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Will higher wages hurt the economy?

Higher wages for fast food and retail workers could hurt the economy, according to an analysis by the Chicago Tribune.

The analysis includes comments from the Workers Organizing Committee, which led hundreds of workers from national chains, from Wendy’s to Potbelly and from Sears to Victoria’s Secret, in strike actions here last week.  They’re not looking to double wages to $15 an hour overnight; they’re trying to organize a union and address a range of issues.

It also includes a Whole Foods employee who works two additional jobs and still qualifies for food stamps, and a labor economist who is quoted to the effect that high unemployment helps lower wages.

But its major thrust is whether consumers can stand to pay the higher prices that they say higher wages would require.  The economists they ask about this specialize in consumer psychology and marketing behavior.

One crucial piece of information is omitted, curiously:  how big of a price increase are we talking here?

In a column reviewing “the boilerplate argument against higher wages” — which is precisely that it would hurt consumers with “enormous” prices increases — David Sirota fills us in.

Raising the minimum wage to $10.50 would add 5 cents to the price of a Big Mac, according to one analysis.  Another study found that raising McDonalds workers’ hourly rate to $15 would drive the price of a Big Mac up by 22 cents.

Run that by your consumer psychologist.

A recent study by Action Now and Stand Up Chicago found that  raising Chicago retail and restaurant workers’ wages to $15 an hour would cost about $100 million for a sector with $14.2 billion in yearly revenues in the city.  That’s about 2.6 percent of revenue.

“Downtown employers can afford a very significant increase in wages,” they argue.

It’s an important reality check to vague scare talk about higher prices.  That line of arguent works because it involves a “populist insinuation that higher wages would hurt the Average Joe,” according to Sirota.

Here’s another hard economic fact that deserves more attention, courtesy of the Center for Tax and Budget Accountability:  the largest, most profitable retailers in Illinois pay the lowest wages.

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Public left out of Emanuel’s budget

A Sun-Times headline from last August may be the crux of the matter:  “Rahm hears boos at budget chat.”

Rahm will hear no boos this year.

With virtually no notice from the media, Mayor Emanuel has sharply reduced public participation in the city’s budget process and completely eliminated public information about his budget proposal.

For over 30 years, the city has held open public hearings on the mayor’s proposed budget.  Emanuel has ended that, substituting closed sessions with specially-selected groups.

And while Mayor Daley always released his draft budget in August, Emanuel has released nothing – not even the standard update on expenses and revenues for the second quarter of the year.

On Wednesday, a delegation representing dozens of community and labor groups delivered an open letter to Emanuel calling on him to “release a proposed budget immediately and schedule public town hall meetings to ensure that our communities are involved in all steps of [the budgeting] process.”

“The Mayor’s shift away from community participation is not only a dramatic break with precedent, but also directly contradicts his campaign promise to create ‘the most open, accountable and transparent government that the city of Chicago has ever seen,'” said Elizabeth Parisian of Stand Up Chicago, one of the groups signing the letter.

“I didn’t think anybody could be more closed-door than Daley, but lo and behold, Rahm’s done it,” said Jerry Morrison of SEIU Local 1.  He believes Chicago is now “the only large city in America that has no public process for its budget.”

“Rahm is good on transparency in terms of putting things on the internet,” commented Dick Simpson, a former independent alderman now at UIC.  “He’s not so good on community participation and democracy.”

***

Mayor Harold Washington initiated town hall budget meetings with the 1984 city budget.  “It was very, very important to him,” recalls Alton Miller, Washington’s press secretary and author of “Harold Washington: The Mayor, The Man,” who’s now at Columbia College.  “He filled his administration with people who had spent many years working on issues from the outside, banging on the doors of City Hall, and he said, let’s do it right.

“It was important to him that when budgets were being decided, it wasn’t just an inside deal with a few people at the table but was genuinely informed by what people in the neighborhoods said they needed,” Miller said.  “And the best way to get that was with open town hall meetings where anybody could ask a question or raise an objection or take issue with any of the proposals.”

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To grow jobs, raise wages

Workers and community groups continue a push to raise the minimum wage here, arguing that it’s a way for Illinois to reduce poverty and create thousands of new jobs.

Tuesday morning (July 24) at 8:30 a.m., a trolley will leave from 209 W. Jackson to visit three Dunkin Donuts and other low-wage employers, and at 2 p.m. at Presidential Towers (570 W. Monroe), Walmart workers will talk about the challenges of making ends meet on a their paychecks.

According to the Center for Tax and Budget Accountability, the largest and most profitable retailers pay lower wages than small and mid-sized companies in the industry.

Homecare workers will rally at the Thompson Center, Randolph and Dearborn, at 3 p.m., and at 3:30 p.m. at City Hall, laid-off janitors will call on Mayor Emanuel to endorse an ordinance to protect jobs and wages when the city bids out contracts.

Fifty janitors lost their jobs last month when the city awarded a new janitorial services contract to a South Holland firm.  According to Progress Illinois, the Responsible Bidders Ordinance has the backing of a majority of aldermen – but it won’t move without Emanuel’s say-so.

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Coalition questions G8 costs, calls for community investment

Costs for the G8/NATO summit in May could be much higher than current projections from the city, according to a labor-community coalition which is calling for a Chicago G8/NATO Community Fund.

“We think that $65 million is very, very, very low, and based on the experience of other host cities, the actual cost is going to be much higher,” said Elizabeth Parisian, a researcher with Stand Up Chicago.

She said the 2010 G8 summit in Huntsville, Ontario, ended up costing over $1 billion, the bulk of which went to security costs. Costs of housing, transportation and entertainment totaled about $180 million, she said.

Like the upcoming summit, the 2010 G8 was a joint summit (that year it was with the G20), and as expected for the upcoming summit, there were big protests.

Stand Up Chicago is working on developing a more detailed independent cost estimate, Parisian said, but getting information is difficult.

“There’s been no transparency from the city,” she said, adding that “we need to know how much it’s going cost and who’s contributing.”

Last week the Chicago Reader reported that a $55 million federal grant described by officials last year as funding planning for summit security training is actually a routine grant that supports the city’s Office of Emergency Management and Communications. Security cost estimates will not be released before the summit, OECM told the Reader.

Funding for community needs

In a letter to Mayor Emanuel last week, community, labor, and civil rights groups asked him to call on corporations contributing to the summit host committee to provide matching donations to a community fund “which can be used to keep libraries and mental health clinics open, as well as to provide direct investment in Chicago’s many struggling neighborhoods.”

Six mental health clinics are slated for closing in April for a cost savings of $2 million. Library hours were recently cut in order to save $1 million.

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TIF money for city jobs, and accountability for CME

In a march on City Hall tomorrow, community and labor groups will present Mayor Emanuel with a golden toilet representing the TIF subsidy recently returned by CME Group, which was to help build a luxury bathroom, cafe, and fitness center.

Led by the Grassroots Collaborative, the groups are asking Emanuel to use $33 million recently returned by CME, Bank of America, and CNA, to restore jobs and services in the city’s schools, clinics, and libraries.

They’re also calling for a moratorium on new TIF projects in the LaSalle Central TIF district, which they view as the epicenter of TIF subsidies benefiting corporations at the expense of neighborhoods.

Community activists from across the city will rally at the Chicago Board of Trade, 141 W. Jackson, at 10 a.m. on Wednesday, February 8, and march to City Hall.

Jobs for Chicagoans

Eric Tellez of Grassroots Collaborative cited recent research showing that jobs from downtown development spurred by TIFs have largely gone to suburban commuters.

“This is Chicago’s tax money – why isn’t it being used to employ Chicagoans?” he asked.  Restoring funding for city services “protects jobs with good wages for people who we know will live in Chicago.  They provide services for our neighborhoods, and they employ people from our neighborhoods.”

Meanwhile, as details emerge regarding CME’s role in the collapse of MF Global last October, Stand Up Chicago is highlighting issues of accountability – including the need for outside regulation of “self-regulating” exchanges.

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’99 Percent’ vs. CME tax break

CME has been successfully bidding for the attention of Illinois politicians – and now regular folks are starting to notice.

On Tuesday, a statewide allliance is protesting at City Hall and then marching to State Senate President John Cullerton’s office to protest his legislation granting a $50 million tax break to CME, owner of the Chicago Mercantile Exchange and Chicago Board of Trade.

On Wednesday, a coalition of community and labor groups will launch a campaign to derail CME’s tax break – and press for a small financial transaction tax on CME trades – with a march on protest at the Chicago Board of Trade and a stand with Occupy Chicago.

“It’s a shakedown,” said Mehrdad Azemun of National Peoples Action, of the new tax break.  NPA is one of several regional and statewide networks of community and church groups that are joining to protest the measure on Tuesday.

“Corporations as large as these need to pay their fair share, especially at a time when every day brings news of more cuts to state and city programs, more police stations being closed.”

He points out that just a few years ago, CME threatened to leave – and then promised to stay, after it received a $15 million TIF subsidy and millions more in property tax breaks.

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‘An amazing convergence’

It’s been a remarkable week in Chicago, a nonstop whirl of protests targeting the financial industry and government collusion with corporations, and demanding action on jobs, housing, and schools.

Coming Friday:  a rally for “jobs not cuts,” with MoveOn, Stand Up Chicago, Chicago Jobs With Justice and Occupy Chicago joining forces, at noon at the Federal Plaza.

Occupy Chicago gets much credit for capturing the public’s imagination – and for their 24-7 commitment and important organizational innovations.  But it was community groups and unions that staged some of the most dramatic and creative actions here this week.

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Alternatives to cuts

With Mayor Emanuel’s budget proposal expected to emphasize austerity with heavy cuts to city services, proposals to bolster revenues — and ensure that sacrifice is truly shared — are gaining traction.

“We’re afraid [the budget] is going to be heavy, heavy, heavy on cuts” including public safety and other city services, with the main impact “on working families and public sector workers,” said Amisha Patel of the Grassroots Collaborative, which is holding a “corporate welfare tour” Wednesday morning (see below).

The group’s initiative to return hundreds of millions of TIF funds to the city and other taxing bodies has the most momentum right now.  Seventeen aldermen cosponsored the Responsible Budget Ordinance – which would return 50 percent of surplus TIF dollars from all TIFs with balances over $5 million – and more have signed on since it was introduced last week.

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