“Big Box Bill” is a bitter pill for low-skilled Chicagoans
Sixty years of research affirm that mandated wage hikes put low-skilled adults out of work, warns Employment Policies Institute
Publication Date: July 2006
Topics: Living Wage
Washington, DC – Chicago city council’s recently passed “Big Box Bill” will destroy jobs and put low-skilled employees out of work, said the Employment Policies Institute today.
“This Big Box Bill ignores the larger problem that needs to be addressed which is a matter of helping people gain the skills they need to advance in the workplace and earn more on their own,” said Mike Flynn, EPI’s director of legislative affairs. “When the base wage is artificially inflated, those with the lowest skills in the workforce will lose their jobs to automation or even higher-skilled teens entering the workforce.”
Separate studies from Duke, Michigan State, and Boston University all conclude that minimum wage hikes attract teenagers from wealthy families into the workforce, displacing low-skilled adults in the process. Cornell University found that a 10% increase in the minimum wage results in an 8.5% increase in unemployment for adults lacking a high school diploma.
Not only will the Big Box Bill threaten current jobs, but as evidenced in other cities with exceptionally high minimum wages, companies will avoid expansion in regions where the costs of doing business are too high.
“Since Santa Fe’s living wage ordinance went into effect, businesses have opted to expand outside the city limits,” added Flynn. “The inflated cost of doing business in Santa Fe was a virtual ‘Keep Out’ sign for new companies and the jobs they bring.”