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For the first time in the nation, Wal-Mart has agreed [1] to a higher wage standard at a new store to be built in Chicago, Illinois. The retail giant’s commitment was part of an agreement to assure City Council support for zoning approvals, on which the Council voted [2] Wednesday. The deal also concludes a six-year fight over what will be only Wal-Mart’s second store in the Windy City. As we reported previously, Wal-Mart reached a stalemate with labor unions in 2006, after the City Council passed [3] an industry-specific wage standard for big box retailers, which was later vetoed [4] by Mayor Richard M. Daley.
Under the new agreement, Wal-Mart commits to a starting wage of $8.75, $0.50 per hour higher than the minimum wage for new employees. After one year of employment, Wal-Mart will raise workers’ wages by $0.60 to $9.35 per hour. Wal-Mart also agreed to pay prevailing wage, use union contractors to build the store and to provide $20 million to local non-profits over five years. The company claims the deal paves the way for it to move forward with plans to open two-dozen more stores in Chicago by 2015, although the agreement does not cover any other stores.
Legislation Needed to Lock-in Higher Wage Standards: Despite conventional assumptions about the economy, the Wal-Mart case shows that state and local governments still have good opportunities to raise wage and labor standards, particularly on an industry-specific basis. Still, this is a an agreement for only one store, rather than the city-wide policy embodied in the original ordinance approved by the City Council. Wal-Mart was able to negotiate its compromise by fragmenting [1] the opposition with promises of temporary benefits to the building trades [5] and non-profits [1] and avoiding broader legislation. If Chicago enacted its 2006 wage ordinance, the local economy would have benefited from thousands of workers throughout the city’s big-box retail sector being lifted out of poverty and depending less on public services.
While the deal represents a first for Wal-Mart, it falls short of other actions cities and states are taking to set higher industry-specific wage and labor standards. For instance, in 2008 Los Angeles [6] passed a law that sets a living wage standard at all hotels near the LAX airport; and in 2009, New York state passed a law requiring labor peace agreements [7] for all hotels developed or financed by the state through its public benefit corporations. New York is also considering a bill that would set a prevailing wage [8] standard for building service workers employed by public utilities.
A similar fight [9] is looming over Wal-Mart’s plans to build its first store in New York City, where the City Council in December stood strong by rejecting [10] another retail project because the developer would not agree to a living wage standard. According to City Council Speaker Christine Quinn, the question for elected officials is not about creating jobs or not creating jobs, but about what kind of jobs [9] the city should be creating: “We don't want companies that have led the nation in law suits being brought against them by workers,” she said. “We don't want companies that have the largest class-action in history brought against them. We don't want companies where women are, over and over, paid less than men and not promoted.”
Resources
National Employment Law Project - The Road to Responsible Contracting [11]
Good Jobs First - High Road or Low Road? Job Quality in the New Green Economy [12]
Good Jobs First - Making the Connection: Transit-Oriented Jobs and Development [13]
Economic Policy Institute - The Employment Impact of a Comprehensive Living Wage Law, Evidence from California [14]