Chicago: A fast-tracked $15 minimum wage by 2021 in the City of Chicago would increase paychecks for low-income workers and lift thousands of Chicagoans out of poverty, according to a new study from the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign and the Illinois Economic Policy Institute.
The report notes that the city’s minimum wage ordinance, which was passed in 2014, places a cap on the annual increase in the minimum wage. As a result, the city’s minimum wage cannot rise to $15 per hour until 2025 at the earliest, and may not reach $15 per hour until after the rest of Illinois.
“The cost of living is higher in the City of Chicago,” said study co-author and University of Illinois Professor Robert Bruno. “There has been a movement to raise the city’s minimum wage to $15 per hour over the next two years to boost the purchasing power of Chicago workers.”
The report reveals that cities that currently have higher minimum wages than Chicago’s $13 per hour rate have similar local area unemployment rates. The three cities with minimum wages of at least $15 per hour– San Francisco, San Jose, and Seattle– have lower unemployment rates than Chicago.
“This parallels the bulk of the economic research,” said Bruno. “Raising the minimum wage has small or negligible effects on employment because it reduces worker turnover for employers and increases consumer demand by the working class, offsetting any negative consequences.”
Drawing on peer-reviewed academic research and using industry-standard IMPLAN economic modeling, the report finds that a $15 minimum wage would raise incomes for over 430,000 Chicago workers, the majority of whom are female, people of color, and at least 30 years old. Additionally, an estimated 100,000 Chicago residents would see their earnings increase so much that they would no longer fall below the federal poverty line.
“A $15 minimum wage would reduce income inequality and ensure that families can maintain a decent standard of living in the City of Chicago,” said study co-author and Illinois Economic Policy Institute Policy Director Frank Manzo IV.
At the same time, the impact on consumer prices would be minimal, according to the researchers. Between 2015 and 2018, when Chicago’s minimum wage went up by 46 percent from $8.25 to $12 per hour, food prices only increased 0.5 percent more in the Chicago area than the national average. This, the authors say, is equivalent to about 3 cents for a Big Mac meal at a local McDonald’s restaurant.
“This is why four out of every five Chicago residents support raising the minimum wage to $15 an hour,” Bruno concluded. “A $15 minimum wage would build a strong Chicago economy with little to no downside.”