Chicago: Groundbreaking Retail Workers Living Wage Law Passes

By a vote of 35 to 14, the Chicago city council yesterday approved a new ordinance requiring large retailers in the city to phase in a living wage for their employees of $10 per hour plus $3 per hour in benefits-- the highest minimum wage established for any industry sector in the country.  If signed by the mayor, the law would raise pay for tens of thousands of workers in retailers such as Wal-Mart, Target, Toys R Us, Lowe's and Home Depot.  A broad coalition of organizations including ACORN, labor unions and church groups worked together for its passage.

As discussed here last month, this law is part of an emerging trend of states and local governments establishing different, higher minimum "living wage" standards for selected industrial sectors, from larger employers to tourist zones to hotels.  While innovative in the modern era, the Chicago law is a return to the historic practice of federal and state laws creating different minimum wage levels both between and within different industries.

Because the Chicago ordinance allows employers to pay higher wages in lieu of paying the increased benefits required under the law, the law is clearly not preempted by federal ERISA law, as this legal analysis by the Brennan Center explains.   “Every federal court of appeals that has reviewed a wage law like the Chicago ordinance," explains Paul Sonn, deputy director at the Brennan Center, "has upheld the law under ERISA.â€?

And while large retailers covered by the ordinance are making noises about not building new stores in the city, the reality is that after Santa Fe created a living wage of $9.50 per hour for large employers, Wal-Mart asked for approval to build a new Supercenter.  The fact that leading retailer Costco already pays all its employees a living wage of $10 per hour plus benefits nationwide emphasizes that "big box" retailers can thrive paying a living wage.  See this economic analysis of why the expansion drive by large retailers means higher wage standards will not deter their growth.