If the Feds won't raise the minimum wage, the city of Chicago will do something about it

1. Chicago Orders ‘Big Box’ Stores to Raise Wage – by ERIK ECKHOLM

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.

A gallery packed with supporters of the bill broke into cheers as the measure passed, by a vote of 35 to 14, after four hours of intense speeches and debate.

“This is a great day for the working men and women of Chicago,” said Alderman Joseph A. Moore, the measure’s chief sponsor. Mr. Moore said he had had inquiries about the ordinance from officials in several other cities.

An Illinois retailers’ group said it would challenge the measure in court, and Mayor Richard M. Daley , who opposed the measure, has not said whether he will veto it.

Wal-Mart’s response to the Council’s action was swift and blunt.

“It’s sad — this puts politics ahead of working men and women,” John Simley, a Wal-Mart spokesman, said in a telephone interview. “It means that Chicago is closed to business.”

Wal-Mart will still open its nearly completed branch on Chicago’s West Side in September — the company’s first store in the city — but any future plans “will likely change,” Mr. Simley said.

In arguing that Wal-Mart and other companies can easily afford to meet the new standards, proponents of the measure pointed to Costco, which says it already pays at least $10 an hour plus benefits to starting workers around the country.

In existing stores in the Chicago area, Wal-Mart pays entry-level wages of about $7.25 an hour but its average pay is $11 an hour, a company spokesman told The Chicago Tribune. The company has not revealed details of its benefits.

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.

“We’re very confident that retailers want and need to be in Chicago, and the question for the city is what kinds of jobs they will bring,” said Annette Bernhardt of the Brennan Center for Justice at the New York University Law School, which helped draft the Chicago bill and has done economic studies of its likely impact.

The Illinois Retail Merchants Association condemned the measure as likely to hamper job creation and a form of illegal discrimination, and said it would challenge it in court.

Mayor Daley said earlier that the ordinance could impede growth and tax revenues. He did not say yesterday whether he would veto it, but he would have to persuade two aldermen to switch their votes to avoid an override.

Some politicians and residents in neighborhoods where new Wal-Mart, Target or Home Depot stores are planned also spoke out against the measure, fearing a loss of jobs, and leaders of black churches dueled over the benefits and risks.

The bill was the object of a fierce lobbying battle over recent months, with unions and community groups flooding aldermen with petitions, post cards and telephone calls and retailers doing the same.

In a meeting with several black aldermen, Target officials warned that passage of the measure could cause the company to cancel or delay three stores planned for the city’s South Side, the aldermen told reporters.

Yet the proposal had strong appeal, especially in the city’s lower-income black and Hispanic wards.

“The working people were overwhelmingly in favor of this law, and this was conveyed to the aldermen,” said Madeline Talbott, chief organizer for Acorn, a community group that campaigned for the bill.

Alderman George Cardenas, who voted for the ordinance, said: “We had to make a stand. This is good for people and good for the country.”

The bill comes at a time when many large retailers are increasing their presence in large cities.

The drive to raise state and city minimum wages has grown out of frustration with Congress, which has left the federal minimum wage at $5.15 an hour since 1997. At least 22 states have enacted somewhat higher minimum wage laws.

San Francisco; Albuquerque; Santa Fe, N.M.; and Washington have across-the-board minimum wage ordinances for all but the smallest businesses. Those in San Francisco and Santa Fe have set levels near that in the Chicago bill without driving out retailers, Ms. Bernhardt said.

Ms. Bernhardt said large retailers had saturated suburban markets and had powerful incentives to move into urban areas.

Under the bill, minimum wages in the covered stores would rise to $9.25 in 2007 and to $10 in 2010, and be indexed to inflation after that. Benefits would have to total $1.50 an hour in 2007 and $3 in 2010.

Smaller retailers would remain subject to the state minimum wage of $6.50 an hour.

A legal brief prepared recently for the Illinois Retail Merchants Association said the bill would violate equal protection guarantees in the Constitution, but a legal analysis by the Brennan Center at New York University said there was ample precedent for selective imposition of minimum wages by size of business.

The bill would affect 35 stores already in Chicago, including branches of Kmart, Target, Toys “R” Us and stores like Sears and Lowes. Support for the idea started taking off two years ago when Wal-Mart said it would open its first store in the city in 2006, in the poor Austin ward on the West Side. Madison Capital Times (Wisconsin)


2. Wal-Mart Casts Its Shadow On Banks -- by Dave Zweifel

I remember attending a "celebration" ceremony in 1987 where it was announced Wal-Mart was going to open its first store in Madison and bring with it its "famous" Sam's Club.

Area government officials, a few representatives of the business community and several civic leaders were there to cheer the announcement that the country's fastest-growing retailer (it was then No. 3 behind Sears and Kmart) was coming to town.

Up until then, Sam Walton's Arkansas-based corporation had concentrated on smaller cities, where its huge buying power could easily undercut the local mom and pop operations on Main Street and often quickly put them out of business. It brought jobs to many of the cities, but it also eliminated more than a few of them.

As a member of the press contingent that attended that 1987 event, I remember an area community banker getting up in front of the crowd and effusively welcoming the Wal-Mart officials to Madison. He gushed at how happy the Madison area was to get a Wal-Mart and Sam's and hoped that the retailer would be building more in the area, which, of course, it was soon to do.

It goes without saying that the Wal-marting of America isn't quite as popular today as it was back then. Even the Chicago City Council, concerned about the corporation's reputation for exploiting workers, passed an ordinance last week to require Wal-Mart and other "big box" stores to pay at least $10 an hour by the year 2010 as a condition of opening stores there.

The council pooh-poohed the usual threats that the big boxes would leave Chicago for the suburbs, reasoning that if there's money to be made in the city and, of course, there is the workers ought to get a piece of it.

And I couldn't help but wonder if that banker who was so thrilled with Wal-Mart coming to our city back then would be so welcoming today.

You see, Wal-Mart isn't content to dominate just the retailing world. It's now trying to snatch some of the business that has traditionally belonged to the banks.

Banking representatives have been beating down the doors in Congress to get it to block Wal-Mart's bid to open a bank. The giant corporation has asked the Federal Deposit Insurance Corp. to give it a charter for a bank in Utah, a move that the bankers see as just the first. Wal-Mart insists that the bank will be used only to process debit and credit card transactions at its stores.

But bankers, particularly smaller community banks, are worried sick that Wal-Mart will start with the limited-service banks and eventually turn them into full-service financial institutions. Suddenly, the same folks who have fought any governmental "interference" with Wal-Mart's employment practices want the government to help them control what they now agree is a beast.

Wal-Mart could do to those community banks what it did to the locally owned hardware store.

Suddenly, it's not so fair.

(Dave Zweifel is editor of The Capital Times. E-mail to: dzweifel@madison.com)