PORTLAND, OR

by Mike Bryson
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I don’t live in Chicago, but because of A.B. Dada’s previous article¹ I was interested in watching the hilarity of a powerful City Council and a powerful Mayor battling against each other while huge corporations sit by the sidelines chuckling. The City Council of the City of Chicago passed a Big Box Ordinance a few weeks ago with a 14-1 vote. The Big Box Ordinance would force Big Box stores to pay a minimum of US$13 per hour in wages and benefits to even the most entry level employees. Immediately Target canceled 2 stores they were planning in the City, with many suburbs more than happy to let them open without the wage minimums. Mayor Daley came out immediately to fight against the ordinance, but his veto (the first in 17 years if he did so) would need 3 or 4 councilmen on his side to prevent an override.

Now we see Wal-Mart and Lowe’s, a home improvement store, also cancel new stores in the City of Chicago.² I am shocked that the councilmen would want to push these huge income (and tax!) generators out of the city, so I considered the reasons why they would try to pass such a ridiculous law. While I was on the phone with A.B. Dada yesterday, it hit me; it isn’t about power over the citizens, it is likely about business power.

Mayor Daley is a huge and powerful Mayor, with many sources of campaign income. He may receive huge contributions from the Big Box companies (possibly, I have no actual data on this) versus contributions from individuals. He likely does not make any major profits from companies within the city as it would be seen as a conflict of interest, and why should he worry about running small businesses when he can raise millions by calling the ones he already is supported by?

That is NOT true of the City Councilmen, though. Many of them have been alledgely involved in local businesses that reap big profits for them. They each cover a district in Chicago, so they have 93% less voters than Daley does, and significantly less power. For these Councilmen, Big Box competitors could drive their huge profits in the toilet. I’ve visited Chicago only 3 times, but my most recent visit a few weeks back I had gone with A.B. to the South Side to see the mess that is made down there. Prices in the tiny stores are outrageous, but competition is diminished because zoning is very hard to get. The North Side is a completely different story; stores are everywhere and prices are competitive.

Almost all the Big Box stores opening in Chicago are doing so on the South Side where they can do very well. With a poorer class of people, it is likely that the Big Box stores will be a huge opportunity for consumers, workers and even smaller stores as the local consumers won’t have to drive to the burbs (or take a 1 hour bus ride each way) to get what they want; visiting local stores along the way. Yet those who actually own (openly or secretly) the small “convenience stores” would be put out of business quick considering their racket of jacking up prices because no one can open a competing store nearby.

While I have no facts to back this up, and I am not from Chicago, it makes more sense to me than what the papers are saying. The Mayor wants the campaign income from the Big Box stores so he is against the ordinance; the councilmen want the income from the possible shill stores that they possibly own.

Discuss this article at the anarcho-capitalism forum.

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Mike Bryson is the news editor of the Global Unanimocracy Network. He lives in the Portland, OR region where he works as an IT business developer and point of sale consultant. E-mail Mike with news links or comments on this report.

CHICAGO, IL

by A.B. Dada
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The news is out all over Chicagoland — Target is pulling out of a new development in one of Chicago’s lower-income South Side neighborhoods.¹ The City of Chicago has just passed an ordinance nicknamed the “Big Box Ordinance” which was approved 14-1 by City Council. This ordinance requires that employers pay even the least skilled worker at least US$13 in wages and benefits (about double minimum wage). This ordinance would apply to Target, Wal*Mart and any of the other “Big Box” stores that have started to open throughout the Chicago area. For years the Big Box stores could not get zoning or approval to open based on the fears of smaller business owners that the Big Box stores would run them out of business.

I was in a retail market for 4 years that competed with Wal*Mart and other Big Box stores. I was on very friendly terms with the store managers as well as the department heads of the departments that competed with me. Almost 20% of my business came from referrals from these Big Box “devils” who realized that my small retail stores were an asset in helping their customers fix problems — I had the Big Box “monsters” to thank.

The South Side of Chicago has been plagued as a low-income area for decades. Target has been planning on opening 2-4 stores throughout Chicago’s lower-income areas and has already proceeded to budget for 2 to open in the coming years. Yet Target has to run each of its stores profitably — the additional wage and benefits requirement would add up to US$1 million in overhead for each store. Remember, these are lower-income areas — Target already has to offer the best prices and service for customers who are not usually able to drive to a discount retailer. How the City of Chicago could think that a wage requirement would help the poor is beyond me — the poor will be helped by having a store with cheaper products that the locals are used to. This would offer a significant savings to the residents which would allow them to continue to support other small stores in the area. Over the past few years, many local businesses have failed in the city’s South Side due to excessively high property taxes (passed on in rent costs) as well as high licensing and sales taxes as well. Some areas of Cook County are pushing 9-10% sales taxes where neighboring suburbs fall as low as 6.5%. That 3.5% difference can mean hundreds to even thousands of dollars a year extra in sales tax payments for a family of 4.

The development that Target was planning on moving into has already received almost US$30 million in City funds to get it going. To me that is proof that the development was never meant to be — if the City destroys the ability for businesses to open and stay profitable, how can they expect to tax other businesses to support an area they’ve already crushed?

Good job, Target. You may not get much of my money, but I will give you more of it now that I know that you won’t play games with the State, at least in this case. The Target in my town has already given nearly US$1 million to local schools (many in the top 10 are private schools) and I’ve never had a problem returning a substandard product. I’ll continue to vote with my dollars and not at the ballot box, and we’ll continue to watch cities destroy opportunities for the residents while they tax them more and more for preferential treatment that helps only the very few and very connected.

Discuss this article at the anarcho-capitalism forum.

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A.B. Dada is the founder and editor of the Global Unanimocracy Network. He lives in the Chicago, IL region where he works as an business relations consultant and incubator entrepreneur. E-mail A.B. Dada with news links or comments on this report.