Strolling the AGORA By Murray Shor

The dust had barely settled over Chicago City Council’s approval July 26 of an ordinance establishing higher minimum wages for workers at major big-box stores before this shopping center/retail industry started to react.

Whether the law will survive a possible veto by Mayor Richard Daley, and court challenges by various organizations, still remains to be seen. However, what is known is that Target has already killed plans for one new store in that city and may pull out as anchor of Marshfield Plaza planned on the South Side. Of course, with its acquisition from Federated Department Stores of several stores in traditional malls, and its commitment to anchor several other large malls, the discounter has signaled it is open to future expansion, beyond its stand-alone stores.

In addition, Lowe’s has stopped plans on its two home-improvement centers in Chicago pending Daley’s possible veto; he has until Sept. 13 to act.

Wal-Mart, which would be impacted by the approval—as would be Home Depot, Sears, Menard’s, Nord-strom, Macy’s, etc., etc.— announced it would raise starting salaries at one-third of its US units by 6%; the increases would be spread evenly around the country and would not favor urban or rural areas, it said.

Prior to the city council vote, a company spokesman had said "we’d redirect our focus on our suburban strategy and see how we could better serve our city of Chicago residents from suburban Chicagoland." The chain has more than 40 stores within 50 miles of the city, and others are planned.

For the record, the ordinance would impact on retailers with annual sales of over $1 billion and stores larger than 90,000 sq. ft.; it would go into effect next July and require employees to be paid at least $9.25 hourly in salary and $1.50 in fringe benefits—these would go to $10 and $3, respectively by 2010, with annual cost-of-living increases. Among the other cities with "living-wage laws" are Santa Fe and Albuquerque in New Mexico, San Francisco in California, and Washington, DC.

The federal minimum wage law is $5.15 per hour; the Illinois state minimum is $6.50 per hour.

"So," asked one industry observer, "would this (new Chicago law) impact on a $1 billion retailer who has two connecting stores of 75,000 sq. ft. each?"

"Or," said another, "suppose you had a building of 100,000 sq. ft., but you had a sliding partition separating it into 70,000 and 30,000 units and checkouts at each end. Is that one store or two?"

"The point is," said a third dealmaker, "high-priced and creative legal minds could challenge this in court for years. But why, for what reason? Land and operating costs are cheaper outside of Chicago, in the suburbs of any large metropolitan city, and it’s been shown time and time again that the affluent are not held captive and will travel to shop where it’s cheaper. Just check out all the New Jersey malls within an hour of New York City."

Many industry observers believe that Chicago needs the big-box operators more than the retailers need them. Historically, costs for operating, advertising, security, and the logistics for distribution and supply have always been more demanding in urban centers than in the suburbs, and in secondary and tertiary markets. That’s where lies the greater current and future potential for a major retailer, they say.

When the industry and "civilians" begin to criticize wages, benefits, and unfair labor tactics, they can’t not talk of Wal-Mart, which is the most likely target if only because of its size. Without going into the validity of these attacks, no other retailer has faced so much organized opposition from flying squads of volunteers eager to assist local community groups in keeping it out of their areas.

The latest rejection was in Bea-verton, OR, where the city council just denied the discounter’s plans for a store on a site annexed to the town early last year. Wal-Mart could appeal before the August 14 deadline, which is after we go to press. In Florida, meanwhile, Leon County’s board of adjustment and appeals is holding a new public hearing after it voided a July 13 vote limiting a proposed Wal-Mart store to 102,000 sq. ft. from the 123,000 sq. ft. the discounter had requested.

The constraints of zoning, facing public opposition to new development, meeting governmental demands regarding the environment, traffic control, pollution, and the like, are issues that this industry has become very familiar with, and has adapted to. However, the idea that a single community would establish formalized double standards on operations is one that is relatively new.