80% of Cook County municipalities have opted out of minimum wage, sick leave ordinances
The number of Cook County municipalities that have opted out of both ordinances has climbed to 107.
Raising the minimum wage and mandating paid sick leave might sound pro-worker, but leaders in many Cook municipalities have said these measures would impose heavy burdens on businesses, and result in fewer jobs for residents. Research on minimum wage laws backs up their sentiments.
Cook County ordinances raise minimum wage to $13 per hour, mandate up to 5 days’ sick leave
While the federal minimum wage is $7.25 per hour, and Illinois’ statewide minimum wage is currently $8.25 per hour, the city of Chicago and Cook County have each hiked their minimum wages even higher. Chicago City Council passed a minimum wage increase for Chicago in 2014, setting the minimum wage in the city at $10 per hour in 2015, and raising it incrementally every year until it hits $13 per hour in 2019. After 2019, the minimum wage will be subject to annual increases based on the consumer price index, or CPI.
In October 2016, the Cook County Board voted to raise the county’s minimum wage to $13 by July 2020. The ordinance phases in the increase: On July 1, 2017, the minimum wage rose to $10, and the level goes up by $1 each year after that until it reaches $13 in July 2020. After 2020, the county minimum wage will be subject to increases based on the CPI. The ordinance states that in each year, the highest minimum wage governs in Cook County, whether that is the federal minimum wage, the state minimum wage or the county’s minimum as set forth in the new law.
Interestingly, Chicago’s and Cook County’s ordinances provide that when unemployment in Chicago or Cook County, respectively, reaches 8.5 percent or higher, the minimum wage will not increase the following year.
Along with the minimum wage increase, the Cook County Board also passed an ordinance mandating that employers in Cook County provide each employee with one hour of sick leave for every 40 hours worked, up to 40 hours of paid sick leave per year, for employees who have worked at least 80 hours within a 120-day period. The mandate also requires employers to allow employees to carry over to the next year half, or up to 20 hours, of their unused, accrued sick leave. Chicago passed a similar sick leave ordinance in 2016.
107 localities opt out of both Cook County ordinances
Since Cook County passed its minimum wage and sick leave ordinances in October 2016, Illinois Policy Institute research shows 107 Cook County municipalities have opted out of both ordinances, one municipality has opted out of only the sick leave ordinance, and three municipalities have opted out of only the minimum wage ordinance. Concerns for the effect on local businesses have played a significant part in many opt-out discussions.
On June 27, the Wilmette Village Board voted to opt out of the minimum wage and sick leave ordinances by votes of 6-1 and 5-2, respectively. The Wilmette/Kenilworth Chamber of Commerce, which represents many small businesses, urged the village board to opt out, explaining that “[t]he majority of respondents [to the chamber’s survey of local businesses] believe they would have to raise prices in order to comply with a mandatory minimum wage increase and mandatory paid leave” and that “[p]roviding and tracking paid leave for full and part-time employees … will cause a significant financial hardship for the majority of respondents.”
Reflecting on the River Forest Village Board’s unanimous vote in March to opt out of the Cook County ordinances, Oak Park River Forest Chamber of Commerce President Cathy Yen commented that small businesses operate on “extremely thin margins, … [which] mean there is little excess profit that can be reallocated to employee salaries,” according to the Chicago Tribune. Yen also told the Tribune that business owners would “need to pass on the higher labor costs to the consumer through increased prices.”
And in Skokie, where a move to opt out failed on a 3-3 tie vote July 6, according to the Skokie Review, a trustee who voted to opt out cited her concern for struggling business owners, who would face significant difficulties under the new mandates.
New study points to loss of jobs and work hours due to Seattle’s minimum wage increases
A June 2017 University of Washington report on the effects of Seattle’s minimum wage hike found a 9 percent decrease in hours worked by lower-wage workers and a decline in total payroll for such jobs during the second phase of the wage hike in 2016, when rates climbed to as much as $13 an hour from as much as $11 an hour. (The rates apply differently depending on factors such as the size of the employer.) MIT labor economist David Autor said in a statement reported by the Los Angeles Times, “[The study] suggests we should be proceeding cautiously when we start pushing minimum wages into ranges where they are pretty significant.”
The June 2017 study echoed the 2016 report by University of Washington researchers on the effects of the first phase of Seattle’s increase in its minimum wage, when the rate increased to as much as $11 an hour from $9.47 an hour. The 2016 study revealed that the employment rate for low-wage workers fell by 1 percentage point, and the number of hours worked by low-wage workers lagged behind those of similar workers in the region. Moreover, the income gains for low-wage workers who kept their jobs were mostly due to the strong local economy, with only 25 percent of those gains attributable to the hike in the minimum wage. The Washington Post summarized the 2016 study: “[A]lthough workers were earning more, fewer of them had a job than would have without an increase. Those who did work had fewer hours than they would have without the wage hike.”
A study released in June by researchers from the University of California, Berkeley, however, found the hike in Seattle’s minimum wage had no effect on employment in Seattle’s food services industry. But Leslie Shedd, vice president of the National Restaurant Association, said in an emailed statement to The Associated Press, “A study in one of the wealthiest cities in the U.S. does not reflect the impact drastic minimum wage increases could have across the country and should not be relied upon as this discussion continues – especially considering other studies have refuted these results.”
Minimum wage hikes can drive companies out of business
Increases in minimum wages can drive some firms out of business entirely. A Harvard Business School study released in April examined San Francisco-area minimum wage hikes and their effect on restaurants in the Bay Area. The researchers found that across all restaurants, a $1 increase in the minimum wage means a 4-10 percent increase in the likelihood a restaurant will go out of business. But wage hikes have a worse effect on “lower quality” restaurants: A $1 increase in the minimum wage leads to a 14 percent rise in the likelihood a 3.5-star-rated (i.e., median-rated on Yelp) restaurant will close, according to the study. The report also found that minimum wage hikes deter the entry of new businesses into the restaurant industry.
The study’s authors noted that according to U.S. Bureau of Labor Statistics data, the restaurant industry uses minimum wage workers more than other sectors.
Minimum wage increases can make it harder for teens to get starter jobs, and can hurt minority communities
Cook County Legislative Committee Chairman John Daley described the minimum wage hike and sick leave legislation as “the moral and right thing to do” when the Cook County Board passed the measures in October 2016, according to the Chicago Tribune. But research shows that increasing the cost of hiring people through minimum wage hikes means many workers with lower skill levels and comparatively little experience will be priced out of the job market altogether, and many job-creating businesses will have a hard time staying afloat.
Hikes in the minimum wage can make it more expensive for employers to hire relatively inexperienced teens, and can contribute to unemployment among young people. A study released in December 2015 by University of California, San Diego Assistant Professor of Economics Jeffrey Clemens reveals that minimum wage increases between 2006 and 2012 reduced employment for people ages 16 to 30 with less than a high school diploma by 5.6 percentage points.
And minimum wage hikes can reduce job opportunities in minority communities. According to a 2011 study by the Employment Policies Institute, for every 10 percent hike in the minimum wage, employment declined 6.5 percent for 16-to-24-year-old black males without a high school diploma. By comparison, employment decreased 1.2 percent for Hispanic males, and dropped 2.5 percent for white males in the same age and education categories.
Statewide, black Illinoisans had a jobless rate of 12.7 percent in 2016, according to Bureau of Labor Statistics data; Illinois is tied with Nevada for the highest black unemployment rate in the nation. The black unemployment rate in Illinois is more than double the state’s jobless rate for white residents.
In Cook County, young black residents in particular suffer from high rates of joblessness, with more than one-third of the county’s black 20-to-24-year-olds out of both school and work in 2015, according to a June 2017 report by researchers at the University of Illinois-Chicago.
The Cook County Board effectively admitted that wage hike mandates can depress employment when they included unemployment escape clauses in the ordinances. But if 8.5 percent countywide unemployment is high enough to halt increases in the minimum wage under the ordinance, shouldn’t the state’s 12.7 percent black unemployment rate and the fact that 34.3 percent of Cook County 20-to-24-year-old black residents are out of both school and work give lawmakers pause?
It is not surprising that so many municipalities are rejecting ordinances that can make it even harder for businesses to stay afloat, and to provide job opportunities for residents who need them. Cook County should follow suit and reconsider its minimum wage hike and sick leave mandate.
Cook County municipalities opting out of minimum wage, sick leave ordinances (107): Alsip, Arlington Heights, Barrington, Bartlett, Bellwood, Bensenville, Berkeley, Blue Island, Bridgeview, Broadview, Brookfield, Buffalo Grove, Burbank, Burnham, Burr Ridge, Calumet City, Calumet Park, Chicago Heights, Chicago Ridge, Country Club Hills, Crestwood, Des Plaines, East Dundee, East Hazel Crest, Elgin, Elk Grove Village, Elmwood Park, Evergreen Park, Flossmoor, Ford Heights, Forest Park, Forest View, Harvey, Hazel Crest, Glenview, Glenwood, Golf, Hanover Park, Harwood Heights, Hickory Hills, Hillside, Hinsdale, Hodgkins, Hoffman Estates, Homewood, Hometown, Indian Head Park, Inverness, Justice, La Grange, La Grange Park, Lansing, Lemont, Lincolnwood, Lynwood, Lyons, Markham, Matteson, Maywood, Melrose Park, Merrionette Park, Midlothian, Morton Grove, Mount Prospect, Niles, Norridge, North Riverside, Northbrook, Northlake, Oak Forest, Oak Lawn, Orland Hills, Orland Park, Palatine, Palos Heights, Palos Park, Park Forest, Park Ridge, Posen, Prospect Heights, Richton Park, River Forest, River Grove, Riverdale, Riverside, Rolling Meadows, Roselle, Rosemont, Sauk Village, Schaumburg, Schiller Park, South Barrington, South Chicago Heights, South Holland, Steger, Stickney, Stone Park, Streamwood, Summit, Thornton, Tinley Park, Westchester, Western Springs, Wheeling, Willow Springs, Wilmette, Worth
Cook County municipalities opting out of minimum wage ordinance, complying with sick leave ordinance (3): Cicero, Dixmoor, Franklin Park
Cook County municipalities opting out of sick leave ordinance, complying with minimum wage ordinance (1): Bedford Park
Cook County municipalities complying with the minimum wage and sick leave ordinances (13): Barrington Hills, Berwyn, Countryside, Deerfield, Evanston, Glencoe, Kenilworth, McCook, Northfield, Oak Park, Palos Hills, Skokie, Winnetka
Awaiting response (4): Dolton, Olympia Fields, Phoenix, Robbins