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Chicago is Raising Minimum Wage to $13
By JLP | July 28, 2006
CHICAGO – Ignoring Mayor Richard Daley and risking the chance to attract giant retailers, the City Council on Wednesday approved an ordinance that makes Chicago the nation’s biggest city to require big-box stores to pay their workers more.
According to this article, Chicago is going to force big-box stores to pay their employees $10 per hour plus $3 per hour in fringe benefits by July 1st, 2010. This is just pure idiocy on Chicago’s part. I bet Chicago’s citizens will be really happy when Wal-Mart, Target, and Home Depot shut their stores and leave town. Also, big, vacant stores are an eye-sore. Just think what something like this could do to the economy of Chicago. Remember, there are usually restaurants and other retailers adjacent to these big-box retailers. These resaurants and smaller retailers rely on the traffic that the big-box retailers bring to the location. If there’s no big-box retailer, there’s no traffic.
I’m sorry but this is just stupidity on the part of Chicago’s City Council.
For more on minimum wages and why they don’t work, check out this post from last year by TheHappyCapitalist.
UPDATE: Read the follow-up to this post.
Topics: Business News | 21 Comments »
July 28th, 2006 at 1:20 pm
Chicago’s citizens will be fine without the big box stores. There are more than enough retailers to cater to Chiagoans’ needs at all socio-economic levels. This isn’t a rural area. If big box stores want to make inroads into cities, they’ll have to pay. It would be more of a problem if the big box stores already had a strong presence and their leaving town would leave customers without options, but that’s not the case.
July 28th, 2006 at 1:25 pm
All fine and good, but why not let the market decide wages?
July 28th, 2006 at 1:28 pm
I think it is great that Chicago is requiring a decent wage. It probably still isn’t a living wage, but hopefully it will reduce the burden Big Box workers put on social services (paid for by tax payers, of course).
If the citizens of Chicago really value their Home Depot, then they won’t mind paying a slight markup so the employees get decent wages.
July 28th, 2006 at 1:38 pm
Not a living wage? I guess you have no idea what the necessities of life are. We all live our lives differently, but I know that you could survive on $7/hr. We all could, it’s just a matter of would we want to. That is up to everyone to decide. I think that the market should set wages; after all it sets prices for things that we buy with our wages. If the minimum wage were necessary to keep people from starving then why would businesses be willing to pay higher than minimum wage? I’ll tell you why, because the market dictates it. Let the market set the wage. Raising the minimum wage will just raise prices, which in turn will make you go to your boss and say I need a raise, which will raise prices, which will make it so that minimum wage is effectively what it was before it was raised.
THINGS DON’T HAPPEN IN A BUBBLE. What goes up must come down. The economy is not a static thing that we can apply arbitrary set points to. It is dynamic, living and breathing, and it is the input from all of us that makes it work.
July 28th, 2006 at 2:03 pm
Agree with JLP on this one…either require the new minimum wage for all businesses or don’t.
July 28th, 2006 at 2:09 pm
savvysaver, but what is a “decent” living wage? $10, four years from now? Why not $25/hour? Isn’t that more “decent?” Actually, I want a raise as well, maybe I need the govt. to step in and help me out…
July 28th, 2006 at 2:38 pm
I live in NYC, a city ruled by artificially set union wages and local govt regulation. And you know what it adds up to: An extraordinarily high cost of living for everyone!
July 28th, 2006 at 2:41 pm
Yes and no. As a Chicago resident, I can tell you that Chicago really doesn’t need any more traffic. The small shops that are sprouting up are doing well and fine with the massive traffic that angers me daily.
I do think that Chicago does need a place where low-wage workers can get inexpensive goods conveniently. There is not a single Wal-Mart in the city limits; the Wal-Marts now are just outside the city, a huge pain for those without a car.
While yes, the market should decide on wages, the market doesn’t have much in the way of morality. It’s easy to say you can live on $7 an hour when you’re making a lot of money.
All this will do is make Wal-Mart get GOOD profits, not MASSIVE profits. They’ll still build in Chicago.
There are positives and negatives to the increases. I’m sure that the big box stores are going to get their big box lawyers all over this.
July 28th, 2006 at 10:25 pm
Gee, here in Michigan the Detroit folks are always complaining that they can’t get big box stores to open in the city. (Stop laughing. It’s true.)
I hope this kind of social tinkering by the do-gooders ends soon. Maybe the courts will step in like they did in Maryland over a similar issue.
What’s next? Is the government going to demand or guarantee that we all get some “minimum” level of “decent” housing, food, and transportation too? Why stop there? How about “decent” TV and radio programs, exercise facilities, friends, spouses, and even children?
Oh yeah, they tried all that once in a place called the USSR. I think George Orwell wrote a book about that place.
But let’s not get lost in the big picture of surrendering our freedoms to insatiable government power and the knuckleheads who love wield it. We just can’t stand by and let that big, bad wolf called free enterprise gobble us all up! Comrads, let us show the world that socialism can actually work — right here in Amerika.
July 29th, 2006 at 9:28 am
Ya’ll have missed JLP’s point! It’s not about box stores, it’s about a free market economy, you know, that little economic theory that makes America great. Minimum wage does not work, not in Chicago, not in box stores, nowhere.
July 29th, 2006 at 12:09 pm
I’m a Chicago resident, and am still holding out hope that the mayor will veto the measure.
We (Americans) live in a market-driven economy – there’s absolutely no reason for the government (local, state or fed) to meddle with non-regulated businesses. All the more important here with our local economy lagging the US averages. Have our aldermen forgotten that recently nearly 17000 people applied for 300 positions at a new suburban IKEA?
I’m not sure where folks get the idea that minimum wage is intended to be a living wage (please clue me in if I’m the only one confused). If workers rely on the minimum wage to get them through life, what’s their incentive to improve their job skills and get higher-paying jobs? Seems like welfare in sheep’s clothing.
Aside from the economics of the situation, I personally wouldn’t be upset to see the stores leave. The “inner city” big-box stores, even in tony neighborhoods, are dirty, excessively crowded at all hours, and always out of stock. I’ve long ago learned to save my big-box shopping for my occasional trips to the ‘burbs.
July 29th, 2006 at 1:50 pm
Love how everyone who isn’t working min wage jobs complain about people on min. wage getting a pay increase. Hows a Mother with a couple kids going to have the time and money to “improve their job skills”?
July 29th, 2006 at 1:53 pm
Brad,
None of us is suggesting that people should stay at minimum wage. A person who works hard, is responsible, and takes initiative can get ahead fairly easy at Target or Wal-Mart. The fact of the matter is: most people want to do the easy jobs but get paid top dollar for doing it.
July 29th, 2006 at 3:03 pm
THC and Cindy are right. It’s about freedom.
Brad, I understand your concern but you can’t use a worst case scenario to justify turning sound economic principles upside down and usurping the freedoms of employers to engage in legitimate commerce with the public and their employees. When you rob them of their freedoms you are also robbing all of us ultimately.
Studies show that when the minimum wage is increased, employers who rely on low skill labor either cut back on hours or simply eliminate jobs. Why? Because the market won’t bear them passing the increased costs along and they are unwilling to take the financial hit.
Who’s going to explain to the single mom with a couple of kids why her hours have been reduced or her job eliminated? I’m sure she’ll appreciate her new “living wage” that sounds so compassionate in theory but is cruel in reality.
July 29th, 2006 at 4:39 pm
JLP: Pardon me for plugging my blog here, but I wrote a post last year about the minimum wage in San Francisco and the consequences of it. If anyone would care to read it, you’ll find it here: http://happycapitalist.blogspot.com/2005/06/economics-of-wages.html
July 31st, 2006 at 2:25 pm
The ordiance has some constitutionality questions, so it may be DOA anyway. (Why limit to minimum wage increase only to “big box” retailers? Why not make all employers pay the same minimum wage? Limiting it to “big box” retailers is where the constitutionality problem comes in.)
It the ordiance isn’t found unconstitutional, then it will eventually work to the detriment of Chicago and its citizens and to the advantage of neighboring communities. The “big box” retailers will build in neighboring communities and will reap the tax revenues. Chicago shoppers will either drive to those locations to shop, or shop at higher priced stores closer to home. In either case, they will pay more.
August 1st, 2006 at 6:14 am
The Wall Street Journal ran a great op-ed piece on this very issue on July 31, page A10. They made a powerful case showing how this “hyper minimum wage” on big box retailers will hurt the working poor — first, in terms of the jobs that are lost and second, in terms of eliminating low price retailers where the poor can shop. It’s a double whammy.
They wrote well:
“What we have here is what liberals used to call the ‘red-lining’ of poor neighborhoods, though this time by the left itself. Liberal advocates have long complained that banks, grocery stores and retailers charge higher prices or refuse to do business in inner cities. But now the very superstores that offer lower prices are being treated as unwelcome.”
Exactly!
August 5th, 2006 at 11:02 am
Maybe Target should of just stayed in MINNESOTA!!! We love them here and why should low income irreponsible lazy people be given more money???? these low lifes are just happy living off the government.. that makes them happy watching tv, sitting on their butts and getting that check.. OH did i mention having more babies??? why waste your time giving them more money ..please… and then most of them come to our state (MN) seeking more help.. GIVE ME A BREAK!!! stay home keep the wage the same and Target you do not need chicago.. i mean your head quarters are in the best place they can be MINNESOTA!!!!
August 5th, 2006 at 8:33 pm
The state in which I live, Washington, has a min. wage of 7.63/hr, but in the larger cities, especially the Seattle/Tacoma area and its outlying suburbs, you’d be hard pressed to find anyone paying less than 10/hr. When big business and especially trans-national corporations collude to raise prices in lieu of loss of obscene profit margins they themselves are creating the cyclical process of wage hiking. Wake up to the realization that we live in a society controled by robber barons and TNCs who in turn own almost all of your news outlets and national politicians. How much in campaign contributions does congress and the house recieve every campaign year? Of course congress won’t raise the min. wage of the employees of these contributors so it falls on the shoulders of more local politicians to rectify such unjust matters. What’s really amazing in this whole debacle is the fact that congress has voted for itself over 30,000 in pay raises since 1997. Just food for thought.
September 13th, 2006 at 6:42 pm
Why don’t they just raise minimum wage all across the board? Why does it only apply to big box workers?
March 5th, 2010 at 5:38 pm
If wages had kept pace with rising productivity since 1968, the average hourly wage would have been $24.56 in 2000, rather than $13.74. The minimum wage would be $13.80–not $5.15. Certainly, employers can pay a minimum wage equivalent to what their counterparts paid more than three decades ago!