Chicago Mayor May Veto ‘Big Box’ Measure

Published September 1, 2006

Chicago Mayor Richard M. Daley apparently plans to exercise his first veto in 17 years as mayor to overrule a “living wage” mandate passed by the City Council in July.

The ordinance was aimed at Wal-Mart, Target, and other so-called “big-box” retailers. One week after the council’s 35-14 vote, Target officials announced the company would pull out of a 32-acre shopping mall on the city’s South Side and suggested they may also abandon a North Side shopping center. A few days later Lowe’s announced it would hold off building two planned home improvement stores in Chicago. Officials at both store chains said their plans could change again, depending on what ultimately happens with the ordinance.

Wal-Mart officials also said they may reconsider plans to build new stores in Chicago.

Daley Wonders Who’s Next?

Daley, who has never vetoed an ordinance since being elected mayor in 1989, hinted he would veto the big-box measure. Daley has until September 13 to issue a veto.

Thirty-four votes are needed to override a mayoral veto, and the ordinance passed with 35 votes.

“It affects a big box today,” Daley told reporters immediately after the City Council vote. “Does it affect someone with 50,000 square feet tomorrow? Or 25,000? Next week is it going to be something else?”

The ordinance would take effect in 2007. Any retailer with $1 billion in national sales and a store 90,000 square feet or larger would be forced to pay employees wages that will climb to $10 an hour, and another $3 an hour in health benefits, by 2010. Afterwards, minimum pay would climb annually to match cost-of-living increases. The federal minimum wage is $5.15 an hour. Illinois’ state minimum is $6.50 an hour.

Communities Fear Impact

Chicago Sun-Times columnist Mary Mitchell reported the views of many of the city’s out-of-work minority residents in a July 23 column.

“Without a doubt, every worker deserves a living wage,” Mitchell wrote. “But the big-box ordinance is a bomb that is being dropped on a community that can least survive the damage. If Wal-Mart or Target pull out [of Chicago], it’s the people who are already living outside of the American dream who are going to suffer.”

Two days later, in a news conference with Daley, Bishop Arthur Brazier, pastor of the Apostolic Church of God in Chicago, said much the same thing.

“No one is interested in salary or starting point,” said Brazier. “All they want is jobs. When you say a living wage and a person has no wage, it doesn’t strike their heart.”

Minorities Will Suffer: Mayor

“This is going to hurt the minority community,” Daley said at the news conference. “This is basically redlining. This deals with economic development in the African-American community.”

Heartland Institute President Joseph Bast concurred.

“Chicago’s anti-Wal-Mart law has nothing to do with helping the poor or minorities, since it saws off the bottom rungs of the economic ladder that millions of people climb each year on their way to better-paying jobs,” Bast said. “It has everything to do with the growing political clout of groups created specifically to advance organized labor’s agenda.”

Labor Unions Back Law

Labor unions were the main supporters of the ordinance. Chicago Federation of Labor President Dennis Gannon told the Sun-Times he doubts Target would turn its back on $58 million in city subsidies at the North and South Side projects. He said Target’s threats are merely scare tactics.

“It’s a corporate strategy by Target and whoever else to try to hold a gun to people’s heads and say, ‘If you don’t back off, this is what we’re gonna do,'” Gannon told the Sun-Times for an August 4 article. “I still believe they’re going to come. There’s value to this marketplace.”

In a news conference, Daley said unions and allied groups engaged in scare tactics of their own by threatening to run candidates against aldermen who opposed the measure.

Stores, Jobs in Jeopardy

The big-box ordinance would affect not only potential new stores that would have been built in Chicago by Wal-Mart and Target, but existing stores such as Costco, Sears, Home Depot, Kmart, Menards, Value City, and others on the Chicago Gold Coast on North Michigan Avenue.

According to the Chicago Department of Planning and Development, at least 18 retailers operating more than 40 stores in the city would be affected by the ordinance.

“I’m not as disappointed as the thousands of job seekers who would have had an opportunity for employment,” said David Vite, president of the Illinois Retail Merchants Association (IRMA).

Lawsuit Possible

The IRMA board of directors has given Vite the authority to “look into potential legal action” because of the discriminatory stance of the ordinance in applying only to certain large retailers. For example, the revenues of drugstore operator Walgreen’s exceed $1 billion nationally, but the company would not be affected by the ordinance because it does not have any Chicago stores larger than 90,000 square feet.

John W. Skorburg ([email protected]) is visiting lecturer in economics at the University of Illinois at Chicago and associate editor of Budget & Tax News.