We’ll be commenting in the future about the "living wage" – especially why it is such a dunderheaded idea from a purely economic standpoint.
Be that as it may, what happens when activists and politicians are trying to ram something down the marketplace’s throat, and the marketplace decides to not play, pick up its ball and go home? In Maryland, a law was passed that essentially targets Wal-Mart to force it to pay health care benefits to its norms (and the union activists behind the law, sore that all efforts so far to unionize Wal-Mart have failed). I’ve been waiting to see what Wal-Mart was going to do.
Then this came up – from the Chicago-Sun Times:
Target is putting plans to build three South Side stores "on hold" — and making veiled threats to close existing Chicago stores — if the City Council mandates wage and benefit standards for "big-box" retailers, African-American aldermen warned Thursday.
Uh-oh, the retailers, I think, have been pushed to far. Why Target? Well, it’s not just Target, it is any big retailer that fits this:
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.
Here we go with the "living wage" meme again. This is "playing chicken" in the economic sense – who is going to blink first? My bet is the politicians. Why? They can only control what is within their jurisdiction – they are helpless if the retailer moves out….and then they will have to discuss the ramification with their angry constituents (some of whom will lose their jobs). Why do I think this is likely?
Here’s the reason: