Chicago on Tuesday joined the growing ranks of major cities that have raised their minimum wage, a move decried by business groups as a jobs killer but touted by labor groups and other supporters as a way to lift Chicago workers and their families out of poverty.
The City Council overwhelmingly approved gradually raising Chicago's minimum wage to $13 an hour from $8.25 by mid-2019, with the first incremental hike to $10 coming in July. Meanwhile, state legislative leaders pulled the plug on a proposal to raise the statewide pay floor to $11 until January at the earliest.
Chicago's vote comes as concerns escalate about widening income inequality, and as cities and states across the country enact laws to boost the earnings of their lowest-paid workers.
In November, voters in Oakland, Calif., approved a referendum to push the minimum wage to $12.25 per hour from $9, and to $15 per hour from $10.74 in San Francisco, while voters in Alaska, Arkansas, Nebraska and South Dakota approved measures that would raise the pay floors in those states to as much as $9.75 per hour.
"We look in our city, and we see the growing chasm between those who have and those who don't," said Ald. Will Burns, 4th, who led the Chicago council's charge to boost the minimum wage. "Raising the minimum wage is not the solution to all of these problems, but it is a key step toward bringing greater equality, bringing greater justice and bringing greater democracy to our city."
Business groups have vehemently opposed the city ordinance in favor of a state plan that would offer a more level playing field, warning that Chicago's hike would drive many of their members out of the city and force others to fire employees or close their doors. The minimum wage, they said, has a domino effect. If the lowest-paid employees get a raise, the rest of the workforce would also expect a raise, putting additional pressure on small businesses.
"Make no mistake, this will cost thousands of low wage jobs throughout Illinois as businesses flee," said a joint statement from the Chicagoland Chamber of Commerce, the Illinois Restaurant Association, the Illinois Retail Merchants Association and the Illinois Hotel and Lodging Association.
"Further, it puts at severe risk the small businesses in border communities throughout Chicago that neighbor the suburbs and Indiana," the statement continued. "Such an increase will permanently depress new business development and hiring."
Theresa Mintle, chief executive of the Chicagoland Chamber of Commerce, said the City Council vote was "disappointing." The focus now turns to Springfield, she said, where the chamber wants more time to put together a package with pro-business reforms.
Hank Meyer, owner of BJ's Market and Bakery, which has two locations on the South Side, is worried.
He expects that he will have to raise prices on his Southern-style menu items by 20 to 25 percent to cover the higher wages, which could put them out of reach for many of his customers. That wouldn't just hurt his business, he said, but also the neighborhoods, which don't have many restaurant options beyond fast food.
"I operate in a community where there are few discretionary dollars," Meyer said. "My customers are very price sensitive. I don't want to be a place relegated to special occasions."
Meyer, who opened the first BJ's at East 87th Street and South Stony Island Avenue in 1996 and the second at 79th Street and Racine Avenue in 2005, said that he employs about 45 people, and that 37 of them make minimum wage or just above. He may have to cut jobs if customers balk at shelling out $12 for a Southern-fried catfish rather than $9.99.
Meyer, who supports a statewide increase, said a hike only in Chicago may do more harm than good to the people it purports to help. If job candidates flock to the city from neighboring suburbs to compete for high-wage entry-level jobs, they might edge out locals with less experience, he said.
Meyer also worries that vendor costs might increase as they adjust their prices to the new wage, piling on expenses when his business model is fragile to begin with.
"This isn't about sound economic policy," Meyer said, "this is about the election cycle."
Labor groups celebrated the new law.
"I started crying," said Katelyn Johnson, executive director of Action Now, a member of the Raise Chicago coalition, which lobbied for the increase. "This means so much for so many people."
Johnson said Chicago's ordinance is "a victory, but it's just the first step." Up next, she said, is getting Illinois lawmakers to increase the state's minimum wage.
Last month, two-thirds of Illinois voters supported raising the state's minimum wage to $10 per hour in a nonbinding referendum.
Johnson said the minimum wage is a personal issue for her because her mother worked two jobs, often at minimum wage, to support the family.
"The fight is not over," Johnson said, adding that labor and community groups will continue to push for a $15 minimum wage. Fast-food workers demanding $15 per hour wages are planning dozens of protests across the country on Thursday, including at multiple restaurants in Chicago.
Douglas Hunter, 53, a fast-food worker who is planing to join the protests, said the city's minimum wage increase "is something to look forward to." He received word about the vote from a union organizer via text message and ran inside the McDonald's where he works to share the news. His co-workers clapped, he said.
Hunter, who makes $9.25 per hour as a maintenance worker at McDonald's, said he recently had to borrow money from his sister to pay his $775 rent. He was short nearly $200 because he's been scheduled to work 30-hour weeks.
"I'm struggling," he said.
McDonald's said in a statement, in part, that the company and its independent franchisees "support paying our valued employees fair wages aligned with a competitive marketplace and that are compliant with local and federal laws. We believe that any minimum wage increase should be implemented over time so that the impact on owners of small and medium-sized businesses — like the ones who own and operate the majority of our restaurants — is manageable."
The Oak Brook-based company added that 90 percent of its U.S. restaurants are independently owned and the company does not set wages for its 3,000 franchises.
Grant DePorter, president of Harry Caray's Restaurant Group, said it is too early to tell how the wage hike will affect his business, but he said the increase comes as businesses like his are dealing with higher health care costs.
Charlene Brandt, regional manager of government affairs for 7-Eleven, said the City Council vote was "not surprising," but she wants to know what the city plans to do to help small businesses cover the increase. Ninety-eight percent of the 7-Eleven locations in Chicago are owned by franchisees, she said, and they already are at a competitive disadvantage because Indiana has lower taxes on items such as cigarettes.
"How are they going to control their labor costs? Chances are they're going to cut hours, and they're going to end up covering shifts more," Brandt said of the franchisees.
But some shop owners applaud Chicago's new law.
Jennifer Pope, owner of Red Balloon children's boutiques, said she supports the increase to $13 because most hourly workers, she believes, are not teens angling for extra spending cash but adults supporting families.
"It's predominantly grown-ups and predominantly women, and a lot of them are mothers," Pope said. "This would be something that would stabilize families here and now, which would ultimately cost us less."
Pope employs nine people across her Red Balloon shops in Bucktown and Andersonville and a pop-up in Hyde Park, and she is opening a new store in Lakeview in March. Though she pays employees minimum wage during their 60-day training period before starting them at a higher rate depending on experience, she expects she will likely have to bump up wages across the board as a result of the increase.
Still, Pope said she expects the impact on her business to be negligible and worthwhile.
"Among the young girls who work for me, the big problem they're facing is paying their student loans, so anything that can help them pay those off faster is a good thing," Pope said.
Tribune reporters Jessica Wohl and Hal Dardick contributed.