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US: Chicago's Council Fails to Override Daley's Veto (Update3)

by Lauren Coleman-Lochner and Kevin OrlandBloomberg
September 13th, 2006

Wal-Mart Stores Inc. and other large retailers claimed victory in Chicago after the City Council failed to override Mayor Richard Daley's veto of an ordinance requiring them to increase their minimum wage.

The Chicago City Council today voted 31 to 18, three votes shy of the 34 votes needed to secure a two-thirds majority for an override to implement the ``living wage'' bill. Daley vetoed it on Sept. 11, his first veto since taking office in 1989.

Cities including New York, San Francisco and Santa Fe, New Mexico, have passed laws requiring that some retailers pay a minimum level of wages or benefits. Labor and community groups have specifically targeted pay and health plans at Wal-Mart, the largest U.S. private employer. Daley said the ordinance would have caused stores to leave Chicago and pledged to work for a statewide minimum wage increase.

``We can both create new jobs and have higher wages in Chicago and across Illinois,'' Daley said at a press conference after the vote.

Chicago's City Council had approved the ordinance, which would lift the minimum wage for employees at retailers with annual sales exceeding $1 billion and stores of at least 90,000 square feet, in a 35-14 vote on July 26.

``We feel the City Council made the right decision to support valuable job opportunities and increase savings for the residents of Chicago,'' Wal-Mart spokesman David Tovar said in an interview today. ``We remain committed to meeting customer demand in the Chicagoland area.''

Shares of Bentonville, Arkansas-based Wal-Mart, the world's largest retailer, rose 1 cent to $48.08 at 4:27 in composite trading on the New York Stock Exchange. They've risen 10 percent since July 26.

Minimum Wage

The measure proposed to raise the minimum wage to $9.25 an hour, plus $1.50 in benefits, starting July 1, 2007. The pay rate would be increased each year up to $10 an hour, plus $3 in benefits, by July 2010. Illinois' minimum wage is $6.50 an hour.

Alderman Joe Moore, who sponsored the measure, said in July as many as 10,000 employees of retailers such as Target Corp., Sears Holdings Corp. and Home Depot Inc. would be affected.

Wal-Mart says it pays full-time hourly workers an average of $10.11 an hour.

An alderman who initially supported the measure said in a statement yesterday that he would back the mayor's veto. ``I share Mayor Daley's belief'' that an increase would drive jobs and business out of Chicago, Alderman Jorge Cardenas said.

The unemployment rate in the Chicago area was 4.7 percent in July, according to the government's Bureau of Labor Statistics. The figures aren't seasonally adjusted. The overall rate for the U.S. was 5 percent.

Company Responses

Wal-Mart, Home Depot and Target lauded Daley for vetoing the measure earlier this week. Wal-Mart will open its first store within the city limits in the next few weeks. Target currently operates eight stores in the city and Home Depot 10.

``Wal-Mart is fighting living-wage ordinances in some of the largest media markets in the country,'' said Nu Wexler, a spokesman for Wal-Mart Watch, a Washington-based coalition of labor, religious, community and environmental groups that wants the company to increase wages. ``If they continue this, they'll only reinforce their reputation for low wages.''

Unions, community groups and lawmakers in 2004 blocked Wal- Mart from opening superstores in Chicago's South and West Side neighborhoods, areas with high unemployment and a limited business base.

The City Council later in 2004 granted permission for Wal- Mart to build only the West Side store, located in the Austin neighborhood, which will open this year. Wal-Mart has 20 stores in the Chicago area, according to the company's Web site.

Expansion Plans

Since April 2004, Wal-Mart has withdrawn plans for stores in the New York City borough of Queens and Inglewood, California.

All Chicago City Council members are up for re-election next year and Daley could face Representative Jesse Jackson Jr. in the Democratic primary in February. Jackson has said he supports living-wage legislation.

``I still think the day was a victory. In the face of seven weeks of unrelenting scare tactics and strong mayoral pressure, still over 60 percent of the council supported a living wage,'' Moore said in an interview after the council meeting.

Moore earlier said he'd introduce a new bill that was broader if necessary. ``This issue will not go away,'' he said. ``The fight for a living wage and a just society will not abate.''

Other councilors weren't swayed. ``You are denying each fellow alderman the right to uplift their community,'' Alderman Burt Natarus said during the debate before the vote.

Other efforts to legislate Wal-Mart's compensation have been rejected. In July, a federal judge in Maryland overturned a law that required the retailer to spend 8 percent of its payroll on health care. Maryland's legislature passed the measure in January after overriding the governor's veto.





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