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| Improving Job Quality, Raising the Bar for Workers and Families

THE $15 QUESTION: Higher minimum helps workers and business

Chicago Tribune - June 5, 2014, by Connie Razza - The Great Recession is over! So say the corporations and the wealthiest among us. For the rest of us, the so-called recovery doesn’t feel like much of one at all.

Corporate profits and stock prices have rebounded, but wages have not. Middle-class and low-income workers are still struggling to keep up with the cost of living. Corporate recovery has been fueled by the proliferation of jobs paying low wages.

How can we fix this? Raise the minimum wage.

That’s why Aldermen Proco “Joe” Moreno, Roderick Sawyer and John Arena have introduced an ordinance to raise the minimum wage for Chicago workers to $15 an hour, following a March advisory referendum in a small number of precincts that showed about 86 percent of Chicago voters support such a proposal.

If adopted, the $15 wage would initially apply only to workers at businesses with $50 million or more in annual receipts, and their subsidiaries and franchisees, while workers at smaller businesses would see the wage phased in over a multi-year period.

A new study by the Center for Popular Democracy, where I serve as director of strategic research, shows that the ordinance will increase income for 40 percent of all Chicago workers.

But what about job loss? Big business will say the higher wage will hurt the economy and force layoffs.

Not so.

Our study shows that an additional $1.1 billion would be passed to workers as take-home pay. Almost all of that money will travel through the local economy, generating an additional $616 million in new economic activity and creating 5,350 new jobs.

And there is precedent for these findings elsewhere: The payroll company Paychex and research firm IHS did a survey that found that Washington, the state with the highest minimum wage, also has the highest annual job growth.

Raising the wage isn’t just the right thing to do; it’s the smart thing to do. And although it may seem counterintuitive, the higher wage will help businesses grow. How?

Because too much inequality threatens economic growth and stability by limiting consumers’ ability to buy goods and participate in the marketplace. In other words, who will buy a new car if no one can afford to pay rent?

Unfortunately, the so-called recovery we’re in has been fueled largely by low-wage jobs replacing previously existing higher-wage jobs, further fueling inequality. In 2012, the Brookings Institute named Chicago the eighth most unequal city in the country.

Latinos and African-Americans make up disproportionate portions of the low-wage workforce, exacerbating racial and geographic disparities in the economy. Our study shows that a higher minimum wage will address these disparities by helping low-wage workers to participate more fully in the city’s economy as consumers, and help facilitate economic recovery in the neighborhoods where these workers live.

The current Illinois minimum wage is $8.25 an hour, a dollar higher than the federal minimum wage. Neither of these wage levels has kept pace with inflation or the cost of living, and both fall well below in purchasing power compared to the minimum wage in previous decades.

While the state and the federal government continue to ponder action, Chicago can’t afford to wait. The city is well positioned to take action, and join other cities, such as Seattle, San Francisco, and Washington, that are showing national leadership for urban America while Congress continues to stall.

More families than ever are relying on low-wage jobs to make ends meet. Let’s give them a fighting chance. Let’s make the economy work for all of us, not just the wealthy and the corporations.

Connie M. Razza is the director of strategic research at the Center for Popular Democracy, which gets funding from private philanthropy, community groups and labor organizations.