New Study Shows $13 Minimum Wage Hike Would Eliminate 11,600 Jobs in Chicago

Majority of Chicagoans Polled Prefer One Statewide Wage, Recognize Negative Impact of $13 Starting Wage

A new study shows that a $13 minimum wage would eliminate more than 11,600 jobs in Chicago. In addition, Illinois taxpayers could be hit with up to $72 million in annual costs if approximately 17,500 state and local employees affected by an increase to $13 in Chicago are included in the final law.
Statewide, more than 80,000 jobs would be lost at the $13 wage level, at a cost of $547 million annually to taxpayers if approximately 126,000 state and local employees affected by a $13 minimum wage in Illinois are included in state action.
The restaurant and foodservice industry provides 515,600 jobs in Illinois, with 318,000 jobs in Chicago. Over six percent of all jobs in the state are directly or indirectly related to the lodging industry, helping to generate $2.5 billion in tax revenue for state and local governments. The study was released by the National Restaurant Association and the American Hotel & Lodging Association and conducted by labor economist David Macpherson of Trinity University.
“A $13-an-hour starting wage may be well-intentioned but it would harm Chicago’s vibrant hospitality industry, including its restaurant, tourism and convention business,” said Scott DeFife, Executive Vice President of Policy and Government Affairs for the National Restaurant Association. “The hospitality industry led Illinois’ job creation throughout the recession and continues to play a crucial role in youth employment. Elected leaders should focus on common-sense solutions that promote opportunities for people of all experience levels.”
“Study after study has shown the negative effects of increasing the minimum wage too high and too fast,” said Brian Crawford, Vice President, Government & Political Affairs for the American Hotel & Lodging Association. “Ultimately, these wage increases hurt those who they are intended to help. As an industry, our sector has been the bright spot in the economy but these kinds of wage increases will hamper our industry’s ability to offer good jobs with benefits to those seeking an opportunity and a path to a lifelong career.”
In this study, Dr. Macpherson uses Census Bureau data to estimate the impact on Chicago’s labor market and taxpayers’ wallets from raising the minimum wage to $13 an hour. Dr. Macpherson’s employment estimates follow the methodology used by the nonpartisan Congressional Budget Office in its report earlier this year estimating the impact of a $10.10 minimum wage nationwide, which in turn relied on 60 different empirical studies to formulate its estimates.
According to the study, while many industries would be impacted negatively if the wage were increased to $13-an-hour statewide, three sectors would be hit the hardest: retail trade; arts, entertainment, recreation, accommodations and food services; and manufacturing.
Illinois residents recognize the negative impact of a dramatic starting wage increase. According to a recent poll, two-thirds of respondents prefer one statewide wage rate and believe that the state legislature, rather than a city council, is the best place to decide wage policy.
Moreover, nearly 60 percent of respondents believe and are concerned that a $13 minimum wage rate would negatively impact entry-level job opportunities for youth and low-skilled individuals in Chicago.
The online survey of 1,000 Illinois residents (including 500 Chicago residents) was conducted November 18-24, 2014, by ORC International for the National Restaurant Association.
About the National Restaurant Association
Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which comprises 990,000 restaurant and foodservice outlets and a workforce of more than 13.5 million employees. We represent the industry in Washington, D.C., and advocate on its behalf. We operate the industry’s largest trade show (NRA Show May 16-19, 2015, in Chicago); leading food safety training and certification program (ServSafe); unique career-building high school program (the NRAEF’s ProStart); as well as the Kids LiveWell program promoting healthful kids’ menu options. 

About the American Hotel & Lodging Association
Serving the hospitality industry for more than a century, AH&LA is the sole national association representing all sectors and stakeholders in the lodging industry, including individual hotel property members, hotel companies, student and faculty members, and industry suppliers. Headquartered in Washington, D.C., AH&LA provides members with national advocacy on Capitol Hill, public relations and image management, education, research and information, and other value-added services to provide bottom-line savings and ensure a positive business climate for the lodging industry. Partner state associations provide local representation and additional cost-saving benefits to members.