Higher minimum wage for Chicago alone would be devastating

Last week, 34 Chicago aldermen signed a letter to legislative leaders in Springfield opposing a proposal that would prevent the city from raising the minimum wage to a level $3 to $5 higher than the rest of the state.

While I share my fellow aldermen’s devotion to the city’s workforce and strongly support a statewide raise in the minimum wage, I could not sign the letter. Doing so would have endorsed a business climate in which an employee’s pay is based on which side of the street they work — and that would be very bad for the city of Chicago.

You don’t need a Nobel Prize in Economics to realize a higher minimum wage on the Chicago side of the city limits will drive businesses to the suburbs. A downtown clothing outlet with a captive and affluent customer-base might be able to survive employee costs that are 30 to 50 percent higher than a similar store in a far away suburban mall, but what about a store that operates in a neighborhood on the city’s border? Just like the downtown store, that neighborhood business would have to raise prices to pay its workforce a higher Chicago wage. But unlike downtown, the neighborhood store’s customer-base would have plenty of lower-priced options in nearby suburbs, some of which could be reached by literally walking across the street. As such, if we raise the Chicago minimum wage higher than neighboring municipalities, we should be prepared to watch businesses and millions of dollars in tax revenue cross the street, too.

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