Living Wage for Employees of Large Retailers – Chicago

In July 2006 the Chicago City Council voted 35-14 to pass a new ordinance that requires large retailers to provide employees with a compensation package consisting of a minimum living wage and a minimum benefits package.

"Large retailers" are defined as those that occupy more than 90,000 square feet and make more than $1 billion in annual gross revenue (includes Wal-Mart, Target, Toys R Us, Lowe’s, and Home Depot). 

The living wage portion of the compensation package is set at $9.25/hr in 2007 and would rise each year to $10.00/hr by 2010.  After 2010, the hourly living wage will be raised by the increase in the cost of living.

Thelarge retailers must also provide their employees supplemental wages or demonstrate that their employees’ benefits are worth at least$1.50/hour in 2007 and $3.00/hr by 2010.

Opponents argue that the city has exceeded its home rule authority and that the new law is discriminatory. While a legal analysis by the University of Illinois College of Law found that the law did not conflict with the federal standards set by the Employee Retirement Income Security Act (ERISA), opponents argue that it does and ERISA should preempt the Chicago law. In September 2006, Mayor Daley began arguing that a Big Box Living Wage Ordinance would deny jobs to poor blacks and latinos—an argument which garnered him new support.

An analysis of an earlier version of the law found that it would affect 35 stores and approximately 16,250 employees.  A poll prior to enacting the rule indicated that 84 percent of Chicago voters support the proposal.

Despitethe overwhelming support for the Big Box Living Wage Ordinance, Mayor Daley followed through on a threat to veto the ordinance in September 2006 — his first veto in his seventeen years as mayor.  The Mayor also convinced four Council members who originally supported the ordinance to change their votes.  With a two-thirds majority needed to override the Mayor’s veto, the attempt to override came up just short on a vote of 31-18.

However, the Big Box Living Wage Ordinance remains a good model of how cities can fight for a living wage for its residents.

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