July 26, 2006
Chicago’s Big-Box Law
Posted by Lisa Fairfax

Today Chicago’s City Council will vote on a new ordinance aimed at increasing the minimum wage for certain employees. It is called the “big-box” law because it is aimed at big-box retailers—stores with 90,000 square feet or more that are operated by companies with annual sales of at least $1 billion. Such retailers would have to pay their employees at least $10 an hour in wages plus $3 in fringe benefits by July 2010.

Advocates of the law seem to be motivated by similar factors that prompted Maryland’s law related to health care benefits aimed at Wal-Mart. The idea is that big corporations need to be held accountable for paying employees a “living wage,” which includes better wages and benefits. I think the other idea is that corporations must play a bigger role in shouldering the cost of rising health care.

Unlike the Maryland law, which was recently struck down, the Chicago ordinance impacts more than 30 stores including Wal-Mart, but also such stores as Home Depot, Target, Nordstrom and Bloomingdale’s.

Critics of the law claim that the law unfairly targets big businesses and that it will run needed jobs out of the community. In fact, several large companies claim that their expansion plans are on hold pending the outcome of the vote today.

I find the upcoming vote interesting because it pits employees against employees. Indeed, several Chicago newspapers report the tension between those employees who see the law as necessary to ensure better wages for all workers and those employees who fear that the fight will result in loss of jobs and opportunity.

It is also interesting because it reframes the debate regarding Wal-Mart. A friend of mine—in full disclosure a labor and employment lawyer—claims that Wal-Mart is creating a kind of race to the bottom, prompting other retailers to cut benefits and salaries in order to remain competitive, and increasingly causing states to bear the externalities of those actions. If this is true then it seems that legislators do have a role to play in preventing such a race. Of course as Fred points out, there is an on-going debate about the real impact of Wal-Mart. The Chicago ordinance does not single out Wal-Mart. In that sense it may be viewed as less about penalizing corporate behavior and more about deciding the appropriateness of states imposing these added costs on large corporations.

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