Big box living wage ordinance

Big Box Ordinances number of cities have been considering a living wage ordinance that would mandate a minimum pay level for all employees, assuring the lowest paid employees that they would receive a wage considered necessary to live. Chicago considered passing such an ordinance, as have other American cities. The reason for these ordinances is clearly that too many retailers are not paying their employees a living wage. In some cases, this may be a perception that to do so would bankrupt the employer. In other cases, underpaying employees may be a strategy to increase profits, as with the recent claims that Wal-Mart has been underpaying employees and has also been informing its workers in how to apply for welfare while working and how to get free medical benefits from the state.

Chicago alderman notes the rationale for ordinances such as the Big Box ordinance proposed for Chicago when he states, "The principle underlying this is that nobody should work a full day's work and not be able to get out of poverty. A job should lift someone out of poverty, not keep someone in it" (Goodman, 2006, para. 5). The ordinance was passed in Chicago but rejected by Mayor Daley, after which proponents turned to the ballot box to have the people vote on the idea. At the time, expert observers also noted that while the rejection of the law was seen as a boon to large stores like Wal-Mart and Target, those stores should recognize that this battle was only beginning and that the idea was gaining ground (Schoeff, 2006, p. 3).

Heller (2006)saw the veto of the ordinance in Chicago as a victory for Mayor Daley, who had opposed the measure from the first but who could not get sufficient support from members of the council to keep it from passing. After his veto, the council could not gat enough votes to override that veto. Some saw the entire process as tainted, noting that one alderman had switched he vote after Wal-Mart agreed to build a store in her community. Wal-Mart praised the vote not to override the veto, as did the National Retail Federation, with president and CEO Tracy Mullin stating, "Mandating wage and benefit levels on the state or municipal level does nothing to address the underlying problems that are driving up the cost of health insurance" (Duff, 2006, p. 28).

The idea of a living wage has been embodied in a number of different types of ordinance across the country, sometimes directed at all retail establishments, sometimes at only one type of business. An ordinance in Baltimore is one of the most common type applying to contractors, and in Baltimore, any contractor providing services to the city must pay employees at least $7.90 an hour. In Detroit, the ordinance calls for a payment of $8.83 per hour and applies to city contractors and recipients of subsidies, including nonprofits. In Pittsburgh, the cost is $7.73 per hour with benefits, and the law applies to city employees, city contractors, recipients of subsidies, and businesses and contractors that receive tax breaks or other assistance from the city. Santa Monica in California is considering the most extensive such ordinance, this one calling for $9.45 per hour with benefits applying to all businesses with fifty or more employees in the city's tourist center and to all companies doing business with the city or receiving grants or subsidies from the city (Furdell, 2001, paras. 2-3).

A proposed ordinance in Virginia engendered much opposition and an ongoing argument over costs and benefits, including controversial questions about jurisdictfion, as addressed by one editorial:

Opposition to a living wage smacks less of a state constitutional challenge and more of the same from a General Assembly seemingly hellbent on eviscerating the power of localities to deal with matters, economic and other, within their respective borders (Living wage laws benefit the entire community, 2004, para. 8).

A report from 2002 claimed that such ordinances lead to a decrease in employment to a slight degree among workers with low skills at the bottom of the economic sector, though the study also showed that this decrease was offset by a decrease in poverty among working families helped by such laws. The study was made for the Public Policy Institute of California, and its author had been a critic of living wage ordinances. Other opponents attacked the report as biased and wrong-headed, though, adhering to the basic argument of those opposing such laws:

Critics of living wage laws traditionally attack them as detrimental to the business environment in a city, because they have the potential to drive away companies that would otherwise stay put. In addition, opponents contend that such laws do little to help low-wage workers because they effectively reduce the number of low-skilled jobs. Opponents believe that such laws force businesses to cut back on the number of hires in order to balance the increased costs of the government-mandated higher wages (Critics assail living wage study, 2002, para. 4).

Daniel (2004) discusses the issue with reference to a proposed ordinance in Memphis and claims that the law would achieve little and is being pushed as a symbolic act more than a real one. He also denies that the living wage would do anything to reduce poverty and also states that there are better ways to make a statement about the need to help the poor than to pass an ordinance that would be ineffective at best and perhaps harmful, though he offers little evidence of any harm.

In Los Angeles, the living wage ordinance was put in place and was shown to be effective, but when an effort was made to extend the ordinance to include a number of hotels near the airport, those businesses fought back and claimed that Los Angeles was becoming hostile to business and was costing the city thousands of existing and potential jobs in the process. The ordinance then in place was passed in 1997 and only applied to businesses receiving contracts or subsidies from the city. The ordinance also indexes wage levels to inflation. If the law were to be extended, "under this formula the 12 hotels and other businesses targeted in this latest ordinance would have to pay their workers $9.39 an hour with benefits or $10.64 an hour without benefits, even though they receive no direct monies from the city" (Fine, 2006, para. 6). The concern raised by proponents of the law was that a ballot referendum might defeat the proposal:

The idea behind the referendum option is that once the measure is on the ballot, it would be easier to mount a campaign to defeat it. Indeed, a broader living wage ordinance in Santa Monica targeting coastal businesses was defeated in a close referendum vote four years ago. In 2004, a statewide measure requiring employers with 50 or more employees to pay for health care was also put to a referendum vote by business and defeated (Fine, 2006, para. 9).

In fact, the passage of the law led to a court case to stop it from taking effect, while efforts to develop a referendum also continued. The law that was finally passed was a compromise to forestall an earlier referendum on the issue, but the hotels were not happy with the new law, either (Fine, 2007).

In Chicago, the big box ordinance battle continues. Wal-Mart opened a new store in the city, and the alderman pushing for the living wage law extended his proposal after the first was not signed by the mayor. Alderman Moore had set a limit on the ordinance of stores of 90,000 square feet or more, but his new proposal has no such limitation and would affect a wider group of retailers and chain stores (First hurdle cleared, big-box still faces ordinance obstacles, 2006). Some critics of the original proposal saw the law as violating the equal protection clause of the Constitution because it singled out only one segment of the retail industry and left the rest untouched (Hansen, 2007, p. 14). The new Chicago ordinance may be an effort to overcome this distinction, but it might have even less chance of gaining support because it now includes other establishments that will join the opposition.

Living wage ordinances have been created out of a real concern for the problems faced by the working poor and by a perception that businesses are often taking advantage of their workers. The proposal differs from the minimum wage largely in terms of how much assistance the municipality wants to give workers. The minimum wage really does little in terms of reducing poverty. It applies almost exclusively to new hires and unskilled workers and is based on the perception Congress has at the time of passage as to what a minimum wage should be. The minimum wage also changes slowly. It is not tied to inflation or any other economic indicator and is changed only when Congress decides to change it, usually after a long period of demand and study. A living wage is intended to provide a certain minimum level to sustain life and to push toward the abolition of poverty. It is also based on the vie that money can be saved by the city if the city does not have to provide certain health and other services to the working poor because they can pay for it themselves or because their employers provide it as part of the package. By most measures, it saves money when the employer makes such arrangements because the employer is more cost-conscious than a government entity may be. In truth, it would be preferable if a larger political entity made such an ordinance binding, as is noted by Coverford (2006), who says the Chicago law would be ineffective in the suburbs because retailers could easily move across boundaries to a smaller suburb without such a law it if so chose. If the living wage were a state or national law, it could cover everyone and would reduce the sort of shifting that might take place in a smaller jurisdiction.