News » July 24, 2006

Bigger Salaries for Big Box Workers?

Will Chicago Pass a Big Box Ordinance to raise worker wages?

By Adam Doster

Construction continues at Chicago's first Wal-Mart store.

Like many people, Pecola Doggett, 56, spent her early working years adjusting to the burgeoning service-sector economy. Whether fielding calls about magazine subscriptions, completing administrative work at local churches or monitoring elections at Chicago City Hall, Doggett earned poverty-level wages and struggled to combat the rising cost of urban living.

That’s why when Costco, the nation’s fifth largest retailer, opened up a store on the city’s North Side, Doggett immediately applied. Unlike most of its competitors, Costco offers its employees a living wage and benefit plan, including full medical coverage. “When Costco came to Chicago, it was a blessing for many, especially those who endure the storm,” says Doggett.

Thousands of Chicago service workers may soon join Doggett in the ranks of the economically secure. As In These Times went to press, the Chicago City Council looked poised to pass an ordinance that would require big box retailers located within city limits to pay their employees a living wage. The legislation requires retail stores larger than 90,000 square feet that are owned by companies who sell $1 billion in merchandise annually to pay their workers a minimum of $9.25 an hour plus $1.50 an hour in benefits beginning July 2007. By 2010, retail giants must offer their employees at least $10 an hour with $3 an hour in benefits, plus annual increases based on adjustments in the cost of living. Thirty-five current stores—including Wal-Mart, Home Depot and Target—would be affected, as well as all future developments.

The two-year campaign, spearheaded by a coalition of labor, community and faith-based organizations known as the Grassroots Collaborative, has widespread approval. Thirty-three of 50 aldermen have expressed support for the measure and Chicagoans have been even more receptive, with one poll showing 84 percent of residents in favor.

Yet inside city council, the ordinance has faced resistance from a select group of city officials, including Mayor Richard M. Daley. They argue that the ordinance will deprive the city of needed jobs and tax revenue by pushing retailers to resource-heavy suburban communities. John Bisio, Wal-Mart’s Midwest director of public affairs, stoked this fear, claiming that Wal-Mart would “put the brakes on” the planned construction of 10 to 20 new stores within the city if the ordinance passes.

It’s not the first time Wal-Mart has issued such an ultimatum. In January, the Maryland General Assembly passed a law requiring large employers to spend at least eight percent of their payroll costs on healthcare. According to Maryland State Delegate Herman Taylor, Wal-Mart immediately threatened to shut down a large distribution center in his district. A month later, however, Wal-Mart’s CEO Lee Scott backed off, saying that “[Wal-Mart] will build more stores and create more jobs [in Maryland].”

The reality is that expansion is the life-blood of retail giants, and populous cities represent an untapped market. “Wal-Mart and other large retailers absolutely need Chicago,” write Annette Bernhardt, a professor at New York University School of Law, and Nik Theodore, a professor at the University of Illinois at Chicago, in a Chicago Tribune Op Ed. “Having built up in rural areas and suburbs to the point of overcapacity and stagnant sales, retailers are now hungrily eyeing cities.”

Supporters believe that the ordinance makes economic sense, not only for big box employees, but for Chicago taxpayers at large. A University of Illinois at Chicago study showed that the ordinance would save Chicago taxpayers $40 million annually because affected employees will become less reliant on public aid.

Given the federal government’s reluctance to raise the minimum wage—a Democratic plan to raise it to $7.25 an hour was defeated in the Senate on June 21—the Grassroots Collaborative thinks that local pressure is the most effective way to bring high-paying jobs to Chicago. Other cities, such as Santa Fe, N.M., and San Francisco, have passed living wage bills with much success. In each location, job growth remained steady, the number of families on temporary assistance declined and price increases were negligible. Yet neither city compares in size or economic complexity to the nation’s third largest city.

A success in Chicago would set a precedent for living wage campaigns nationwide. “Chicago is not an anomaly to think that we can force businesses to pay fair wages to its workers,” says Ken Snyder, the Grassroots Collaborative coordinator. “The sentiment exists in lots of places.”

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• Reader Comments

  This is NOT going to happen.
  The business plan of Big Box stores is based on exploitation of employees — illegal unless caught and the desperate until burned out. (suggested reading:  Nickel and Dimed, by Barbara Ehrenreich)

  “Supporters believe that the ordinance makes economic sense…”
  Surveys in support of a view? Professors writing based on textbook theories? Retail is just beginning to feel the consumer crunch — if anything they will be dumping anyone who has risen above (their) entry level pay scale.

  My son has been working part time for the past three years at a local printer. He has over twenty years experience in the field and earns half of what he did ten years ago.

  His supervisor recently left for another job in a different state. Last week a new employee (earning even less than my son) was asked if he would like to be supervisor of the department. Since it offered no pay increase — only increased responsibility he turned it down. All they see is a vast supply of ever cheaper labor out there.

  If this passes, look for Wal-Mart to locate just over the line in a suburb looking for the jobs and tax revenue. So what if the customer is inconvenienced? Don’t you realize by now the “Service Economy” means — less service, self-service and lousy service?

  My local phone company’s Customer Service is in India!  Where is yours? I pump my own gas, check my oil wash my windshield. My US Post Office takes five days for a first class letter and the drop boxes are overflowing when I go there. As a kid we got a morning and afternoon mail delivery.My congressman has no idea or concern for job quality or pay (except his own).

  Product quality has followed service and job quality in a nose dive.  I have replaced an electrical switch three times in less than a year (Hecho En Mexico). The Philip heads drill drive screws I used last week became dimples which meant using pliers to remove and try again. this was a step up from the ones I took back — those heads popped off on the first five. (Made in Asia). All this is touted as savings to the consumer by way of big box stores by my NAFTA-loving representatives.

  We are in a national reverse auction mode due to corporate greed using globalization to enrich the already too rich who don’t give a damn about the country.

  Posted by whattheheck on Jul 24, 2006 at 3:15 PM

  I work for a local Orchard Supply Hardware, which I think would qualify for a big box store. The pay is meager and the treatment of employees by managment is worse. The posters in the breakroom are all about how to reduce “shrink”; basically lost profits through stolen merchandise and various other avenues. The management/ Sears claim is that it is important to reduce “shrink” because it will go back to the employees, increasing benefits and pay. This however is an outlandish lie. The numbers for my store in lost profits were cut in half (hundreds of thousdands of dollars) from 2004 to 2005 due to employee response. And did we get raises NO. And then on top of this some of our benefits have been cut back. However we were given a celebratory barb b que. Mmmm cheap hamburgers and hotdogs, and grocery brand soda (not even coke or pepsi). Totally ridiculous.

  Posted by MediaFriend on Jul 24, 2006 at 7:45 PM

  Hey…I think they need bigger salaries simply because they’re paying more for the gallon of gas it costs to drive across the Big Box parking lots…..

  Posted by minerva on Aug 5, 2006 at 5:48 PM

  The low pay is no sweat for Mayor Daley.  He gets the increased tax base from the Big Box retailer whether or not the employees get a raise in pay. So if he thinks a proposed minimum floor for wages and benefits would drive the Big Box retailer away he’s against the pay hike. It’s the Federal and State governments, not the city, that get to subsidize low Big Box wages and benefits through public aid, food stamps, medicare, and section eight housing for single parents with dependants. 

  I resent the fact that these multi-billion dollar industries that are impoverishing the world with their low road business model, that is now a template model for the US economy the way Fordism and the Automobile used to be from 1945 to the late1970s, are asked to put a little back into the communities that they get rich in and they refuse!  Big Box businesses like Walmart, which has averaged close to a quarter trillion dollars in revenues every year for the past six years as well as rates of profit in excess of 10%, can’t afford to bring the working families that consistently toil long hours for them just a little further up in hourly earnings.  Even a wage of $9.25/hour for a family of four in Chicago after taxes is still below the poverty line yet, Walmart claims they will go elsewhere if this is demanded of them!  Here is a business that has impoverished the new working poor with low wages, put mom and pop stores out of business, shut down highly profitable US manufacturers like Rubbermaid at a great cost to good jobs and incomes over pennies on the dollar in supplier competition, and caused one of the worst balance of trade deficits in US history and when asked to put some extra money into the hands of their workers who also buy from their stores they militantly refuse! Decades ago Henry Ford realized this was bad business and instituted the $5.00/day wage increase. Walmart has no such inclination mostly because globalization and nation-building are two different things! 

  Perhaps it is time for a real boycott against the big box retailer.  Then they will realize that in order to make money they have to pay something back to the same communities that support them with their labor and their dollars! It’s all about respect. It’s also about solidarity amoung the growing number of working poor which is the only way to fight the incredible power of these big box bullies who are greedy and ready to exploit high unemployment rates in US cities in order to keep wages and benefits down for those working hard for them.

  Posted by cabdriverinchicago on Aug 6, 2006 at 6:39 AM

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