News Release: Be Afraid of ‘Big Box’ Laws, Experts Say

Published August 1, 2006

(Chicago, Illinois – July 27, 2006) On July 26, 2006 the Chicago City Council passed an ordinance requiring retailers with 90,000 square feet of space and more than $1 billion in revenue to pay a “living wage” in excess of the state’s current minimum wage. The ordinance appears to violate federal law but nevertheless passed by a veto-proof majority. The comments below from experts affiliated with The Heartland Institute may be quoted or reprinted in full. If you are interested in obtaining further comment or arranging an interview, please call me at 312/377-4000 or 708/289-3136 (cell), or contact me by email at [email protected].

Joseph L. Bast
President, The Heartland Institute

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“The anti-big box law adopted by the City Council eventually will be overturned by the courts, but only after considerable legal expense and many appeals. The damage to Chicago’s and Illinois’ reputations as being pro-consumer and pro-growth will be measurable in lost jobs and income.

“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. It has everything to do with the growing political clout of groups created specifically to advance organized labor’s agenda.

“Mayor Daley told the Chicago Sun-Times that aldermen were afraid someone would run against them in the next election if they didn’t vote yes on the bill. That’s a sad commentary on how aldermen make decisions, but it’s undoubtedly true. Unions and several well-funded left-wing advocacy groups successfully intimidated local elected officials into adopting their extreme agenda.

“And that is the truly frightening message this vote sends.”

Steve Stanek
Managing Editor, Budget & Tax News

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“Be afraid, Chicago. Be very afraid.

“This City Council believes it has the power to force businesses to raise pay and benefits, which means this City Council also believes it has the power to force businesses to lower pay and benefits.

“By voting 35-14 Wednesday in favor of a ‘living wage’ ordinance forcing big-box retailers to pay workers at least $10 an hour and provide $3 an hour in health insurance benefits, the City Council has declared itself competent to manage one of the most vital aspects of any business: employee compensation.

“Read the comments of backers of ‘living wage’ ordinances. They gripe about the gap between rich and poor. They rail against the high pay of corporate executives. We heard Alderman Ed Smith highlight the gap between entry-level wages and executive pay during the debate that preceded the vote. How long will it be before an alderman proposes an upper limit on pay and perks for highly paid positions?

“This is not as laughable as it may sound. President Richard M. Nixon imposed wage and price controls in the 1970s. Those controls helped lead to the double-digit inflation and stagflation of the mid- to late-1970s.

“Are alderman likely to set maximum compensation? Probably not. But a few years ago most people would have laughed at the idea of aldermen forcing restaurants to pull goose liver pate from their menus (which they have done), or at the idea of aldermen considering telling restaurants which oils they may use in their cooking (which they are doing).

“One irony in the city’s minimum wage ordinance is the harm it is likely to inflict on the people it is supposed to help. We need to remember how minimum wage laws came into being. They were promoted by white unionized workers who were upset at losing jobs to lower-paid non-union black workers. Minimum wage laws priced unskilled black workers out of jobs and saved the jobs of white workers. Unions continue to back minimum wage laws because they make non-union entry-level workers less attractive to employers.

“Because of the new Chicago ordinance, jobs that would go to low-skilled workers and ex-offenders trying to re-enter the workforce likely will not be created. Even if the big-box retailers are bluffing when they threaten to open fewer stores in Chicago, the people most likely to win the ‘living wage’ jobs are those with a decent level of skill and experience. And those people would have higher wages and benefits anyway.

“Human resources management, economics, food preparation, medicine. Apparently the City Council believes nothing is beyond its abilities or outside its reach. This should scare everyone.”