Chicago minimum wage rises to $12 per hour
The city has seen a 45 percent increase in its minimum wage since 2015.
Chicago’s minimum wage is rising to $12 from $11 beginning in July. The increase is the result of a city ordinance passed in 2014 mandating yearly increases in the minimum wage until reaching $13 per hour in 2019. After 2019, annual minimum wage hikes will be tied to the consumer price index.
If previous minimum wage hikes are any indication, small business owners can expect to feel a pinch. Other spikes in the minimum wage triggered by the 2014 ordinance have forced some businesses in Chicago to shut down or reduce staff. This dovetails with a 2017 study on the effects of Seattle’s 2014 minimum wage ordinance. The study found that, with the exception of the restaurant industry, gradual minimum wage hikes resulted in a net reduction in total payroll for low-wage jobs, as well as cuts to low-wage workers’ hours. Seattle’s minimum wage ordinance “lowered low-wage employees’ earnings by an average of $125 per month in 2016,” the study found.
Moreover, minimum wage hikes have been shown to inflict the most harm on minorities. In Chicago, where the unemployment rate for black men between the ages of 20 and 24 already exceeds 40 percent, routine minimum wage increases risk causing even more pain.
Minimum wage increases too often harm those they’re intended to help. As July approaches, Chicago’s most vulnerable low-wage workers will likely be first to fall victim to those unintended consequences.
Rather than raising costs on employers, state and local lawmakers should work to establish a more welcoming the tax and regulatory environment in Illinois and Chicago. Fostering a business climate more conducive to jobs growth and economic prosperity would help expand gainful employment opportunities and diminish joblessness.