Thursday, July 13, 2006

Target may Close Stores In Chicago If Wage Rules OKd

The Chicago Sun-Times reports:
Target is putting on hold plans to build three South Side stores — and making veiled threats to close existing Chicago stores — if the City Council mandates wage and benefit standards for such “big-box” retailers, aldermen warned Thursday.

The saber-rattling is intensifying as the clock winds down toward a July 26 showdown vote on plans to make Chicago the nation’s first major city to establish a “living wage” for stores with at least 90,000 square feet of space operated by retailers with $1 billion in sales.

Minneapolis-based Target becomes the second retailing giant to threaten to pull out of the lucrative Chicago market in a last-ditch effort to stop an ordinance championed by organized labor that breezed through the City Council’s Finance Committee by a vote of 15-to-6 and has attracted support from 33 aldermen.

Wal-Mart has threatened to cancel plans to build as many as 20 new Chicago stores over the next five years if retailers are required to pay employees at least $10 an hour by July 1, 2010.

Mayor Daley is taking the threat seriously. He has publicly challenged aldermen who oppose Wal-Mart’s 20-store expansion to describe how they would replace the 8,000 lost jobs.

Target failed to return calls on the admonition communicated to aldermen of the 5th, 9th and 34th wards in recent days. Target real estate executive Chris Case was scheduled to meet with African-American aldermen on Thursday, but the meeting was cancelled because of scheduling conflicts.

Ald. Carrie Austin (34th) said a Target pull-out would be devastating to the 32-acre shopping mall at 119th and Marshfield that developers had hoped to build, with help from a $23 million city subsidy. Home Depot would likely follow Target out the door. As many as 1,000 jobs would be lost, Austin said.

“It would be devastation for us. Our largest employer in the 34th Ward is the Police Department. The second-largest for us would be Jewel. We have no other resources,” Austin said.

Referring to the anti-Wal-Mart movement that gave birth to the big-box ordinance, Austin said, “If you want to bully up on Wal-Mart, you’ve got to bring in the other ones and, damned if you do on them. If they suffer from it, too bad. If you want to control Wal-Mart, you should go about that a different way.”

Ald. Leslie Hairston (5th) said she has a letter of intent from Target to build a new store at Marquette and Stony Island in her ward. But, the developer has told her the store is now “on hold” and that Target may close existing Chicago stores if the big box ordinance goes through.

Hairston called it little more than a scare tactic. And even if the threat turns out to be real, she’s standing firm in support of organized labor.

“Wal-Mart and Target could pay their people a living wage. Then, we wouldn’t have this problem and people could actually live on the money they made,” Hairston said.

“My position is my position. They’ll do what they have to do. I’ll do what I have to do. If they want to lose the more than $3 billion that is not being captured in my ward, that’s a bad business decision for them.”

Ald. Joe Moore (49th), chief sponsor of the big box ordinance, accused the tag team of Target and Wal-Mart of using “bullying tactics” to stop a train that has already left the station.

“It’s an idle threat…They’re clearly trying to …initimidate members of the City Council. I am very hopeful that members will hold firm….The votes are still there,” Moore said. He predicted 33 votes for the ordinance, “maybe more,” even though Daley has been button-holding aldermen to try and stop it.

Ald. Howard Brookins (21st) is still searching for a big-box retailer to replace the Wal-Mart his colleagues nixed at 83rd and Stewart.

Brookins said Wal-Mart executives have told him they may take the lead of the many riverboat casinos that ring Chicago and run free shuttle buses to their suburban stores if the big box ordinance passes.

“I don’t know if it was in jest, but they did say it…That is an option that they could employ. They could set up locations to have pick-up and drop-off. I don’t think that is that far-fetched,” Brookins said.

Chicago would rather subsidize some high end corporate jobs for UAL's headquarters than allow Big Box retailers in the Chicago.No wonder they are losing jobs and population in Chicago.