Chicago's higher minimum wage worries some suburban businesses
Waitress Gina Maglaya makes $4.95 an hour plus tips working at Tiffany's Restaurant & Cafe on Touhy Avenue in Des Plaines. On slow days, she earns $8.25 an hour, the minimum wage.
Though Chicago's new minimum wage could pay her at least 20 percent more when it goes into effect next summer, Maglaya says it's not enough to make her leave her suburban job for a higher-paying one a few miles down the road inside the Chicago city limits.
“I like it here. This is my comfort zone. I can walk to work,” says Maglaya, a Des Plaines resident who's worked at the restaurant for almost a year. “You need to be happy where you work, so it's not just about the pay. But that extra money would make a big difference. I could afford things like health insurance.”
The Chicago City Council voted Tuesday to increase the minimum wage, creating a pay gap between Chicago and the suburbs after the Illinois House adjourned Wednesday for the year without taking action on the issue.
Some suburban small-business owners near the Chicago border aren't concerned — for now — about losing workers when the Chicago minimum wage rises from $8.25 to $10 an hour in July 2015. It will then gradually increase to $13 an hour by 2019. The hourly wage for tip workers will rise from $4.95 to $5.95 an hour.
But other suburban business owners worry about the higher costs of providing competitive salaries down the road. They say it could cost thousands of dollars more and ultimately translate to higher prices for products and services,
Meanwhile, the minimum wage is set to remain $8.25 in the suburbs and downstate. The legislature could still act before the first Chicago increase takes effect in July, but the latest proposal still would leave a gap. That bill, approved by the state Senate Wednesday after the House had already adjourned, would raise pay to $9 next summer and $11 by 2019 everywhere but Chicago.
Paradise Pup co-owner George Manos supports the minimum wage increase, even if it ultimately forces him to raise salaries and menu prices at his Des Plaines hot dog stand.
“These people work so hard in this industry,” he said. “I've worked those minimum wage jobs in the restaurant business. I know what it's like to start at the bottom.”
Longtime Paradise Pup customer Nina Allen said higher costs would be fine with her.
“I wouldn't mind paying a little more,” said Allen, of Northbrook. “If you're working, you should be able to support your family.”
Tiffany's Restaurant managers Lauren Hodges, of Skokie, and Cheryl Eggert, of Chicago, also sympathize with minimum-wage earners. But with their business struggling, they can't afford to shell out several hundred dollars a week to cover higher salaries and payroll taxes for their 18 employees, Hodges said.
“It's a good thing for the employees, but not for small businesses that are struggling,” Eggert said. “McDonald's and Taco Bell? Make those in corporate America pay.”
About 90 percent of McDonald's restaurants in the United States are independently owned and operated by franchisees who set wages according to job level and local and federal laws. McDonald's does not determine wages set by its more than 3,000 U.S. franchisees, said Lisa McComb, spokeswoman for Oak Brook-based McDonald's.
“McDonald's and our independent franchisees support paying our valued employees fair wages aligned with a competitive marketplace and that are compliant with local and federal laws. We believe that any minimum wage increase should be implemented over time so that the impact on owners of small and medium-sized business, like the ones who own and operate the majority of our restaurants, is manageable,” she said.
McComb said she would not speculate on whether McDonald's workers would leave suburban restaurants in favor of working in Chicago. She also declined to speculate how the new minimum wage would affect its corporate bottom line.
Two banquet businesses operating near the Chicago border reported they already pay more than $8.25. For example, dishwashers and busboys at Rosewood Restaurant & Banquets in Rosemont make $10 an hour, the manager said.
Ray Samlow, owner of Bella Vista Banquets in Bensenville and four other food facilities and restaurants, said he pays his workers, including servers, $10 per hour. So Chicago's action to increase the minimum wage likely won't lure away his workforce, he said.
“For years, I have taken care of my people, and they have been with me for a long time,” he said.
Samlow also owns the Bella Vista catering operations inside the Holiday Inn Express in Palatine, the American Legion Hall in Elmhurst, and the Edge Ice Rink in Bensenville. He also owns Grandma Rose's Pizzeria in Schaumburg.
“They are all trusted employees and worth paying more, and it helps keep them here,” he said.
Mark Keane, owner of Keane Maintenance, a residential repair and remodeling business in Bensenville, said he pays workers $15 per hour and hires for each project, so minimum wage increases won't affect his business, he said.
“For the kids out of school who may still be living with their parents, the minimum wage is OK,” Keane said. “But for adults who are raising a family and getting paid minimum wage, it just doesn't cut it. I don't know how they would do it.”
Rosemont, where numerous hotels, restaurants and entertainment venues employ many people, offers advantages that will keep workers from leaving for a higher minimum wage across the border in Chicago, said Rosemont spokesman Gary Mack, saying he has spoken with the Rosemont Chamber of Commerce and others in town.
“Rosemont is such a great place to work, they likely won't leave for such a small disparity in the amount being paid extra in the city's minimum wage,” Mack said. “We also have a lot of advantages here that aren't in the city, like employee shuttles, walking distance to various transportation. No, the city's change in minimum wage won't have any impact on us whatsoever.”
But it could be the final straw for some businesses. Ashok Pandit, a clerk at Pantry Plus in Bensenville, says the struggling convenience store, owned by his brother, can't afford more money for salaries.
“(A minimum-wage increase) would hurt even more,” he said.