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Minimum Wage Shake Down

When the Maryland legislature passed a measure, overriding the Governor’s veto, to require Wal-Mart to spend a certain set amount of money on health care, I attacked the measure in a column I wrote for PRODUCE BUSINESS.

Now Mayor Richard Daley of Chicago has vetoed a city ordinance that would increase the minimum wage for “big box” retailers. He must have felt pretty strongly as it was the first time he has ever used his veto:

“I understand and share a desire to ensure that everyone who works in the City of Chicago earns a decent wage. But I do not believe that this ordinance, well intentioned as it may be, would achieve that end. Rather, I believe it would drive jobs and businesses from our city, penalizing neighborhoods that need additional economic activity the most.”

The mayor is correct. Setting arbitrary minimum wages would simply encourage retailers to locate outside city limits and encourage city residents to shop outside of city limits.

But the truth is that the mayor’s response, though true, is also beside the point. The point is that it is not the place of government at any level to pluck out certain competitors — in this case stores of less than 90,000 square feet — and give them a competitive advantage over their larger rivals.

If the city council had passed a minimum wage for the whole city, I might give them a lecture on economics. But by selecting one competitor over another, they reveal themselves to be enormously arrogant. They also reveal themselves to thirst for political power. After all, if they can do this, doesn’t it mean that no man is secure in his business? With the whim of the city council, competitive advantage can be given to the smaller competitors.

What a perfect set up to shake down every business in the city. Ever hear of a protection racket?

The City Council is expected to try to overrule the Mayor’s veto.

Pundit Note: The City Council of Chicago at the end of a 2½ hour meeting failed, by three votes, to override Daley’s veto.

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