A Target on Target

The Living Wage Coalition, an organization of 35 community groups in Chicago has set their sights on the national retailer Target. The Chicago City Council passed an ordinance requiring retail stores in the city that are larger than 90,000 square feet and earn more than 1 billion in revenues to pay a living wage of $10 per hour, plus $3 in benefits. In an effort to get the mayor to veto the ordinance, Target is bullying the city with threatening to cancel the opening of three new stores in predominantly African-American neighborhoods, while continuing with the opening of a new store in the predominantly white north side community. Target currently operates seven stores in the city including the Chicago Lincoln Park store, which is the most successful location in the country.

Target receives 9.9 million in tax increment financing subsides to build stores within the city. The CEO, Robert Ulrich, earns more than $20,000 an hour, presiding over a company that is resisting an ordinance requiring him to pay $20,000 a year to its employees. ACORN, the Association of Community Organizations for Reform Now,a social justice organization has issued an action alert asking that people call CEO Robert Ulrich at (612) 304-6073 and tell him, “Fair wages and fair play are good business.” Target already operates stores in cities with living wages, in Sante Fe they pay $9.50 an hour, and in San Francisco they pay $8.82. Paying a living wage in Chicago and all cities, should be the company’s goal.

Shopping with a conscience becomes more difficult all the time. It seems that corporations have lost since of morality. They no longer feel the need to pass along profits from an increase in productivity to their workers. While corporations have record profits, real wages remain stagnant. Corporations have no problem letting the taxpayer pick up the tab for the social programs their employees qualify for because of inadequate wages they pay. I would like to spend my money with companies that pay a living wage and have provide benefits for their employees, but they are getting harder and harder to find. Do you know of a company that is socially and economically responsible for its employees? If you do, email me and tell me about it.

Update:

At digg.com, some comments were posted about this article in response to a link to the article posted there. The following are some of the comments posted by “HumanAction”

"I love when these groups, journalists, or bloggers use the term 'fair.' What is fair? Is fair the same for me as it is for everyone else?.... If people weren't willing to work at Target for less than $10 per hour, Target would be forced to pay more... If Target does open stores, they will have to raise prices, which hurt the poor the most. So despite these groups claiming to want to help the poorest people, because of their ignorance of simple, basic economics, they are doing the exact opposite..." ( you can read his and other comments in full at Digg.com)

I posted this response:
I am the columnist who wrote the article you are commenting on. As for the word “fair,” I never actually used the word. It appears in a quote from ACORN, the social activist group. However, I will try to respond to some of the issues you brought up. First, I am not an economist, I majored in English Literature, about as far away from economics as you can get.

I do know that the reason cities give tax incentives is because they would like to entice business to do things they would not otherwise do if they only concerned themselves with their bottom line. The city offered Target the tax incentives to encourage Target to build the stores, a resource the community needed. When Target entered into the agreement to build the stores, they enter not just a legal contract, but also a social contract with the city. And while reneging on the contract may not violate any legal obligations, it does violate the social obligation they entered into. They have built the stores in the more profitable areas, stores that they probably would have built anyways because it does benefit their bottom line. Now they are threatening not to provide the stores in the less profitable area, despite the fact that they have accepted the tax incentives. This is, in my opinion, morally wrong. Having entered into the agreement, they have an obligation to fulfill the needs of the community, not just their own needs.

I also feel it is morally wrong for a CEO to make more than $20,000 an hour while his employees are living below the poverty line. I am guessing that by your saying no one is forced to take a job at Target, you have never been in a situation where for financial reason you were forced to accept the only job you could get. When a single mother takes a job at the federal minimum wage, she often does so because it is a requirement for her to do so, in order to receive the financial assistance she needs to care for the child she has. Sixty-five percent of her paycheck will go to pay for childcare. The remaining thirty five percent of her paycheck will not cover the cost of housing, food, transportation, and healthcare for her and her child. She will have to accept government assistance for these basic needs.

Because of the government assistance she receives, she can go to work, knowing her child is safe, she is well fed, rested and healthy. These factors make her a more productive employee. The employer directly benefits from this increased productivity. When he does not pass along the profits he gains from this increased productivity to his employees, it is the taxpayer who ends up picking up the tab, by paying for the social programs, we end up subsidizing the CEO’s $20,000 an hour paycheck. That is gaming the system.

I realize that morality is not area economics likes to deal with. You don’t have to agree with my moral judgments. The point of my column was to point out how hard it is for people who do feel these are moral issues, to find a place to shop. I was looking for recommendations from my readers of companies who do share my values, so I can reward them with my dollars.