The struggle to raise pay for low-income workers, once fought in agricultural fields and on factory floors, is moving to the aisles of big retailers in Chicago where large national chains like Wal-Mart and Target may be forced to offer higher wages along with every-day low prices.
While retailers complain the legislation may lead them to stall plans for new downtown stores, Wharton faculty say Chicago's proposed living wage law is largely symbolic and would have little real impact on large retail chains or their employees. "The bottom line is it's feel-good legislation that won't have an effect on firm location or firm costs -- or on low-income families in Chicago, either," says Wharton finance professor Robert Inman.
Under a proposal passed by Chicago's City Council in July, retail chains with sales of more than $1 billion or stores larger than 90,000 square feet will be required to pay workers $10 an hour in wages and $3 in benefits by 2010. Illinois' current minimum wage is $6.50 an hour, while the federal minimum wage -- last increased in September 1997 -- remains at $5.15 an hour.
"It's a bit of a transfer to low-income families, but not significant enough to end poverty in the City of Chicago, if that's what the objective is. I can't imagine it's going to drive any of these stores out of town," Inman adds.
Support for the EITC
In the past decade, more than 140 cities and counties have passed so-called living wage laws -- setting their own hourly wage above the federal minimum -- designed to provide workers with a decent standard of living. The rate of pay and conditions vary from place to place, but most living wage statutes target firms doing business with government.
Eighteen states require employers to pay rates above the federal minimum wage and six states will have ballot initiatives this fall to raise state minimums.
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