21 Chicago Aldermen Introduce $15 Minimum Wage Bill

Proponents of a government-imposed wage hike in Chicago are gaining steam. On May 28, 21 of the city’s 50 aldermen signed on as co-sponsors of a bill to raise the city’s minimum wage to $15 per hour.

Details of the bill include:

Firms with at least $50 million in annual revenues would have to begin paying $12.50 an hour right away and $15 an hour within a year. Smaller companies would get a bit of a break, with the increase to $15 phased in over years. 

The minimum wage would be tied to the inflation rate, rising automatically after the $15 figure is implemented.

For over a year, a coalition of labor unions and community groups known as Raise Chicago has been advocating for a minimum wage increase.

Gloria Warner, a member of Raise Chicago, said “Raising the minimum wage to $15 an hour in Chicago is one of the most important things we can do for working families, communities and the economy… If the mayor and city council is serious about reducing violence and helping the kids do better in school, then they need to create a minimum wage of $15 an hour for Chicago workers.”

It is no surprise that labor unions are behind the push for a minimum wage hike, but it is not because it will lift low-wage workers out of poverty or create economic growth.

As previously mentioned, numerous labor unions directly benefit from increases to the minimum wage. Many unions negotiate collective bargaining agreements that tie union member pay to increases in the minimum and living wage laws (Center for Union Facts research uncovers a number of these contracts.) Also, some union contracts require employers to reopen contract negotiations with unions when there is a change in state or federal wage minimum wage laws.

In addition, economic growth or job creation is an unlikely outcome of a $15 minimum. For one, a RealClearMarkets.com poll found that about 80 percent of economists surveyed recognize that a minimum wage increases unemployment of low-skilled and young workers. Two, as Michael Saltsman, research director at the Employment Policy Institute, comments, “economists from the Federal Reserve Board and the University of California-Irvine took the time to read all of the most credible research on the minimum wage from the past 20 years, and found an overwhelming 85 percent of it pointed to a decline in employment.”

But that is not all. According to the Washington Policy Center (WPC), Seattle’s proposed $15 minimum wage bill, which hasn’t even passed, is already having negative impact on the local economy. Erin Shannon, WPC Director, has the story:

After decades in Seattle, Northwest Caster and Equipment recently made the difficult decision to move the business to unincorporated Lynnwood, according to a report by KOMO news. The owner of the family business blames Seattle’s increasingly difficult business climate for the move:  “It just seems like increasingly the city’s become a more difficult place to do business.”

The city’s proposed $15 minimum wage was tops on the list of complaints.  “If I’m going to bring someone in on an entry level, I’d prefer to start them out where I’d like to start them out, rather than having that dictated to me.”

A commercial property landlord echoes those concerns about the $15 minimum wage, noting several tenants have signaled they may not renew their leases if it becomes law: “It’s just too expensive to operate in the city.”

And in a story today, KUOW reports that small businesses throughout the city are panicking over the super high minimum wage.  Multiple small business owners told KUOW they are holding off on opening new business or expanding their current business in Seattle, while others said they are delaying plans to hire new workers.

One of those business owners is a well-known and active supporter of “progressive” labor policies, including a higher minimum wage.  Jody Hall, owner of Cupcake Royale, initially supported a $15 minimum wage.  But now Hall admits the proposed policy is, “keeping me up at night like nothing ever has.”

While Hall has serious concerns with Mayor Ed Murray’s plan to phase in a $15 minimum wage over seven years with a temporary tip credit, her biggest fear is if voters approve the radical charter amendment sponsored by the group 15Now.  The charter amendment would force all large employers to begin paying $15 in 2015, and would give small business owners just three years to acclimate to the high wage.  And the 15Now proposal would not allow for any tip credit.

If the charter amendment passes, Hall says she would be forced to close half of her seven locations and lay off 50 of her 100 workers.

But beyond the differences between Mayor Murray’s proposal or the more aggressive 15Now proposal, Hall says she now has “serious second thoughts” about a $15 minimum wage in general, especially since Seattle would be “going it alone” with a wage that is significantly higher than any other minimum wage in the nation.

Hall’s second thoughts about a $15 minimum wage have led to second thoughts about expanding her business.  She was set to open a new business in Seattle this year, but has tabled the plan until after voters have their say on the charter amendment in the November election.  Hall says if she considers any new locations before then, they will be outside the city limits.

Earlier this year a study commissioned by Mayor Murray and the Seattle City Council determined a $15 minimum wage would help low wage workers and reduce poverty, but omitted any estimations on the impact on employment.  A subsequent study by a Seattle economist predicted significant job loss.

Chicago’s unemployment rate is already at 10.9 percent. Hopefully, Raise Chicago and Chicago aldermen take note of the negative impact of a potential $15 minimum wage in Seattle and change course.