Morality vs. Reality

The Chicago City Council wants companies that operate in the Chicago area with more that a billion in sales and stores greater than 90,000 square feet to pay workers in those stores at least $10 an hour and provide $3 in benefits. The Chicago Sun-Times reports:

Target is putting plans to build three South Side stores "on hold" -- and making veiled threats to close existing Chicago stores -- if the City Council mandates wage and benefit standards for "big-box" retailers, African-American aldermen warned Thursday.

The saber-rattling is intensifying as the clock winds down toward a July 26 showdown vote on plans to make Chicago the nation's first major city to establish a "living wage" for stores with at least 90,000 square feet of space operated by retailers with $1 billion in sales.

Minneapolis-based Target becomes the second retailing giant to threaten to pull out of the lucrative Chicago market in a last-ditch effort to stop an ordinance championed by organized labor that breezed through the City Council's Finance Committee 15-6 and has attracted support from 33 aldermen.

Wal-Mart has threatened to cancel plans to build as many as 20 Chicago stores over the next five years if retailers are required to pay employees at least $10 an hour and $3 in benefits by July 1, 2010.

I like the words "threats" and "saber-rattling." They imply the whole thing is a morality play. The greedy retailers want to get away with low wages. The City Council stands up for the workers. They spar. They threaten. They counterpunch.

But that is not what is really happening. If the law passes, the question for Target and Wal-Mart will not be whether to carry out the "threats" they made. They will look and see whether it is still profitable to operate in the Chicago area. If it is not, it will appear as if they are carrying out their threat. If it is still profitable, it will appear as if they "backed down" and the Council called their bluff. But companies try and make profits. That's what they do. If you make it unprofitable for them to operate a store, they will close it down.

The best part of this story comes here:

Ald. Leslie Hairston (5th) said she has a letter of intent from Target to build a new store at Marquette and Stony Island in her ward. But the developer has told her the store is "on hold" and that Target may close existing Chicago stores if the big-box ordinance goes through.

Hairston called it little more than a scare tactic. And even if the threat turns out to be real, she's standing firm in support of organized labor.

"Wal-Mart and Target could pay their people a living wage. Then we wouldn't have this problem, and people could actually live on the money they made," Hairston said.

To Ald. Hairston, it's a question of morality, of blame. Hairston seems oblivious to the possibility that the opening and closing of stores depends on profitability.

Imagine a different world. A world where the City Council was blamed for the failure of Wal-Mart and Target to pay a decent wage. Here's how the story might read:

After years of disastrous decisions in running the public schools, it has become clear that Chicago's City Council has failed the children of the Chicago area. After attending these mediocre schools, many children of the city have inadequate skills to be successful in the labor market.

"Something must be done," declared Ald. Johnson. "If we had decent schools, we wouldn't have this problem and people could live on the money they made."

Johnson has proposed a bill that would require all Chicago City Council members and teachers and administrators in the Chicago school system to pay a special tax. The proceeds of the tax would help provide workers in the member's district with a living wage

	Chicago backs higher minimum wage	BBC News	Thu Jul 27	0
	Chicago Council Passes 'Living Wage' Act	Associated Press	Thu Jul 27	185