Raise Chicago
Increase the wellbeing of workers, their neighborhoods, and Chicago’s economy

A Report by the Center for Popular Democracy and Raise Chicago

Introduction

The recession appears to be safely in the rearview mirror for corporations, whose profits and stock prices have rebounded. However, the jobs recovery has been fueled by the proliferation of jobs paying low wages. An earlier study by Action Now and Stand Up! Chicago found that low-wage jobs made up 21% of all jobs lost during the Great Recession, while constituting 58% of jobs created during the recovery.[i]

This trend has exacerbated already increasing wealth and income inequalities in the US[ii]and Chicago. In 2012, Chicago had the 8th highest level of inequality by some measures.[iii] Economists suggest that too much inequality may threaten not only economic growth but economic stability as well, in part because inequality slows consumption for most people.[iv]

On March 18, 2014 Chicago voters voted overwhelmingly – by 86% – to support a referendum raise the minimum wage to $15 for Chicago workers at firms with $50 million in annual receipts and their subsidiaries and franchisees. This initiative allows Chicago to enable workers to get a toehold on the rockface to the middle class, rather than wait on state and federal government action. It offers the opportunity for the city to stimulate and strengthen its economy in the near term. It promises to enable individuals to invest more deeply in themselves, their families, and their communities.

In this paper, we find that the targeted $15 minimum wage will:

• Increase wages: $1,472 million in new gross wages
• Stimulate Chicago’s economy: $616 million in new economic activity and 5,350 new jobs
• Increase city revenues: Almost $45 million in new sales tax revenues
• Decrease labor turnover: as much as 80% less annual turnover
• Modestly increase consumer prices: 2% price hikes at covered firms and franchises

In accordance with the principles of a well-tuned, consumer-driven local economy, this proposed measure would enable Chicago’s economy to perform better while increasing opportunity and wellbeing for more of the city’s low-wage residents.

[i] Action Now and Stand Up! Chicago, “A Case for $15: A Low Wage Work Crisis,” 2012.

[ii] Associated Press, “Top 1% Took Record Share of US Income Last Year,” 2013.

[iii] Alan Berube, “All Cities Are Not Created Unequal,” 2014.

[iv] Jonathan Rauch, “Inequality and Its Perils,” National Journal, 2012.

This report, uploaded on 5/30/14, contains a small correction from an earlier version.