Major Changes Blowing Through the Windy City: Chicago Approves Big Minimum Wage Increase

On December 2, 2014, the Chicago City Council, by a vote of 44-5, approved Mayor Rahm Emanuel’s plan to boost Chicago’s minimum wage to $13 per hour by mid-2019. Under the new ordinance, the minimum wage will increase on July 1, 2015 to $10 an hour from the current statewide hourly rate of $8.25. It then will increase by 50 cents in July 2016 and another 50 cents in July 2017. After that, the minimum wage would go up $1 in July 2018 and $1 in July 2019 to reach $13 per hour. After 2019, yearly increases would be pegged to the local consumer price index, with a limit of 2.5 percent, if the unemployment rate stays below 8.5 percent.

Mayor Emanuel applauded the City Council’s vote in a statement, declaring: “A higher minimum wage ensures that nobody who works in the City of Chicago will ever struggle to reach the middle class or be forced to raise their child in poverty. Today, Chicago has shown that our City is behind a fair working wage.” According to a mayoral panel appointed to study the issue, the ordinance will affect more than 400,000 workers in the city and add approximately $800 million to the Chicago economy.

The Chicagoland Chamber of Commerce and its Illinois counterpart have opposed the increase, saying the state already has a higher minimum wage than that of neighboring states but has lagged in the economic recovery. The Illinois Chamber of Commerce said in a statement after the vote: “Raising the minimum wage has not proven to reduce poverty or narrow the income gap and puts a stranglehold on Illinois’ top job creators: small businesses.”

The City Council’s decision comes in the midst of nationwide increases in the minimum wage in states, cities, and counties. In the November 2014 election cycle, voters in four states supported measures to raise their minimum wages, bringing the number of states to 29 that have passed laws raising the minimum wage beyond the federal rate of $7.25. Cities like Seattle and San Francisco have voted to phase in (through 2018) a $15 per hour minimum wage, and Oakland bumped its minimum wage up to $12.25 per hour, effective March 2015. Portland, Maine and Louisville, Kentucky are also considering increases to around $10 per hour.

The DC area is also facing changes in the minimum wage. As we have reported on before, in Maryland, employers will face not one but two minimum wage increases in 2015. On January 1, 2015, the rate will jump from $7.25 to $8.00 per hour. Then, on July 1, 2015, Maryland will increase its minimum wage again to $8.25 per hour. Tipped employees will continue to have a minimum cash wage of $3.63 per hour, meaning the maximum tip credit will increase. In Montgomery County and Prince George’s County, Maryland, the minimum wage is already $8.40 and is set to rise to $9.55 on October 1, 2015. It then increases to $10.75 in October 2016 and to $11.50 in October 2017. And in Virginia, Sen. Dave Marsden of Fairfax County has introduced legislation for the 2015 session that would gradually increase the state’s hourly minimum wage from $7.25 to $10.10 by 2017 unless a higher federal minimum wage is in place by then.

Arent Fox will continue to monitor minimum wage increases across the country. For more information, please contact the authors of this post or the Arent Fox professional who regularly handles your matters.