Cafe Hayek's Russell Roberts takes down a proposed law in Chicago. The Chicago city council has a proposal to force big box retailers (defined as more than a billion dollars in sales with stores greater than 90,000 square feet) to pay workers $10/hr plus $3 in benefits. Target and Wal-Mart have responded by suspending plans to open more stores and deciding whether to close additional stores. Mayor Daley would also like to know how the aldermen in Chicago are going to replace the 8000 lost jobs if Wal-Mart doesn't continue its expansion.
Of course, if this plays out where the "living wage" is enacted and Target and Wal-Mart leave, then we're left with the unseen effects of such a law. With no big boxes prices will gradually rise to levels seen in the non-big box retailer world. Of course, this effect will be slow and unseen, therefore no one will really complain about it. There will just be 20,000 less jobs in the greater Chicago area. But that's not what gets aldermen elected, raising people's wages with a law gets them elected. Unfortunately, this law not only won't raise anyone's wages it will end up lowering wages by having more people fighting for fewer jobs in the retail sector.
In addition, the unskilled teenagers who can't find work stocking shelves or whatever unskilled kids do at Target are not going to get any job experience. With fewer business unable to give a teenager a job because of wage standards that teenager never gets a chance to get a toehold in the labor force. How's he going to get started? What happens is the kid gets public assistance at the first opportunity, then becomes involved in the neverending circle of government dependency. This dependency is what draws him out to vote for an alderman who will raise the wages of the poor by imposing some minimum wage. The cycle starts again, relegating another generation of teenagers to government dependency.
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