ACSBlog: The Blog of the American Constitution Society

by Justin Cox, Editor at Large

Chicago Mayor Richard Daley has until the next regularly scheduled city council meeting on September 13 to either sign or veto the controversial "Big Box" ordinance passed by the council on July 26, 2006. (UPDATE: Daley has vetoed the bill.) The ordinance, approved by a 35 to 14 margin, would require retailers with sales of $1 billion or more operating stores larger than 90,000 square feet in Chicago to pay a living wage and contribute an additional amount for benefits or supplemental wages. The living wage would start at $9.25 in 2007, and phase up to $10.00 by 2010. The supplement would start at $1.50 in 2007, and phase up to $3.00 by 2010.

Daley has refused to say whether he will veto the measure, but his strong criticisms have fueled speculation that he will exercise his mayoral veto for the first time in his 17 year administration. Among his critiques, Daley has suggested that the ordinance will force the city to raise property taxes because of its supposed detrimental effects on sales tax receipts and has "played the race card" by calling the ordinance an example of racial "redlining." Redlining is the practice of denying or raising the cost of services to residents in certain areas, and is illegal when based on certain criteria, including race. Since the City Council only has jurisdiction within city limits, the ordinance would not apply to outlying areas, leading Daley to claim that "No one would ever bring [this ordinance] up in the suburban area. We're not talking about the Near North Side. . . . We're not talking about Wrigleyville. We're not talking about any of those [white] communities. We're talking about the West Side and the South Side...."

If Daley does exercise his veto power, the City Council would have to muster 34 votes to override it, meaning that just two defections would make a veto stick. One South Side alderman, Shirley Coleman (16th), has already said that she has decided to change her vote in the event of a veto after learning that Wal-Mart was "seriously considering" a store in her ward. Three other aldermen who voted for the ordinance have publicly wavered, though none has declared an intention to switch votes.

Campaigning has heated up has the September 13 meeting approaches. Santa Fe Mayor David Coss and San Francisco Supervisor Tom Ammiano appeared at a Chicago City Council hearing in mid-August to discuss their cities' experiences with living wage laws (a visit that Mayor Daley subsequently slammed, saying the visitors should "get back and help their own cities."). Both Coss and Ammiano reported that living wages have been good for their cities. Mayor Coss reported that gross receipts in Santa Fe - which has a $9.50 minimum wage for all of enterprises of at least 25 employees - actually increased last year at a higher-than-normal 7 percent. What's more, Wal-Mart has announced plans to open a controversial new Super Center store in his city, choosing to build the 150,000 square foot store within the city limits of Santa Fe, whose minimum wage will increase to $10.50 next year.

The economic story is similar in San Francisco, which currently has a minimum wage of $8.82. The wage is annually adjusted for inflation, and employers are not allowed to count tips toward the wage requirement. A study conducted by University of California, Berkeley's Institute of Industrial Relations found that fulltime employment and job tenure in restaurants has actually increased sine the ordinance went into effect; that the wage increase did not force businesses to close; and that restaurant prices increased just three cents on the dollar relative to unaffected restaurants on the east side of the San Francisco Bay.

Should Mayor Daley not veto the ordinance, some Chicago business leaders have indicated that they will file a lawsuit to challenge the ordinance, likely either as an equal protection claim or on grounds similar to those recently used to strike down Maryland's Fair Share Health Care Fund Act. In July, a federal district court judge struck down the Maryland law on the grounds that it is preempted by the federal Employee Retirement Income Security Act (ERISA), which promotes uniform treatment of employers. U.S. District Court Judge J. Frederick Motz wrote that his ruling adhered to "long established Supreme Court law that state laws which impose employee health or welfare mandates on employers are invalid under ERISA." The attorney general of Maryland, J. Joseph Curran Jr., has said he will appeal the decision to the 4th Circuit Court of Appeals.

This ruling has led some to question the legality of the Chicago "Big Box" ordinance. However, a legal analysis done on behalf of the Brennan Center for Justice by Professor Laurie Reynolds of the University of Illinois College of Law concludes that the ordinance is legal and likely to be upheld. Reynolds notes that "[e]very federal court of appeals that has reviewed a combined wage and benefits law like the Chicago ordinance has upheld the law under ERISA." The legal distinction between the Chicago ordinance and the Maryland law, according to Reynolds, is that the latter only deals with health care benefits, whereas the former is a comprehensive wage and benefits ordinance.

Despite the attempts by Mayor Daley and his supporters to discredit the ordinance, a poll released last week found that 71% of Chicagoans support the ordinance. Nearly ninety percent of those who favor the ordinance said they "strongly favor" it. As an increasing number of states and localities are considering legislation regulating - or barring - large retailers, the Chicago battle may be a precursor of what is to come.