Big Box Living Wage Ordinance Redux

In Mike Doyle's Chicagocarless.com blog, he takes issue with the big box living wage ordinance making its way through the city council in Chicago. Read it and then read my reply here.

The idea that singling out big box retailers is somehow discriminatory or unique in the history of urban politics is inaccurate. Municipalities, states, and other levels of governments routinely provide special tax incentives for individual firms (Boeing in Chicago is one example) or for specific industries in order to attract or keep big ticket firms to a locality or to create what economists call agglomeration economies. The flip side, regulating specific firms or industry sub sectors at the local level is also not unprecedented. Blue laws and smoking bans with exceptions are two examples.
2. All levels of government have a compelling interest to regulate firms that are causing what economists call “negative externalities.” Negative externalities are social and economic costs not reflected in the price of the goods and services offered. Wal-Mart, as a recent article in Harpers brilliantly elucidates, is an example of a monopsony, a consumer version of a monopoly. Neoliberal economics has poisoned the conversation around what is a monopoly, leading us all to believe that if you can shop someplace else or buy someone else’s product it’s not a monopoly. Wal-Mart, by virtue of its extreme market power is able to dictate the behavior of suppliers, even large ones like Proctor and Gamble. The question then is how much negative externalities Wal-Mart injects into the market. The article in Harpers indicates there a quite a few. In other words, Wal-Mart especially, does not occupy a “niche” in the retail market. It is a monopsony that is skewing the natural functioning of many productive sectors of the consumer product market.
3. To push this off on the Alberto Gonzales Justice Department, the State of Illinois or the Republican Congress or some other non-municipal level is disingenuous. There is no momentum there for any anti-trust or pro-worker legislation. As Rage against the Machine says “it has to start somewhere, it has to start now. What better place than here, what better time than now?”
4. The question of employment versus living wage employment and your somewhat cynical playing of the race/South Side card are complex and most troubling for advocates of the measure. South Side neighborhoods are notoriously underserved by retail business, not necessarily because of economic reality. The buying power of South Side residents is comparable to other regions of the city, but is just ignored. It is great that Wal-Mart wishes to work outside of outmoded racist thinking, but there are a number of cautions. As Nickled and Dimed and the work of Susan Lambert and her associates at the School of Social Service Administration show, it’s not just the wages that are problematic at Target and Wal-Mart. The whole nature of low-wage labor is high turnover, poor working condition jobs that do not allow people to get ahead. It is well documented that it is in low wage labor employers’ interest to maintain a pool of workers who cycle in and out of their jobs and do not “move up the ladder.” Hence the appeal of Chinese manufacturers. I’m glad Devyn was able to move from minimum wage work to success. His story is an exception, I’m afraid. Current economic patterns have turned low wage workers like those quoted in your story into beggars who just want any job. The long boom in the American economy was facilitated by jobs that not only paid decent wages, but allowed for longer term employment, on the job training that led to possibilities of advancement and an unwritten contract between workers and management. Short term bottom line thinking and the ascendancy of the middle class consumer as the most important actor in the economy have destroyed this. Can’t we do better than a “let them eat the cake of crappy Wal-Mart jobs?”I think so.

Peace