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Seeing the Light

The Chicago City Council recently passed legislation requiring large retailer to pay its employees at least $10 an hour along with at least $3 an hour in benefits. A veto by Mayor Daley was always a possibility although the vote in favor of the legislation was large enough to overturn a veto: (from the New York Times story on the original vote):

Mayor Daley said earlier that the ordinance could impede growth and tax
revenues. He did not say yesterday whether he would veto it, but he
would have to persuade two aldermen to switch their votes to avoid an

Well, yesterday, he vetoed it (HT: Cafe Hayek reader Kevin O’Reilly). And surprise! Suddenly the votes to overturn the veto aren’t there anymore. A number of members of the council have suddenly gained a new appreciation for the effects of incentives:

"I am going to be changing my vote, joining the mayor in a veto," said
Ald. Shirley Coleman (16th). "The community wants me to make sure that
an opportunity exists for people willing to work for something other
than $10 an hour, and Wal-Mart has expressed strong interest in
building in my ward."


Ald. Danny Solis (25th), a Daley ally, said, "This was a difficult
choice, but I’m going to go with the mayor. This ordinance is unfair.
The Wal-Marts and Targets of the world can just set up shop on the
borders of the city. I’m about a living wage, but not if it handicaps
the city."


Ald. George Cardenas (12th), who voted in favor of the measure but
signaled a possible switch shortly afterward, said he also would join
with Daley.


He said he changed sides on the issue after the mayor spoke to him about the ordinance.


"My decision is based on Mayor Daley’s track record," Cardenas said in a statement. "Chicago has never looked better."


Cardenas, a freshman alderman elected with the backing of the pro-Daley
Hispanic Democratic Organization, said the ordinance would harm "the
very people unions are trying to help."

Greg Mankiw has a very nice analysis of the costs of mandating higher wages in the face of market forces here.

My conversation with Richard Epstein on the economics, politics and constitutionality of singling out particular kinds of retailers for regulation is here.