart employees average $10.99 an hour, with just a few making the starting wage of $7.25 an hour, Wal-Mart spokesman John Bisio recently said.
As of 2004, Target in many cities had a starting salary of about $7 an hour, published reports said. A few Target workers outside Illinois said they recently started with salaries as low as $6.25 an hour, according to postings on the Target Union! (www.targetunion.org) Web site for store employees.
Wal-Mart has threatened to cancel plans to build as many as 20 Chicago stores over the next five years if retailers are required to pay employees at least $10 an hour and $3 in benefits by July 1, 2010.
'It would be devastation for us'
Mayor Daley is taking the threat seriously. He has challenged aldermen who oppose Wal-Mart's 20-store expansion to describe how they would replace the 8,000 lost jobs.
Target failed to return calls on the admonition communicated to aldermen of the 5th, 9th and 34th wards in recent days. Target real estate executive Chris Case was scheduled to meet with African-American aldermen Thursday, but the meeting was canceled because of scheduling conflicts.
Ald. Carrie Austin (34th) said a Target pullout would be devastating to the 32-acre shopping mall at 119th and Marshfield that developers had hoped to build, with help from a $23 million city subsidy. Home Depot would likely follow Target out the door. As many as 1,000 jobs would be lost, Austin said.
"It would be devastation for us. Our largest employer in the 34th Ward is the Police Department. The second-largest for us would be Jewel. We have no other resources," Austin said.
Referring to the anti-Wal-Mart movement that gave birth to the big-box ordinance, Austin said, "If you want to bully up on Wal-Mart, you've got to bring in the other ones, and damned if you do on them. If they suffer from it, too bad. If you want to control Wal-Mart, you should go about that a different way."
Accused of 'bullying tactics'
Ald. Leslie Hairston (5th) said she has a letter of intent from Target to build a new store at Marquette and Stony Island in her ward. But the developer has told her the store is "on hold" and that Target may close existing Chicago stores if the big-box ordinance goes through.
Hairston called it little more than a scare tactic. And even if the threat turns out to be real, she's standing firm in support of organized labor.
"Wal-Mart and Target could pay their people a living wage. Then we wouldn't have this problem, and people could actually live on the money they made," Hairston said.
Ald. Joe Moore (49th), chief sponsor of the big-box ordinance, accused Target and Wal-Mart of using "bullying tactics" to stop a train that has already left the station.
"It's an idle threat. ... They're clearly trying to ... intimidate members of the City Council. I am very hopeful that members will hold firm. ... The votes are still there," Moore said. He predicted 33 votes for the ordinance, "maybe more," even though Daley has been buttonholing aldermen to try to stop it.
Ald. Howard Brookins (21st) is still searching for a big-box retailer to replace the Wal-Mart his colleagues nixed at 83rd and Stewart.
Brookins said Wal-Mart executives have told him they may take the lead of the riverboat casinos that ring Chicago and run free shuttle buses to their suburban stores if the big-box ordinance passes.
"I don't know if it was in jest, but they did say it. ... That is an option that they could employ. They could set up locations to have pickup and dropoff. I don't think that is that farfetched," Brookins said.
What blows is that Flowers is my state rep.
They shop there, but that isn't their average customer. The average Target customer's household income I have read makes $6k/year than Walmart's. Both were a LOT lower than the grocery chain I work for (less than half).
By losing the jobs and tax revenue these stores will/do generate this idea hurts your bottom line far worse than dropping the whole idea and embracing the new stores with their jobs and tax revenue.
Not to beat this thing to death, but everything the government does is like this. Increasing the minimum wage is probably not as significant as requiring health insurance. Places like Chicago or Maryland can get away with doing it, so long as the costs can be passed on, which usually means either that on balance, competing jurisdictions are no more business friendly than they are, or that the affected industries don't really have meaningful competition in neighboring jurisdictions in any event, possibly because of the convenience factor.
That's just one more reason why a federalist system works better than a unified government. If they could impose their policies on the entire nation, then there would be no competition to bring them back to earth. On the other hand, if every jurisdiction agrees that the benefits of a policy outweigh its costs, then there is no problem with businesses fleeing the jurisdiction to avoid the policy because all jurisdictions will have the same policy.
Sorry, I misunderstood your comment. I thought you were saying that you weren't concerned because you fell under the size limit.
I'd have to disagree. Big Government and Big Business are fundementally different. Big Business may look impressive, but no matter how much money it has, the worst it can ever do is decline to deal with me, or deal with me only under conditions I don't like (i.e. charge prices I don't like). At any point, I am free to walk away from Big Business.
Government is different. I HAVE to pay them taxes. I HAVE to obey their edicts, whether or not I want to deal with them. And if I fall out of the favor of the state, they can lock me up for a long time, or even kill me.
It's true that Big Business can use the State to advance its agenda in illegitimate ways- for example, by pressuring a government to take possession of private property so the business can develop it. But the balance right now is so in favor of the government that most business lobbying activity is simply defensive in nature. A business that exerts influence on a politician to keep from jacking up the minimum wage yet again is not colluding against anyone's rights, they are merely trying to preserve their own right to contract.
That is exactly what is occurring with the anti-smoking campaigns....towns and counties with smoking bans are losing business to surrounding areas without them and so now they are demanding the entire state have them in order to not have the competition.
The government should have no place in making business decisions whether it be mandatory smoking bans or mandatory health insurance. Let the market decide with consumers and employees directing the decisions with their feet and wallets.
Well, I'm less concerned than they are. But in 10 years from now I could definately see this being lowered to 20k sq ft retail building. Our average wages right now in that area are close to $15/hr anyway but we have quite a few bag boys, cashiers, and service counter people that are around $7-8/hr part time. These are mainly high school & college kids. Throw on 2-3/raise + $3 in benefits and we'd consider leaving the Chicago area. Our stores are technically outside of Chicago for the time being (Geneva & Kildeer) but we have at this time plans to open 2 stores inside Chicago in the next couple of years.
"Brookins said Wal-Mart officials have told him that residents of his ward spent $17 million at their store and affiliated Sam's stores outside the city in 2005. And company executives have talked about using shuttle buses to help Chicagoans get to suburban locations in a strategy similar to the one used by casinos."
That's a very interesting tidbit.
I guess paying for a couple of shuttle buses is a lot cheaper than raising thousands of workers' pay by $2.75 per hour.
I don't have a source for what he said, but where I live, the only Walmarts and Targets are out in the suburbs where it is tough for inner-city people to reach them. I don't know if there are ANY of them in the city yet. The city folks shop at Salvation Army. So do the suburban folks, too. Yes, most of the Walmart/Target shoppers appear to have some bucks. Lots of expensive cars.
That's a potential for a lot of tax revenue the city is throwing away with this hairbrained scheme.
I hope Target folds their Chicago tents. Local/state governments dictating saleries to private industry. Remember, Chicago is a BIG union city. KMA, Chi-town.
If Chicago passes this asinine law, I can only hope that they pass a hundred others like it. That way they will drive all business out of Chicago and working, tax paying Chicago residents too, they won't have problems finding employment elsewhere but the libs will have to flee to Detroit, thereby making Illinois better for everyone and lowering the average IQ of Detroiters even further.
I know my theory is full of holes, I'm just frustrated at decades of living in central Illinois and having the will of Chicago dems imposed on me.
Before anyone tells me to simply move. See how easy that is after investing a life time in family, property, jobs etc. in a place.
I see my attorney and my physician and their families both shop at Wal Mart here.
There is a Fred Meyers next door where they could shop (and spend more) just as easily.
Pennys etc. is just a hop away also.
Sorry but you are the one who is wrong.
The following is copied and pasted from Target's website and I have first hand knowledge of my local store giving to the Salvation Army on more that one occasion."
Salvation Army Target has a long-standing solicitation policy at our stores nationwide.
In order to provide a distraction-free shopping environment for our guests, we do not allow solicitation or petitioning at our stores regardless of the cause being represented.
In January 2004 we informed The Salvation Army of our decision to consistently apply our solicitation policy. This policy does not diminish our support of The Salvation Army. In fact, Target and The Salvation Army recently announced a new partnership for an online Wish List designed to assist families in need. From November 25 through January 25, visitors to Target.com/salvation army can view and purchase clothing, household items, personal products, and Gift Cards to be donated to families across the country. Guests will also be able to link directly to The Salvation Army website to make a monetary contribution.
In addition, any non-profit organization, including The Salvation Army, can apply for a grant through its local Target store.
Store grants form the basis of Target's extensive commitment to supporting the communities in which it does business, and many local Salvation Army corps across the country benefit from Target store grants.
Here are a few examples of grants provided to local Salvation Army chapters in 2005: Monroe, LA - Educational Services Organization
Passaic, NJ - Salvation Army Family Enrichment (SAFE)
Dallas, TX - Domestic Violence Prevention Program
Phoenix, AZ - Domestic Violence Shelter
Monterey Bay Peninsula, CA, - Building Confident Families
Target has one of the largest and most respected corporate philanthropy programs in America, donating more than $2 million per week and hundreds of thousands of volunteer hours each year to non-profit organizations across the country.
Forbes magazine recently ranked Target as the "Most Charitable Company in America."
You are right that there are two alternatives to provide for low wage earners. The state can either mandate they be paid a certain wage, or they can be subsidized out of general tax revenue. To put it another way, we can choose to support the poor through higher prices or higher taxes.
Which solution is more just? If our society decides that everyone must have some minimum level of subsistence, that burden should fall on society as equally as possible. It's not fair to say that "big box" shoppers (or more accurately, "big box" customers) should be the only ones to support the poor in the form of higher prices. If society demands that everyone meet a certain standard of living, everyone in that society should play a part. Equitably structured taxes are the only way to accomplish that.
Which solution is more practical? Paying living wages is going to increase unemployment, particularly among those with fewer job skills, like the poor. There is only some small fraction of welfare recipients who could profitably be hired starting at, say, $12.00 an hour. Those who ARE hired are taken off welfare, most likely. But the bulk who are NOT hired have no chance at all but to stay on the dole.
If wages are set by market conditions, a much larger portion of the poor has a chance to get started. The majority of starting wages will be too low to get them off welfare...at first. But over time, some portion of those workers are going to improve their skills, learn more about the job, and will start to see wage increases approaching a living wage. Even those who can't quite rise to that level would have less need for assistance than the unemployed, so money could be saved there as well.
Will the long run results favor the market wage solution for reducing the welfare burden? I'm not sure, because it depends on how many people can work their way up to a living wage vs. how many could be hired starting at a living wage. In any case, I think it's a real possibility.
Supporting the poor through high wage/high price solutions is not the most just method, and it may not be the most efficient.
After I retired from my job in 1999 I got a job at Wal-Mart in store security for 6 months and it finally hit me why I retired in the first place, damn those time clocks!
The job I retired from was union and I was shocked to see how many of my local union leaders shopped at Wal-Mart- usually late at night. Shocked I tell you!