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Gary Becker and Richard Posner, Chicagoans who don’t agree on much of anything, are of a similar cast of mind about the recently-adopted “big box” ordinance raising the minimum wage and benefits at stores with more than 90,000 square feet.
It’s stupid and misguided and will hurt low-income families, says Becker. Can’t disagree, says Posner.
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Just when I think that I couldn’t possibly hold a lower opinion of the City Council…
The biggest beneficiaries of low-price retail stores are the low-income families (annual incomes of less than $10,000) who shop there. The benefit of lower retail prices, possible only through the scale economies generated by big-box retailers, completely swamps the effect of any depression in local wages.
When the Evergreen Park store opened last year, over 27 thousand people applied for 325 jobs (starting pay of about $7.25 an hour). Once again, an ignorant but energetic group of fools has held sway over the rest of the city. Here’s an excerpt from the lead editorial in yesterday’s Wall Street Journal:
“These policies come at a very heavy price to the city. When activists kept Wal-Mart out of Chicago’s South side last year, the company opened the store in nearby Evergreen Park instead. Now that store collects an estimated $530 million a year in sales from Chicago residents without a penny of sales tax going to Chicago. The location where Wal-Mart was going to build remains an empty lot. Partly as a result of such anti-business policies, Chicagoans spend $5 billion a year shopping in the suburbs.
“Liberals who dominate big-city politics talk endlessly about economic justice and fairness, but what is just or fair about a law that punishes the least affluent? Some lucky few workers earn more from super-minimum wage laws, but the price is paid by those with low incomes and skills who are the first to be priced out of the job market. Mayor Richard Daley fumed this week that aldermen voted for the law because political activists threatened to campaign against them. So we guess Chicago’s politicians really were voting to protect high-paying jobs in the city: their own.”
Absolutely. In fact, isn’t the whole idea of a minimum wage “punishing the least affluent?” Think how many jobs would be created, how affordable products would become, how quickly the economy would grow and how much the working poor would benefit if we dropped the minimum wage down to three bucks an hour, or eliminated it altogether.
Sure, Wal-Mart workers are earning less in real dollars today than they did 10 years ago, but the goods they buy would be really cheap if the company paid them even less. Isn’t it about time we set self interest aside and put the interests of the least affluent first by lowering their wages?
Barry,
Mush-minded sarcasm doesn’t advance the argument very far. There’s a ton of empirical evidence that raising minimum wages eliminates jobs. Employers simply adopt labor-saving technology, among other alternatives.
Would you be seeing fewer self-service checkout stations if you didn’t have unionized checkout clerks in supermarkets? And so on.
Everyone’s heart (or at least everyone’s who has one) is for spreading the wealth through higher wages. Everyone’s head – at least everyone’s who has one – recognizes the difficulty of doing so.
Sarcasm is often effective in advancing an argument, but insult generally isn’t, so I’ll remove my mush mind from the debate.
It’s funny how everybody in this country is so obsessed with not letting the unions get too much power (even though they were spayed and neutered a long time ago) and nobody seems to mind that big business is running the show. If every city took the stand that Chicago has, we wouldn’t have to lie awake at night worrying about what (the new) big brother was going to do next.
Look, the above link included commentary by a Nobel-winning University of Chicago economist (thanks for the link, by the way). This argument at least deserves well-reasoned debate, not a restatement of talking points.
My original point was that the City Council has again categorically rejected the advice coming out of Hyde Park without making a coherent counter-argument. This strikes me as either willful ignorance or political cowardice.
I never cease to be amazed at how strongly the ignorant hold opinions.
Nobel-winning economists at the University of Chicago have led many a third-world country down the path to permanent third-world status. As a result, many third-world countries have learned to ignore the advice from UC economists.
Many of our Chicago wards are not that much different than third-world countries in their state of economic development, so it’s only appropriate that they think like third-world countries.
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