Chicago City Council to Low-wage Workers and Poor People: Eat Dirt!
The Chicago City Council has proved beyond doubt its aggressive hostility to the welfare of low-wage workers and low-income consumers by its approval of an ordinance that would forbid Chicagoans from legally entering into agreements to work for less than $10 an hour and $3 in benefits—even if they want to—with retailers with $1 billion in annual sales and stores of at least 90,000 square feet.
By prohibiting job-seekers from accepting terms of employment to the mutual benefit of aspiring workers and potential employers, the City Council has effectively requested that major employers like Wal-Mart and Target open fewer new stores in Chicago, and to make available fewer (and possibly no) new jobs. Additionally, the Council has asked Chicago’s low-income consumers, who would benefit most from more discount retail outlets, to forgo significant increases in their quality of life.
As NYU economist Jason Furman wrote in Slate by way of crushing Barbara Ehrenreich in a debate about the effect of Wal-Mart on America’s working class:
A range of studies has found that Wal-Mart’s prices are 8 percent to 39 percent below the prices of its competitors. The single most careful economic study, co-authored by the well-respected MIT economist Jerry Hausman, found that grocery sales by Wal-Mart and other big-box stores made consumers better off to the tune of 25 percent of food consumption. That doesn’t mean much for those of us in the top fifth of the income distribution—we spend only about 3.5 percent of our income on food at home and, at least in my case, most of that shopping is done at high-priced supermarkets like Whole Foods. But that’s a huge savings for households in the bottom quintile, which, on average, spend 26 percent of their income on food. In fact, it is equivalent to a 6.5 percent boost in household income—unless the family lives in New York City or one of the other places that have successfully kept Wal-Mart and its ilk away.
Why does the Chicago City Council insist on harming workers by denying them their moral right to enter into work agreements on terms they find acceptable? Why does the Chicago City Council want to keep things from getting better for its city’s poor?
[Cross-posted from Cato@Liberty]
July 28th, 2006 09:43
I can’t say you’re wrong. Walmart will have less new jobs, due to this minimum wage law. However, I think it is worth noting that it is difficult to live on less than $10 an hour in Chicago.
Moreover, I don’t know that workers find a -$10 wage acceptable as much as they feel compelled by need to accept it.
July 28th, 2006 21:34
In response to person, I will point out that if the cost of living in Chicago is high, and the wages are not sufficient to keep labor in the area, then this will have the effect of encouraging people to leave Chicago, at least in marginal cases. This would reduce labor supply and possibly raise wages for those remaining.
The high minimum wage in the city may have the unfortunate effect of encouraging people to move there believing they will find good paying jobs and simply end up unemployed. Just a thought.
July 30th, 2006 21:37
A few more reasons why this analysis is shallow and overlooks important stuff:
1) How does Wal-Mart to get prices that low? It tries to buy as much as possible from the same provider. Then, when it has monopolized its production and the provider has lost most of his clients to fulfill Wal-Mart’s demand, Wal-Mart it forces the provider to lower its price until the provider can barely survive.
2) I don’t know about Wal-Mart’s locations in Chicago, but in Montreal, it’s always far away from older neighborhoods, where the poor populations go. So, who goes to Wal-Mart? Well, people with cars. That seems to exclude people who have trouble feeding their families. It sure is the case where I live.
3) In Montreal, there’s a place where a lot of poor people go shopping: St-Hubert street. Most people go there on foot because it’s located in a poor neighborhood, but it also attracts middle-class shoppers who park in nearby streets, as it is features very good fashion stores. Prices are really low, probably close to wal-mart-low. How is it possible? Cheap labor. Immigrants who don’t know french and have trouble finding jobs, children when the business is a family business, merchants who litterally live in their commerce and/or make miserable profits to make sure their commerce keeps working, etc. These poor merchants pay the price when middle-class people stop going to their stores to shop in Wal-Mart. And Wal-Mart is well known to hit hard on the competition.
July 31st, 2006 15:06
Chad,
I agree that wages below the costs of living would likely encourage people to leave Chicago. But I don’t know if that is a good thing or bad thing. First many of people that might be encouraged to leave have family in Chicago. For poor people, extended families have economic as well as sentimental importance. For example, a women may depend on her mother for free childcare. Second, poor people often lack their own transportation, as Louis notes. Some poor people may depend on public transportation. Rural areas do not usually have such dependable and affordable public transportation. Finally, areas outside of Chicago may not have even less employment opportunities.
July 31st, 2006 16:36
More than ten years ago, I worked at a branch office in Iowa for a company headquartered in Chicago. The starting pay was $7 an hour for phone reps in Iowa, but the exact same job for the exact same company in the Chicago office paid $12 an hour because they couldn’t get people to work for less than that due to the high cost of living. So I guess my question is- how many jobs is this really going to impact if the market wage was that much higher ten years ago? Is it largely a moot point? Does anyone have data on how many jobs it will impact?
August 2nd, 2006 17:31
Data? Data? Will doesn’t need any stinkin’ data. He’s got dogma and he’s got a healthy dose of snide.