Taking advantage of state law allowing them to essentially ignore some dictates of Cook County’s government, a growing number of Cook County suburban communities are opting out of labor ordinances passed by the Cook County Board last fall.
The ordinances, which take effect July 1 and mirror similar rules put in place in Chicago, would require employers to pay workers a minimum hourly wage of $13 by 2020, and to give all workers paid sick leave.
Six municipalities have opted out of one or both county ordinances, including Barrington, Bedford Park, Mount Prospect, Rosemont, Tinley Park and Oak Forest. At least another half dozen boards are discussing the matter, while others consider adopting their own timetables to increase the minimum wage and install a less burdensome sick leave mandate.
With the county now fragmented into different legally-binding areas, and with more splinters forthcoming, Cook County business owners – particularly those with locations or franchises in different municipalities - are questioning how their businesses will be impacted by inconsistent minimum wage laws, and discussing whether the state or courts may need to step in to unravel the tangling web.
Larger corporations who already pay well above minimum wage likely won’t be affected by differing ordinances, said Katina Xouria, chief financial officer at Mount Prospect’s Robert Bosch Tool Corporation, which employs about 600 people making power tools and accessories.
Though Mount Prospect opted out of the minimum wage ordinance, it’s unlikely Bosch would have felt any immediate ramifications, she said.
“We pay market rate, and we pay competitive wages for the area,” Xouria said. “All the jobs we have are not minimum wage.”
However, small business owners likely will start considering other options, said Andrew Bleiman, co-founder of the Northern Illinois Franchise Association, and partner at the law firm of Marks and Klein.
He said employers may opt to put in place oversight based on hourly need, resulting in fewer hours for employees.
“People will be sent home perhaps earlier if business is slow or … they don’t need as much staff,” Bleiman said. “It really will be strict oversight management of labor costs in these small businesses.”
Jamie Izaks, co-founder of NIFA and president of All Points Public Relations in Deerfield, believes franchises may adjust pricing at different locations.
“Dynamic pricing models will become more prevalent in small businesses than ever before,” Izaks said.
Jim DiVerde and Chuck Martin own six Chicago area Culver’s restaurant franchise locations, including four in Cook County: Schaumburg, Arlington Heights, Mount Prospect and Rosemont, the latter two of which have opted out of the county’s minimum wage ordinance.
“I would hate to have to manage our business in two different ways because we try to unify our businesses,” said Nabil Raihani, operations manager for DiVerde and Martin. “We try to have the same starting wage for everybody.”
Raihani said they are “quite pleased” that Mount Prospect has opted out of the minimum wage ordinance. Martin and DiVerde already pay employees more than the current $8.25 minimum wage, but if Schaumburg and Arlington Heights do not opt out of the county’s ordinance, they may have to pay more at their other two locations to stay an attractive employer, despite the villages opting out of the increase.
“I would be forced to match whatever the other ones are paying,” Raihani said. “It will take a big chunk of our bottom line, and unfortunately, we will have to raise our prices.”
The disparity in minimum wage within Cook County is exemplative of the unequal playing field now seen on a county to county level, DiVerde said.
“That’s what makes it tough,” DiVerde said. “There’s so many consumers I talk to every day that really don’t shop in Cook County … . I never fill up my(fuel) tank [in Cook County]; the price jumps 20 to 40 cents a gallon because of different taxes. That worries me, that we’re going to have that same problem.”
“In 15-20 minutes, I can drive through three counties: Kane, DuPage, then Cook,” DiVerde continued. “When [this ordinance] is only happening to the one, it puts us at a competitive disadvantage.”
The Schaumburg Business Association has asked the Schaumburg village board to opt out of the county’s minimum wage ordinance, based on feedback provided by the business community, said Allison Albrecht, communications manager for the village.
The SBA shared the results of a survey, reporting 57 businesses out of 114 survey respondents said they will be harmed by the minimum wage ordinance.
The SBA further found 28 percent of Schaumburg businesses believe the ordinance would cause them to downsize; 21 percent would move out of Schaumburg to another county; and 12 percent would indefinitely freeze job growth.
“The Schaumburg Business Association Board of Directors believe the … Cook County Minimum Wage ordinance will negatively impact economic growth, hiring, retention, and business recruitment within Schaumburg as neighboring communities that reside in different counties would have a lesser cost to do business,” Matt Frank, the village’s economic development manager, wrote in a memorandum to Schaumburg officials. “The (SBA) also believes that there is a larger unknown tertiary impact that will be felt due to many businesses that use the minimum wage as a marker to set salaries for their workforce.”
The SBA did not offer a position on the mandated sick leave ordinance.
With additional rising costs of employing full-time workers – overtime pay, healthcare, and more – minimum wage increases present another threat to businesses, Izaks said.
In the long run, that could lead to businesses shuttering their doors, Bleiman said.
DiVerde said he knows of at least one Culver’s operator who, late last year, sold three Illinois restaurants to escape the Illinois business culture.
“I know several others that are not interested in looking in Chicago or Cook County because of the unfriendly business [atmosphere],” DiVerde said.
He and his business partner are among them.
“We very much want to grow and expand, and we’re currently approved for expansion and looking to do so, but under no circumstances will it be in Cook County,” DiVerde said.
On a grander scale, counties, states and the country as a whole need to be careful when it comes to mandating pay, Xouria said.
It’s very easy to move a business from county to county, she said, noting she believes the minimum wage ordinance will impact Cook County negatively.
“Some people will have a higher minimum wage, which clearly helps the employees,” she said. “The question is: At what level does it hurt the employees because companies will move out?”
Izaks said he’s spoken with many franchise owners, and he’s found no one who disagrees that the minimum wage needs to be increased.
“I think it’s the pace at which these companies are being asked to do it,” he said. “I don’t think it’s a matter of what that minimum wage is, it’s how far do they take it at a speed at which small businesses, like a franchise owner, can do it where it won’t cost customers over time.”
While Cook County businesses are primarily focused on controlling their costs in the wake of the minimum wage increase, attorney John Heiderscheidt is trying to prevent the county’s minimum wage ordinance from taking effect July 1. He has launched a campaign on GoFundMe, intending his Fair Wage Campaign to become a central rallying point for opponents of the ordinance who similarly believe the county has overstepped its authority, trespassing on turf reserved for the state.
If the campaign comes close to its target of $50,000, Heiderscheidt said he plans to create a political action committee or association to lobby Springfield and litigate for the law’s repeal. The PAC also would help municipalities opt out of the ordinance.
“I started the Fair Wage Campaign as an outlet for people who want to challenge and/or blunt the effects of this law,” said Heiderscheidt, a Cook County attorney and real estate broker. “The PAC will also advocate for better policy towards low wage earners. I’m the first to admit we need to do better at investing in low wage earners’ sustained professional development in Illinois. These jobs should be stepping stones, not dead ends.”
DiVerde and many others have voiced their opinion that minimum wage laws should come from the state or even federal government, not individual counties.
But since it hasn’t, DiVerde said he’ll continue to have concerns about the ordinance’s uneven impact.
“We don’t mind wages are growing; we feel that’s good for everybody,” he said. “If it affects all my competitors, then I’m not as worried as when it’s just Cook County.”