Good for Chicago – they did it. They passed a living wage ordinance requiring “big box” retailers like Wal-Mart and Target to pay their workers at least $10 an hour along with $3 an hour worth of benefits as part of the cost of doing business in the city by the year 2010. The law applies to any stores that occupy more than 90,000 square feet and gross more than $1 billion annually (Erick Eckholm, “Chicago Orders ‘Big Box’ Stores to Raise Their Wages,” New York Times, 27 July 2006, A1).
By “they,” I especially mean rank-and-file community and labor activists, who reflected and organized mass support for the “big box” law in the city’s large number of disproportionately poor black and Latino wards.
The ordinance, which passed the Chicago City Council by a vote of 35 to 14, is opposed by the city’s openly corporation- and Bush-friendly Mayor Richard M. Daley, whose political influence has declined in the wake of recent municipal corruption scandals. According to Daley, the new law will “impede economic growth” and shrink tax revenues in the city.
Wal-Mart, Target, and other large-scale corporate retailers can weep and moan to their heart’s content. They can claim all they want that the new wage law “puts politics ahead of working men and women” – Wal-Mart spokesman John Simley’s immediate claim after the bill was passed. They can argue all they wish that the ordinance will cause big retailers to “close” operations in Chicago (Target is already saying that it may delay or cancel the opening of three stores on the city’s South Side). But the truth of the matter is that Wal-Mart and other giant retailers can easily afford to pay $10 an hour (the starting wage at Costco) within and beyond Chicago. Having saturated the nation’s suburban markets some time ago, moreover, Wal-Mart wants and needs to operate in huge urban environment like Chicago. They have no intention of abandoning the city. As the Brennan Center for Justice told the New York Times last Wednesday, moreover, numerous large municipalities in the U.S. have set across-the-board minimum-wage requirements for all but tiny businesses without compelling mass retailers to leave (Eckholm, “Chicago Orders”).
Wal-Mart’s claim of special concern for “working men and women” within and beyond the predominantly black neighborhoods through which it has sought to enter Chicago is worse than disingenuous. Offering wage and benefits so low that a significant portion of its workforce qualifies for Food Stamps, Medicaid, and other forms of public assistance, Wal-Mart has a long and rich record of breaking labor, employment, and civil rights laws. It is what Simon Head, a fellow at the mainstream Century Foundation, calls “a template of 21st-century capitalism . . . a capitalism that resembles a capitalism of 100 years ago” in that it “combines the extremely dynamic use of technology with a very authoritarian and ruthless managerial culture” (Steven Greenhouse, “Wal-Mart, A Nation Unto Itself,” New York Times, April 17, 2004).
As black Chicago resident, researcher, and activist Dorian T. Warren told the black daily Chicago Defender two years ago, “Wal-Mart is the largest employer in the world and it is also the largest discriminator in the world. Think of every possible civil and human rights law on the books and chances are Wal-Mart has broken it.”
Warren also noted the negative impact that Wal-Mart’s global purchasing practices have on U.S. manufacturing employment, the decline of which has especially harmed African-Americans. “We all love a good bargain and cheap goods at low prices,” he told the Defender, but “to bring us those low prices we thirst for, Wal-Mart brought $12 billion in merchandise from China in 2002 – 10 percent of all Chinese exports to the U.S. Wal-Mart is actually eliminating jobs in this country by boosting the off-shoring of manufacturing jobs to low-wage countries like China to bring us those cheap goods. We are shopping ourselves out of jobs and paying the costs while Wal-Mart profits, destroying our standards of living and our communities along the way. Cheap prices have expensive consequences” (Warren was quoted in Ferman Mentrell Beckless,”‘ Wal-Mart Will Cost Us Jobs,’” Chicago Defender, May 19, 2004, p.3).
As one indication of its “ruthless managerial culture,” the company makes it notoriously difficult for its “team members” (as the company likes it calls its workers) to obtain benefits. Wal-Mart’s large number and percentage of part-time employees do not become eligible for health insurance until they put in two years at the firm. Even after that period, they are not permitted to buy coverage for their families. Thanks to exceedingly high deductibles and co-payments, moreover, full-time Wal-Mart workers with health insurance pay for more than 40 percent of their coverage. Four years ago, Wal-Mart changed its definition of part-time work from 28 to 34 hours a week.
The negative impacts of Wal-Mart’s “authoritarian” and regressive practices are hardly restricted to Wal-Mart employees. The anti-union retail colossus sets the pace for an inter-capitalist “race to the bottom” of the wage and benefit scale, providing other retail chains with an excuse for requiring their own workers to give back hard-won gains. A 2004 grocery strike in southern California was sparked by the determination of that region’s leading supermarket chains to increase the amount contributed by workers to their “employer-provided” health insurance programs. The justification cited by managers was the threat of competition from Wal-Mart. The resulting conflict was widely called “a Wal-Mart strike” even though the Walton family’s holdings weren’t directly involved.
The coming of “big-box”Wal-Marts (complete with full-service grocery stores) to Chicago is likely to depress the wages of workers in the city’s unionized Dominick’s and Jewel supermarkets. At the same time, as the University of Illinois at Chicago’s Center for Urban Economic Development has noted, Wal-Mart can be expected to take down a considerable number of local retail businesses who will be unable to compete with the retail giant, thereby eliminating as many jobs as Wal-Mart will bring to the Midwest Metropolis.
In seeking to enter Chicago through two predominantly African-American neighborhoods, thereby sparking the grassroots campaign that culminated in last Wednesday’s ordinance, Wal-Mart calculated that black Chicagoans were so desperate for employment and low-cost goods that they would ignore the company’s rich record of tyranny and exploitation. With a supply chain firmly rooted in the brutal labor camps of totalitarian China, Wal-Mart figures that the path to Chicago’s pot of retail gold passes though abandoned city streets that are lined with boarded-up shops, vacant lots, storefront churches, and ubiquitous corner groceries and liquor stores.
What it didn’t figure on was the presence of neighborhood residents and activists capable of calculating the costly source of Wal-Mart’s low-price success and the limits of what Wal-Mart’s low-road path to retail hegemony offers inner city communities.
Ten dollars an hour is nothing to get over-excited about, given the ever-escalating price of basic expenditures in Chicago. For those Wal-Mart “team members” who are not relegated to the part-time, no-benefit workforce, that hourly rate translates into just $20,000 a year, far below the real cost of living in a major metropolis like Chicago. According to the Economic Policy Institute, the real no-frills cost of living for a single parent and two children (the typical welfare unit) in Chicago, based on what it calls “a basic family budget” (one that takes into account housing, food, child care, transportation, health care, and other necessities and taxes), was $35,307 in 2001 (Economic Policy Institute, Hardships in America: The Real Story of Working Families (Washington D.C.: Economic Policy Institute, 2001, pp. 1-43, Table A4.2). The comparable statistic for 2010 will be considerably higher.
Still, $10 beats $7.25 (the company’s current entry-level wage in the Chicago area) and the message from Chicago’s black and Latino wards and labor and community-based organizations is loud and clear: “We need jobs and we need adequate retail services in our communities, but we have our pride. We need and deserve a livable wage. We need and deserve adequate health care. But we’re not so poor and marginal and desperate that we are about to sell our dignity and souls to the false and contradictory promises of ‘low prices’ and ‘get a job, any job.’ Even slaves had jobs, technically speaking. At the same time, we know that big corporate retailers like Wal-Mart are themselves desperate to gain favored access to big, central-city markets and we are going to exercise democratic and social control over significant aspect of our material and social experience. We are going to work together and with and through local public authorities to put employers and this country on a higher road.”
It’s a message that much of America, within and beyond the central cities, would do well to hear and adapt. And it’s a good message to hear from the city’s black and Latino neighborhoods during the 40th anniversay of the Chicago Freedom Movement, led by Martin Luther King, Jr. in July of 2006. As is rarely recalled, King died while leading a campaign to lift the security, income, and dignity of the black working poor in Memphis, Tennessee – an effort he connected to what he considered the broader “evils” of class inequality and “economic exploitation.”
Paul Street ([email protected]) is a researcher, writer, and independent urban social policy researcher in Iowa City, IA. His publications include Still Separate, Unequal: Race, Place, Policy and the State of Black Chicago (Chicago, IL: Chicago Urban League, 2005)and Empire and Inequality: America and the World Since 9/11 (Boulder, CO: Paradigm Publishers, 2004).