The Employer of Choice

The St. Paul City Council wants to keep Dayton's downtown. But at what price?

At 10:30 on a Thursday morning, the fourth-floor furniture department of Dayton's in downtown St. Paul is empty of customers. Two employees pass the time chatting near the escalators. The background elevator music is conspicuously loud amid the silence. The acres of purple leather sofas and Lester Loden loveseats might as well be tucked away in a dim warehouse. You get the impression that you could crawl under the covers of a sleigh bed and lie undisturbed for days.

The scene on other floors is not much more robust. A trio of Dayton's employees gossip at the Elizabeth Arden skin-care products counter; a young leather-clad woman browses the lingerie section; a pair of elderly ladies haunts the shoe department. The busiest action is at the foyer pay phones and the coffee and pastry stand.

The sleepy scene highlights what Brian Sweeney, St. Paul's planning director, noted the night before at a city-council meeting: The downtown Dayton's store "frankly is not competitive."

Bernie Hesse, of the United Food and Commercial Workers Union, calls the Dayton's deal "economic blackmail"
David Kern
Bernie Hesse, of the United Food and Commercial Workers Union, calls the Dayton's deal "economic blackmail"

The impetus for Sweeney's comment was a public hearing on a proposal for a $20 million renovation of the last vestige of retail shopping in downtown St. Paul, soon to be known as Marshall Field's. Under the renovation plan, the number of floors would be dropped from five to three, aisles would be widened, floors and ceilings redone, exterior bricks scrubbed, and new facades added to the primary entrances on Cedar Avenue and Wabasha Street. To pay for the overhaul, Target Corporation, parent company of Marshall Field's, is banking on $7.8 million in public funds. The city would contribute $6.3 million in the form of a forgivable loan for renovations. St. Paul also promises to secure a $1.5 million grant for the company to cover the costs of asbestos removal. (The latter funds would likely come through the Metropolitan Council.) If Target failed to keep a store open downtown for 10 years it would have to pay back the $6.3 million.

When the deal, negotiated by Sweeney's office and the St. Paul Port Authority over six years, was made public last month, members of the St. Paul City Council were falling over themselves to embrace it. "They were jubilant; they were giddy," recalls Bernie Hesse, an organizer for United Food and Commercial Workers Union, Local 789. Council member Jay Benanav went so far as to suggest that perhaps the city's contribution was too stingy. "Why not put in a little more to make that look like a first-class building?" Benanav wondered to the Star Tribune. "I'd like to see a little more pizzazz."

But what council members weren't aware of when they made their initial rose-hued assessments of the plan was that, along with pocketing almost $8 million in public funds, Target Corp. would be receiving an exemption from the city's living-wage ordinance. Under this regulation, adopted in 1997, companies that receive more than $100,000 in public financing must pay all employees a living wage. Calculated at 110 percent of the poverty level for a family of four, this amount is $9.02 an hour at present.

Living-wage ordinances have long been a burden that Twin Cities politicians would rather artfully dodge than embrace. Until last month Minneapolis's policy contained a loophole that allowed the city to grant exemptions without going before the public to explain why a publicly supported corporation could not pay its employees $9.02 an hour. Under pressure from city-council member Jim Niland and living-wage advocates, this policy was eventually amended. But not before, among other examples, Target was granted a waiver for its proposed downtown Minneapolis store.

As the fine print of the proposed Dayton's deal became public, other nagging questions presented themselves as well. Will the subsidy ultimately lead to a loss of jobs at the Marshall Field's store? Is the deal simply a means for Target to make a less economically painful farewell to downtown St. Paul down the road? Why hasn't the company made its financial records available to the city?

These were the issues that Brian Sweeney was attempting to defuse as he took the podium at the city council meeting last week. Sweeney noted that the subsidy was "very much on the low end" of what municipalities have ponied up to large retailers nationwide. Citing a report by a retail consultant, Sweeney pointed out that Norfolk, Virginia, recently offered $30 million to Nordstrom for a new location, while Rochester has put together a subsidy of $20 million for the same retailer. (Sweeney has also pointed to Minneapolis's courting of the downtown Target store, which at last count amounted to a benefit package of more than $50 million. "We love being compared to downtown Minneapolis," he quips.)

But Sweeney had a more difficult job in laying out a justification for the waiver of the living-wage ordinance. According to the proposed contract, the only reason given for the waiver is Target's "long-standing participation" in St. Paul. To sweeten this pot, Sweeney made the case that the company is the "employer of choice, when you look at the combination of wages, benefits, and the flexible working schedule." He even went so far as to cite the Dayton's employee discount as proof that the corporation is a benevolent employer.

But Sweeney's best argument lay in pointing out the alternative to giving Target $7.8 million and a living-wage exemption. "Bottom line, the Dayton's store as it existed previously was not a competitive enterprise," Sweeney summarized. "This agreement makes it a competitive enterprise."

This logic did not blunt criticism from the public during the hearing. David Buckley, a board member of ACORN, referred to Target's hints at leaving downtown as a "veiled threat." Labor organizer Hesse called it "economic blackmail." St. Paul resident Jennifer Blevins wondered why a corporation that earned $1.1 billion in profits in 1999 can't pay a living wage. "It's not up to the city of St. Paul to make Dayton's their charity case," she argued. Mary Buivid, who identified herself as a former Target Corp. employee, begged the council not to grant the waiver. "I'm one of those people who has had to try and survive and live on a non-living wage," she said.

Council members also had questions for Sweeney. Benanav wondered if the Dayton's store would be slashing jobs at the same time that it cuts its retail space from five floors to three. Michael Litwin, Target's regional real estate manager, replied that the company has no plans to eliminate any positions.

Benanav also asked the city for detailed information on exactly how much Dayton's pays its employees. Council member Jerry Blakey wanted to know about health benefits. Kathy Lantry added to the wish list an accounting of how many projects have been granted waivers to the living-wage requirement since its adoption.

But perhaps the most enlightening moment came when council president Dan Bostrom pointed out that the city's ordinance requires that any company asking for a waiver offer a "detailed explanation" for why it can't pay a living wage. "Have we received that?" Bostrom asked Sweeney. "No, we have not received that," Sweeney answered. "We can get that."

Ultimately, at the behest of Blakey, the issue was laid over for two weeks, pending more information. So far only council members Chris Coleman and Pat Harris have embraced the waiver (although neither returned phone calls from City Pages seeking comment). The remaining council members left the meeting talking tough.

"In some ways it's not a loan, it's a gift," says Benanav of the subsidy. "And I think the least we can ask for is high-quality jobs and good wages, and if that doesn't work for them they can find other means to finance their operation."

Unspoken at the hearing is the theory that Dayton's is simply using the city to take care of a costly asbestos problem and will ultimately take off for greener--presumably suburban--pastures anyway. "The only reason Dayton's didn't boogie, in my opinion, is they can't sell the building because they've got asbestos," says Hesse. He speculates that Dayton's will ultimately prevail, but hopes that the debate will at least highlight the issue and perhaps become fodder for the upcoming mayoral campaign. (Benanav, Blakey, and Bostrom are all running for the city's top post.)

Target spokeswoman Melissa Stark says it is not clear how the company would proceed if the deal is ultimately derailed because of the living-wage issue. "We'd have to review our options," she says. "We are committed to the city of St. Paul. We are ready to sign this deal."

On the morning after the city council meeting on the lower level of the downtown store, employees outnumber customers. Three workers are passing time in the Field Gear section of the men's department. One of them, a college-age man with a goatee, brings up Sweeney's comment of the previous evening--that Dayton's, with its generous package of benefits, is the "employer of choice." Grumbling ensues about the impossibility of saving for retirement when you're struggling with the basics of food and shelter. "You can't eat a 401K," the young man quips.

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