Chicago’s City Council passed a measure last week that mandates “big box” stores such as Wal-Mart, Best Buy and Lowe’s to pay workers — regardless of experience — a minimum wage of $13 an hour including benefits by 2010. See the opinion piece in today’s Wall Street Journal.

The justification is to help poor people have a better standard of living. Is this another example of good intentions mixed with bad economics? This time I doubt the intentions are to help the poor. They may be to reduce the number of aesthetically unpleasing “big box” stores to make the neighborhoods look nicer, but it surely won’t help the poor. What it will do is move jobs from the city to the suburbs, discourage Wal-Mart and others from staying and expanding in Chicago, and in addition to creating higher unemployment result in an increase in prices at these stores.

People forget that a higher standard of living isn’t just measured by one’s salary, but also by the cost of goods. A salary increase that is accompanied by an equal increase in the cost of goods doesn’t mean a higher standard of living. I agree that big box stores are aesthetically unpleasing, but I also recognize that they enable Americans to buy many household goods at low prices and enjoy a standard of living better than anywhere else in the world. When I lived in Nicaragua, a halogen lamp cost almost three times as much as it did in the States — that’s was because there weren’t places like Wal-Mart to provide them more cheaply — and that meant that only people of a higher income level could afford to buy them. My question is that when the prices inevitably increase will the Chicago City Council mandate “everyday low prices” too?


  • http://www.churchicago.org John Powers

    Wal Mart is trying to set up shop in a Westside neighborhood that has been burned out since the 1968 Riots. Ikea is trying to set up shop in an abandoned railyard on the near South Side.

    The aesthete in me tends towards low priced consumer goods over rats and boarded up buildings.

    JBP

  • Clare Krishan

    IKEA has a store in Philly off of I95 near the city center also, Hope Depot is a neighbor and both do well. I take no issue with using delapitated lots to turn a profit, more power to ‘em! But there is something for Americans who want to go global with their business empires to learn from this report three years ago
    http://www.iwim.uni-bremen.de/publikationen/pdf/w024.pdf
    predicting Wal Mart failure in Germany. Ignoring the advice they blundered on and lost more than $1 billion in the process, announcing their departure from that market last month.

    German ‘mittlestandische Betriebe’ (mid sized firms) contribute something of lasting value to the German economy and culture – a much wider variety of high quality goods at competitive prices than any similar American business, better pay and locations within walking distance to the community. Worthy of note to those interested in defending US global competiveness against fast learners India and China: which marque of cars retain their luxury cachet? Not GMs that’s for sure, they’re $4 billion in the hole. Mercedes Porsche and BMW, all German.

  • http://blog.acton.org Jordan

    There’s commentary on the ordinance at the Becker-Posner blog, [url=http://www.becker-posner-blog.com/archives/2006/07/post_3.html]here [/url]and [url=http://www.becker-posner-blog.com/archives/2006/07/the_big_box_min.html]here[/url] (HT: [url=http://www.professorbainbridge.com/2006/07/becker_on_chica.html]Prof. Bainbridge[/url]).

  • http://www.churchicago.org John Powers

    Hi Clare,

    Doesn’t German retail prove the point quite well? If WalMart is not making the grade, the customers will let them know.

    Rather than letting the esteemed Aldermen of Chicago make that decision, shouldn’t the customers in the best position to know what they want to buy?

    JBP