Chicago Rules: Living Wage Will Mean Higher Unemployment

You've got to love the law of unintended consequences. Never mind that big-box retailers are a huge source of jobs for entry level positions - a stepping stone to other retail and service jobs, Chicago now says that such companies must provide a living wage.

The ordinance passed 35-14 after three hours of impassioned debate.

The measure requires mega-retailers with over $1 billion in annual sales and stores of at least 90,000 square feet to pay workers at least $10 an hour in wages plus $3 in fringe benefits by mid-2010. The current minimum wage in Illinois is $6.50 an hour and the federal minimum is $5.15.

Mayor Richard M. Daley and others warned the living wage proposal would drive jobs and desperately needed development from some of the city's poorest neighborhoods and lead giants like Wal-Mart to abandon the city.

Wal-Mart spokesman John Bisio said earlier that if the measure passed, ''We'd redirect our focus on our suburban strategy and see how we could better serve our city of Chicago residents from suburban Chicagoland.''

What will this mean? Employers who are forced to incur higher employment costs are more likely to resist hiring new employees. If the costs are high enough, they will relocate or close unprofitable stores.

Anyone want to count on Chicago having higher unemployment in coming months and years as this law takes a hold on the local economy?