Better late than never: Unfortunately, Oak Park should opt out of minimum wage hike
The Oak Park Board of Trustees will meet in an “emergency” session Friday evening to consider delaying implementation of the Cook County minimum wage increase scheduled to take effect on July 1st, so that it has time to study an issue that it should have been studying for the past three months. They didn’t do their homework; now they need an extension.
The Board — or maybe it was staff — was on the right track a couple weeks ago when the business community’s request to discuss the issue was put on the June 19th agenda. Regardless of where you stand on it, home-rule communities have the right to opt out, and so at least fully considering that option in a timely manner would have been the responsible thing for the Board to do.
Alas, after a frank and thoughtful discussion among their followers on Facebook, trustees decided they’d heard enough and the matter was pulled off the June 19th agenda, the implication being that it was settled: Oak Park would not opt out of the county minimum wage increase. I think the new trustees’ communication on social media is terrific, but we shouldn’t be making actual policy decisions via social media. Use it for feedback and discussion, but make decisions at the Board table.
The business community shouldn’t have even had to ask that this issue be addressed. The Village president and hold-over trustees should have known better than to ignore such an important issue.
Anyway, should Oak Park opt out? It’s a hard question for me, because I believe that $10 an hour is a reasonable minimum wage, and that it should increase over time in a systematic way.
The impact of past minimum wage increases, according to research I’ve read on the subject, has been generally good for workers and has not resulted in widespread job losses or business failures. That said, one recent study found that minimum wage hikes could be the final nail in the coffin for already struggling restaurants — pushed over the edge by the added labor costs, but perhaps just hastening the inevitable.
Most minimum wage increases have been much smaller than the Cook County increases, however, so the relevance of past research is debatable. The increase taking effect July 1 is 21%, from $8.25 an hour to $10 an hour, with additional 10%, 9%, and 8% hikes every year until 2020, when it reaches $13. That’s a big increase in the cost structure for most small businesses, if not for larger companies.
Two new studies are out analyzing the impact of an even larger minimum wage increase in Seattle. One says it’s helped low-wage workers. The other says it has hurt them. The left has been touting the first study; the right has embraced the second. No need to go all ideological on this, Oak Park. The studies actually appear to agree that the impact on restaurant workers in Seattle has been generally positive. I assume that most minimum wage jobs in Oak Park are in food service, so the research may auger in favor of the increase. You can read the studies here and here. Warning: they’re slow slogging. There is a good accessible discussion of them on FiveThirtyEight.com here.
But the Seattle studies are not really on point for Oak Park. Seattle’s hike covers a geographically large city where all employers were put on a level playing field. Most businesses there compete for customers with other businesses within the city of Seattle. A city that size also contains a lot of larger companies that can handle wage increases more easily than small businesses. In fact, Seattle’s ordinance distinguishes by business type. In Oak Park, most low-wage employers are small businesses (although our two hospitals may have a number of minimum-wage jobs). Because surrounding communities including Forest Park, River Forest, and Elmwood Park have all opted out already, small businesses in Oak Park would be put at a competitive disadvantage if Oak Park stays in. Our local businesses, especially restaurants, compete in this larger geographical area.
Opting out would not only hurt existing Oak Park businesses, it could hinder new business formation. Why locate within the Village when you can compete for the same customers with a much lower wage structure in Forest Park or River Forest? Our retail base in Oak Park is already struggling. Taxes are higher than in surrounding areas, except perhaps River Forest, the price we pay for better schools. More and more shopping is done on-line. Restaurants are a key to getting people out and about, yet they would likely be hurt the most by the increase. Were the wage hike to cause businesses to close, or to move, or hinder new business openings, it could result in fewer low-wage jobs than we have now.
I’m all for the idea of gradually and systematically raising the minimum wage, but it has to be done on a uniform basis that covers the entire relevant labor and consumer market. Not opting out of the Cook County minimum wage increase would be a great way for us to show symbolic support for the idea of a significant increase in the minimum wage, but the reality will be different for our small businesses and workers. If, on the other hand, a progressive community like Oak Park opts out, it should send a message to policymakers that a broader approach to this issue is necessary.
