Off Target In Chicago

INVESTOR'S BUSINESS DAILY
Posted 8/7/2006

Over-Regulation: Just as we predicted, Chicago's big-box socialism has produced its first casualty. As Target cancels two inner-city projects, big-box opponents can't understand that zero is not a living wage either.

We have long argued that if you want more employees, you need more employers, and to do that you need to create a business climate where employers can come in and make a profit. Unlike government, they can't print money or raise taxes. If they fail to manage the bottom line, they go out of business.

Wages and benefits are part of that bottom line. To keep it in balance, employers tend to pay employees what their labor is worth, not what their lifestyle requires.

Failing to understand that, the Chicago City Council voted by a veto-proof 35-14 margin to force stores 90,000 square feet or larger to rewrite their budgets, barely after a federal judge ruled that Maryland state lawmakers could not decide what big-box retailers like Wal-Mart should pay in wages and benefits.

In the face of this creeping socialism, Target announced last week it is pulling out of a 32-acre shopping mall on Chicago's depressed South Side and will likely cut and run from a 160,000-square-foot superstore under way on the city's north side as well.

Any business has only so much it can budget for salaries and benefits. Force it to pay more for each worker, and it will hire fewer workers or not locate in your community at all, costing jobs and tax revenues. Or it will charge its customers higher prices.

When Wal-Mart was told recently it wasn't welcome to build a store on the South Side, it located the store two blocks away in Evergreen Park, taking its jobs, employees and tax revenues with it. Twenty-five thousand people applied for just 350 jobs.

The knock on Wal-Mart is that it doesn't pay what liberals call a "living wage," a concept that says you should be paid not what your labor is worth in the free market but according to your lifestyle and the size of your family. Still, when Wal-Mart sought to build a store in Los Angeles, some 10,000 locals applied to work there.

It's ironic that Wal-Mart critics, who contend the company's employees live paycheck to paycheck, forget that many of its customers also live paycheck to paycheck, and seek quality merchandise at decent prices. Which is why 100 million people shop there every week. How can they oppose "low" wages for Wal-Mart employees while in effect supporting higher prices for Wal-Mart customers?

The average Wal-Mart store saves families up to $2,300 a year by slashing prices — and forcing competitors to do the same. That's quite a bit if you're trying to feed and clothe a family of four on, say, $40,000 a year.

Wal-Mart gives people what they want at prices they can afford. It believes a fair wage is one agreed on between employee and employer. The firm is efficient, innovative, successful and profitable. It's the poster child for roll-up-your-sleeves capitalism. Its success story mirrors America's. Liberals knock it for all those reasons.

Government should try to imitate Wal-Mart's methods and results — not oppose them.