Fiscal Policy: A city teetering on the brink of insolvency passes a minimum wage that would reach $13 by 2019, higher than the minimum elsewhere in a state that just elected a Republican governor. What could go wrong?
What's the emergency? Emanuel wanted to jump the gun on any minimum-wage bill that might come out of the state legislature in Springfield, particularly after the election of Republican Bruce Rauner as governor. Such legislation is said to bar cities from raising their minimums above the state's. Rauner has said that any minimum-wage increases should be part of a package that promotes growth without reducing competitiveness.
"Raising the minimum wage doesn't help somebody (who is) unemployed, and it doesn't help somebody who's employed and who could get unemployed because of the lack of competitiveness that raising the minimum wage could engender," Rauner said.
The Chicagoland Chamber of Commerce, Illinois Hotel and Lodging Association and Illinois Restaurant Association all lobbied against the Chicago-only increase, arguing that it would give suburban business a 57% labor-cost advantage.
"Competitiveness" isn't found in the leftist lexicon, but the concept of a living wage is. This notion says that employees should be paid based not on the value of their work but on the demands of their lifestyles. Street protests and the lobbying of pandering policymakers have replaced a good education and an improved skill set.
One alderman who opposed the Chicago-only increase and whose ward borders on nine Chicago suburbs, Mary O'Connor, rightly predicted "unintended consequences," ranging from more "vacant storefronts" to fewer jobs and shorter hours for those having or seeking a job.
Companies are neither charities nor pipelines for income redistribution. Increased labor costs either force them to move to friendlier business climes, hire fewer workers, cut worker pay, pass costs on to customers, replace employees with technology, or all of the above.
Moody's Investors Service has downgraded Chicago's credit rating by three notches, partly the result of $19 billion in unfunded pension debt. In the first decade of this century, the city lost 7.1% of its jobs. Its famous Loop, the second-largest business district in the nation, has reportedly lost 18.6% of its private-sector positions.
Raising the minimum wage will not reverse these setbacks. Time to stop digging, Mr. Mayor.
Read more at Investor's Business Daily