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Chicago Orders Big Bix Retailers to Raise Wages

This is an interesting debate. Chicago has a large population of low-end wage earners, many of whom are also Big Box shoppers. With taxes already high, Chicago is using its leverage to squeeze higher wages (and therefore higher tax revenue) out of these retailers. Also, it would appear to raise the standard of living a little bit for these wage earners. Of course, it might also tend to raise the price of merchandise slightly to cover the higher cost of doing business in Chicago, and that would defeat the purpose of helping the poor (though not the purpose of increasing tax revenue, which Chicago undoubtedly uses, wisely or not, to help the poor in other ways). No one wants to bankrupt the chains, but they are in no danger of that now. Chicago is perhaps being quite savvy.

On the other hand, do we really want this kind of micro-management regulating the economy? Does the city council have any real sense of how the market operates? The market has set the wage for this kind of low education, entry level work. If you make Target and Home Depot pay an extra $3/hr, isn’t it likely that they will seek more for their money in terms of education and experience? To instantly give a cashier at Target a $2/hr raise is to place their income above that of their managers. To retain managers, Target would have to raise all salaries by a similar proportion. That could make the cost of doing business in Chicago prohibitive. This policy may simply mean shifting the least qualified around. The Big Bog stores may simply cherry pick the best applicants from the region, and that process might tend to exclude those with the poorest educations, language skills, etc. from the national chains. What happens if the economy tanks? Will the city council be quick to amend the law? Or will they leave it in place and drive the store out of town?

Perhaps the city council ought to work on policies that will create more higher wage jobs while ensuring that their public school system was turning out graduates who were qualified for those jobs.

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This page contains a single entry from the blog posted on July 27, 2006 9:35 AM.

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