‘Wal-Mart Laws’ Harm Black Communities

Published October 1, 2006

The “big-box ordinance” passed on July 26 by the Chicago City Council would require national retail chains such as Wal-Mart and Target to pay their Chicago employees at least $9.25 an hour plus $1.50 in benefits, to increase to $10.00 an hour and $3.00 in benefits by the year 2010. The law would apply only to retail stores with at least 90,000 indoor square feet, owned by national companies with annual revenues of $1 billion or more.

If Chicago Mayor Richard M. Daley had not vetoed this ordinance, it’s likely the law would have ended up in court, where it would probably have been rejected, as a similar law in Maryland was recently.

Advocates of the ordinance, both black and white, claim it will help poor black Americans. But support for this ordinance did not begin in the black community, nor would its effect be to benefit blacks.

This is a scheme started as a labor union initiative being introduced in cities around the country, with backing by ACORN (Association of Community Organizations for Reform Now), a highly partisan advocacy group based in Washington, DC. ACORN runs voter registration drives that benefit Democrats, while claiming it’s a nonpartisan organization. Its aggressive tactics recently prompted the U.S. House of Representatives to take action.

Union Power Scheme

This scheme’s purpose is to increase labor union membership and dues collection and put union leaders in a stronger position in dealing with the management of Wal-Mart and other nonunion companies.

When two groups collaborate–in this case, unions and the black community–where the stakes are not equal, one usually reaps all the benefits while the other foots the bill. In this case, an underdeveloped black community loses community jobs and better services.

That clearly would have been the case with this ordinance. The law would have raised the minimum wage for large nonunion stores, forcing them to pay as much as or more than their smaller, unionized competitors.

Businesses pay lower wages to people whose lack of skills and experience mean they don’t add a lot of value to the goods and services the businesses sell. Many such people are young, attended low-quality public schools and may have dropped out of them, or are ex-offenders trying to get back into the workforce. A disproportionate number of these people, regrettably, are black.

So when a city government steps in and makes it illegal for some businesses to pay less than $10.00 an hour and an additional $3.00 an hour in benefits, it effectively makes it illegal for those businesses to hire many black applicants. Crucial entry-level jobs that would enable young blacks and ex-offenders to start climbing the career ladder to better-paying and more fulfilling jobs will be closed to them.

Loss of Stores, Jobs

When the city council passed this ordinance, Wal-Mart indicated it would build outside of Chicago or just across the city line and still serve Chicago citizens. Target announced it might cancel plans to build new stores in the city.

The loss to the black community would have been plain to see if the mayor had not used his veto pen for the first time in 17 years. This ordinance was not about helping the black community, but all about benefitting union leaders in Chicago, who are trying to protect their current members at the expense of the black community.

Lee Walker ([email protected]) is president of The New Coalition for Economic and Social Change (http://www.newcoalition.org) and a senior fellow of The Heartland Institute. An earlier version of this article originally appeared in the Chicago Defender.