Chicago’s minimum wage rising Wednesday to $14 amid pandemic. For some, it won’t be enough.
The minimum wage in the city goes up starting Wednesday. But fast-food workers say the bump in pay still won’t provide financial stability.
After years of pushing for an increase in hourly wages to $15, Ieshia Townsend is among the workers who will get closer to that goal Wednesday when the city of Chicago’s minimum wage bumps from $13 to $14.
But for Townsend, whose hours at McDonald’s have been cut back to five hours a week, the increase will do little to provide financial stability. She’s juggling extra work through delivery services, and her sister is helping her get a third job at a daycare facility.
“We are the workers who come in, they are not taking care of us,” Townsend says. “We are not asking for a lot. We are asking for $15.”
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The $1 increase takes effect Wednesday. Another $1-an-hour bump is planned to $15 in 2021. The hourly wages for tipped workers will go up from $6.40 to $8.40. The increase was approved in November, months before the COVID-19 pandemic drastically affected business.
Across the state, the minimum wage will increase to $10 an hour on Wednesday, with an aim of reaching $15 by Jan. 1, 2025, according to the Illinois Department of Labor. Wages for tipped workers will rise Wednesday to $6, and their wages will go up to $9 by 2025.
Earlier this month, the Chicagoland Chamber of Commerce pushed for the increase to be delayed because of the pandemic. And the Illinois Restaurant Association said the increase will be “particularly challenging for small, independent neighborhood restaurants that have been devastated by COVID-19.”
City officials plan to move forward with the bump in pay, saying the coronavirus pandemic has laid bare how many people are struggling to make ends meet.
“In the middle of an economic meltdown of historic proportions, now is not the time to retreat from our commitment to workers,” says Isaac Reichman, a spokesman for the city’s Department of Business Affairs and Consumer Protection. “Those who continue to have jobs need our support.”
Brian Phelan, an associate professor of economics at DePaul University, says there are always concerns that an increase in the minimum wage will lead to job losses. But Phelan says studies have found there typically are small job losses associated with increases in wages.
Still, he’s worried. “You are increasing the burden on businesses who are struggling,” he says. “They might try to get back with fewer workers. They might view this as a time to invest in automation technology and try to change the way that they sell the goods.”
The increase in Chicago is in line with wage increases that have taken place in the past two decades that Krista Ruffini, a visiting scholar at the Federal Reserve Bank of Minneapolis, has examined. Chicago’s increase is part of a national trend in which cities with a higher cost of living, like San Francisco, have raised the minimum wage above the federal level of $7.25.
When wages go up, usually there aren’t many jobs lost, but nor do you see gains in employment, Ruffini says. Teenagers and other younger workers usually face more negative effects than more experienced workers. For consumers, the changes typically mean the public will end up paying more for goods, she says.
Businesses with fewer than 20 employees have a longer timeline to get to $15, according to the city.
Jesse Iñiguez, a co-founder of Back of the Yards Coffee, says the business employs 10 workers who are on tipped wages. He’s been trying to figure out how to get the workers to $15 without tips. He wants to eliminate the tipped-wage scale because he thinks it encourages wage discrimination.
“We feel it’s very important that we all play a part in order to maintain the economy,” Iñiguez says. “It doesn’t serve me any good to hoard the cash if my employees don’t have the money to spend at the neighborhood corner store.”
Many of the coffee shop workers are between 16 to 24 years old.
“Just because it’s an entry-level job, it doesn’t mean that they should be receiving poverty wages,” Iñiguez says.
Andrea Herrera, founder of Amazing Edibles Gourmet Catering, has paid workers above the minimum wage, ranging from $17 to $40 an hour because, she says, she doesn’t think people can live on a minimum wage.
But the pandemic has tested her Near West Side business, resulting, she says, in a 90% reduction in revenue. She cut her staff, which included full-time and part-time workers, from 25 to 7. Se won’t have much to worry about when the minimum wage rises but sees how it could be a struggle for other business owners.
“Almost all of us have lost revenue or are barely hanging on,” Herrera says.
Businesses like Target have already bumped up wages to $15 an hour.
Carlos De Leon has worked as a cook at McDonald’s for 10 years. De Leon is a single father, and his wages support his three children — ages 14, 11 and 8.
He says he typically worked six to seven hours a day at a McDonald’s in the Loop. Then, with the pandemic, the restaurant cut his hours and days. In late April, he and his co-workers went on strike for about three weeks to demand better personal protective equipment after two workers contracted coronavirus.
And he had to apply for unemployment benefits in recent weeks after the location closed for renovations. When he eventually returns to work, his pay will increase to $14.
But he says: “Well, with everything that has been going on right now, it’s not going to be sufficient. I’m going to have to look for another part-time [job]. We have kids. We have to look out for them.”
De Leon and Townsend don’t work 40 hours a week, meaning they won’t get the full benefits of the bump in pay. Ruffini says that’s not unusual for workers in the food industry, who usually don’t work full time.
Townsend has two children, a 9-year-old and a 1-year-old, and helps take care of her 21-year-old nephew. She works at a McDonald’s on the South Side and says she hopes the company agrees to pay their workers $15 before next year. Like De Leon, Townsend and her co-workers went on a strike in recent months after demanding better masks and gloves.
“If I have to keep going on strike with McDonald’s for them to realize that I am worth my value, and my family is worthy, I’m going to keep going on strike,” Townsend says. “I want a better future for myself and for my kids.”
Elvia Malagón’s reporting on social justice and income inequality is made possible by a grant from the Chicago Community Trust.