Chicago's Minimum Wage Ordinance

Today's NYT reports

After months of fevered lobbying and bitter debate, the Chicago City Council passed a groundbreaking ordinance yesterday requiring “big box” stores, like Wal-Mart and Home Depot, to pay a minimum wage of $10 an hour by 2010, along with at least $3 an hour worth of benefits.

Regardless of where you stand on the US Conference of Catholic Bishops' support for an increase in the minimum wage, won't this be a fascinating experiment to watch?    If this withstands the threat of Mayor Daley's veto and legal challenges by retailers, it might be a municipal "laboratory for reform" that could test the competing arguments.  Again from the NYT article:

With this ordinance, Chicago has opened a contentious front in the growing national movement, led by labor and poverty groups, to raise the incomes of bottom-rung workers through local minimum wage and “living wage” legislation. Some economists say such measures will stifle development and deprive consumers of access to cheap goods, but many poverty experts say that local efforts elsewhere to raise wages have not choked off growth and that the expanding, low-paying retail sector can be safely pressed to raise pay.

“We’re very confident that retailers want and need to be in Chicago, and the question for the city is what kinds of jobs they will bring,” said Annette Bernhardt of the Brennan Center for Justice at the New York University Law School, which helped draft the Chicago bill and has done economic studies of its likely impact.

I also think the federalism/subsidarity angle to this debate is interesting. Again from the NYT article:

The drive to raise state and city minimum wages has grown out of frustration with Congress, which has left the federal minimum wage at $5.15 an hour since 1997. At least 22 states have enacted somewhat higher minimum wage laws.

San Francisco; Albuquerque; Santa Fe, N.M.; and Washington have across-the-board minimum wage ordinances for all but the smallest businesses. Those in San Francisco and Santa Fe have set levels near that in the Chicago bill without driving out retailers, Ms. Bernhardt said.

In the area of the law more familiar to me, predatory lending, the municipal and state attempts to impose tighter restrictions on certain predatory lending practices than exist at the federal level are almost invariably preempted by federal banking law.  I'm currently trying to work through whether principles of subsidiarity might be helpful in thinking about this issues.  It might be interesting to watch what happens to these municiple minimum wage ordinances through that lens as well.

Lisa