Big Box Blues

Posted 7/28/2006 from IBD:

Economics: A week after a judge ruled that Maryland lawmakers can't make company policy for Wal-Mart, the Chicago City Council has decided what the retail giant will pay its employees.

On Wednesday, the city council voted by the veto-proof margin of 35-14 to require large retailers to set their minimum pay at $9.25 an hour in 2007 and raise it to $10 an hour in 2010. Benefit supplements must be increased, as well, from $1.50 an hour in 2007 to $3 an hour in 2010.

The law doesn't single out Wal-Mart — it applies to stores covering 90,000 or more square feet. Target, Home Depot, Lowe's and a list of department stores fall into the "big-box" category. But the intended quarry is Wal-Mart, which was told two years ago by aldermen that it could not build a store on the city's South Side.

Just as Maryland lawmakers lacked the authority, both moral and legal, to force Wal-Mart to pay at least 8% of its payroll costs on employee health care or pay the difference to the state, neither does the Chicago City Council have the authority to tell businesses in the city what they can pay workers.

In addition to overstepping their boundaries as public servants, the Maryland Legislature and the Chicago City Council passed laws that harm local communities.

"I've got these white liberals telling me what's good for my community," Chicago Alderman Isaac Carothers said last week in the Chicago Tribune.

"But this big-box thing will cost black people jobs. If I put out a notice that there were 500 jobs waiting in my ward — what Wal-Mart was offering for each store — you'd see a line of people from my ward all the way to Mississippi. People want jobs. That's it."

All politicians want votes. But is anti-Wal-Mart pandering smart?

Sure, it's trendy, particularly among the media and political elites, to bash Wal-Mart. But forcing big retailers to raise wages will cost jobs. Only so much of their budgets can be paid to workers. Isn't it better to have 50 employees working at $8 an hour ($1.50 more than the Illinois minimum wage, $2.85 above the federal minimum) at a store than 43 working at the mandated $9.25 an hour?

Or how about no jobs at all?

Wal-Mart, with hundreds of jobs and low prices, said it's dropping plans to build as many as 20 Chicago stores in the next five years. Target might stop building at three Chicago locations and shut existing stores in the city. According to the Chicago Sun-Times, the big-box law could cost 8,000 jobs.

We wonder whose interest the aldermen are really looking out for.