Chicago Is Failing to Enforce Its $10.50 Minimum Wage

Melissa Sanchez

The underpayment of Safe Passage workers is just one example of how the city’s minimum wage ordinance has fallen short since it took effect in July 2015. (Michelle Kanaar / The Chicago Reporter)

This arti­cle was first post­ed by The Chica­go Reporter.

Sab­ri­na Jack­son looked for­ward to a raise last sum­mer at her job as a cross­ing guard near her children’s Engle­wood school.

Chicago’s min­i­mum wage was slat­ed to increase from $10 to $10.50 per hour under a city ordi­nance, pro­vid­ing a small but wel­come boost to Jackson’s paycheck.

But when the new school year rolled around, Jack­son dis­cov­ered, I didn’t get a raise.” Chica­go Pub­lic Schools refused to pay the high­er wage for the 1,300 cross­ing guards, telling non­prof­it groups that run the pro­gram that the dis­trict had bud­get prob­lems and claim­ing the work­ers were exempt. The dis­trict nev­er explained why it con­sid­ered the work­ers an exception.

The under­pay­ment of Safe Pas­sage work­ers is just one exam­ple of how the city’s min­i­mum wage ordi­nance has fall­en short since it took effect in July 2015. A Reporter analy­sis esti­mates that thou­sands of work­ers have been left behind because of excep­tions in the law, which will raise the city’s min­i­mum hourly wage to $13 by 2019.

Mean­while, the city depart­ment respon­si­ble for enforce­ment has inves­ti­gat­ed just a quar­ter of 454 wage com­plaints, recov­ered lost pay for only a few dozen peo­ple and has yet to fine a sin­gle com­pa­ny for vio­lat­ing the ordi­nance. Fol­low­ing repeat­ed ques­tion­ing by The Chica­go Reporter about the department’s lax enforce­ment, city offi­cials now say they will levy fines. Also fol­low­ing the Reporter’s inquiries, CPS reversed course and said it would cov­er the wage increase, as well as back pay, to its cross­ing guards. CPS is com­mit­ted to meet­ing the city’s min­i­mum wage ordi­nance, and we have begun the process of guar­an­tee­ing that all Safe Pas­sage work­ers will be prop­er­ly com­pen­sat­ed this year,” said dis­trict spokesman Michael Pass­man in a state­ment in late January.

Oth­er cities that have passed high­er min­i­mum wage laws, like San Fran­cis­co and Seat­tle, have had much greater suc­cess with more rig­or­ous enforcement.

Ald. Car­los Ramirez-Rosa (35th Ward) agreed that Chica­go needs to con­sid­er ramp­ing up its over­sight of the law. He recalled inter­ven­ing last year to resolve a wage dis­pute in his ward between the own­er of an Albany Park ware­house and a work­er, who was undocumented.

I’m hap­py to use that lever­age,” Ramirez-Rosa said. But ulti­mate­ly we need to make sure there are bet­ter enforce­ment oppor­tu­ni­ties. It’s extreme­ly impor­tant that the City of Chica­go put teeth behind its exist­ing ordi­nances. And if what we’re doing is inad­e­quate, we need to get seri­ous about hav­ing the right resources and enforce­ment mech­a­nisms in place.”

For Jack­son, who con­tin­ues to look for high­er-pay­ing work and depends on food stamps and a pub­lic hous­ing sub­sidy to sup­port her four chil­dren, even a small pay increase is significant.

It will help out a lot. That 50 cents does add up,” she said. Maybe it’ll be an extra bill that you don’t have to wor­ry about, extra things I can now get for my kids.”

How Chica­go raised pay — for some workers

In the months lead­ing up to his re-elec­tion cam­paign in 2014, May­or Rahm Emanuel formed a task force to look at rais­ing the city’s min­i­mum wage. Com­mu­ni­ty groups, includ­ing those involved in the nation­al Fight for $15 fast food work­ers’ wage cam­paign, lob­bied for $15 an hour. Busi­ness groups pushed back, warn­ing that small busi­ness­es would close down or cut workers.

While cities such as Seat­tle, San Fran­cis­co and Los Ange­les adopt­ed a $15 min­i­mum, Chica­go City Coun­cil approved a $13 min­i­mum in Decem­ber 2014. The task force acknowl­edged that $13 fell far short of a liv­ing wage, giv­en the city’s high hous­ing costs. (The Liv­ing Wage Cal­cu­la­tor, a project devel­oped by the Mass­a­chu­setts Insti­tute of Tech­nol­o­gy, sets the amount at $24.91 per hour for a sin­gle adult with one child in Cook County.)

Still, Emanuel tout­ed the increase as a way to lift work­ing fam­i­lies out of pover­ty, and sup­port­ers viewed it as just a first step. It’s a big part of the puz­zle for peo­ple to be upward­ly mobile, to start get­ting paid fair­ly and have a bet­ter way to make ends meet,” said John Bouman, pres­i­dent of the Chica­go-based Sar­gent Shriv­er Nation­al Cen­ter on Pover­ty Law, who co-chaired the task force. (Since Chicago’s ordi­nance, Cook Coun­ty passed a $13 min­i­mum wage in 2016. State leg­is­la­tors are con­sid­er­ing a pro­pos­al to raise the Illi­nois min­i­mum to $11 an hour.)

City offi­cials esti­mate that more than 270,000 low-wage work­ers have ben­e­fit­ed from the increase. Yet the Reporter’s analy­sis found that more than 20,000 work­ers are exempt, in part because the ordi­nance incor­po­rat­ed a num­ber of excep­tions in state law. The list of exemp­tions includes cer­tain younger work­ers, such as those in the city’s One Sum­mer Chica­go pro­gram, oth­er teens under 18, and stu­dent work­ers at pub­lic col­leges and uni­ver­si­ties; dis­abled work­ers; work­ers in tran­si­tion­al employ­ment pro­grams, such as those for the home­less and for­mer-inmates; new employ­ees in their first 90 days on the job; work­ers for cer­tain small busi­ness­es and oth­er groups.

Bouman called that a tac­ti­cal deci­sion” to avoid a big­ger bat­tle over the ordi­nance itself. Nei­ther the city nor the task force came up with its own esti­mates of exempt work­ers. The idea was it was going to be hard enough to get a sub­stan­tial increase in the min­i­mum wage, that it would frac­ture and get more and more com­pli­cat­ed the more of the exemp­tions and sub-pro­vi­sions were includ­ed in the debate,” Bouman said.

Yet advo­cates for sev­er­al groups called on the city to use the ordi­nance as a chance to lev­el the play­ing field for all workers.

The exemp­tions make it more dif­fi­cult for peo­ple with dis­abil­i­ties to con­tribute to the work­force and live inde­pen­dent­ly,” said Gary Arnold, spokesman for Access Liv­ing, a dis­abil­i­ty rights group.

Oth­er groups, includ­ing those that help place youth in the One Sum­mer Chica­go pro­gram, were sur­prised to learn of the exemp­tions after the ordi­nance took effect.

They should be get­ting paid the min­i­mum, espe­cial­ly those youth who were placed in busi­ness­es where there are oth­er employ­ees get­ting the min­i­mum wage,” said Juli­et de Jesus Ale­jan­dre, youth pro­gram direc­tor for the Logan Square Neigh­bor­hood Asso­ci­a­tion. It was a dis­pro­por­tion­ate num­ber of young peo­ple of col­or, who applied to many dif­fer­ent places and this oppor­tu­ni­ty was the only one that called them back.”

Ale­jan­dre sees this as an issue of equi­ty, as white youth from high­er-income fam­i­lies tend to have more con­nec­tions and job oppor­tu­ni­ties in their neigh­bor­hoods. In fact, she recalled that one of the few white par­tic­i­pants in the pro­gram last sum­mer ulti­mate­ly turned down a slot after her moth­er helped her find a high­er-pay­ing intern­ship elsewhere.

Once the ordi­nance passed, the may­or formed a Work­ing Fam­i­lies Task Force to ana­lyze oth­er issues, includ­ing sick leave poli­cies and work­er sched­ul­ing prac­tices. That group heard from fast food work­ers whose hours were cut as their hourly pay rose. They were work­ers like Aiesha Mead­ows McLau­rin, who works at three Burg­er King restau­rants to make ends meet. They cut back on a lot of our work­ers’ hours,” she said. Now I’m run­ning between three jobs and still rely­ing on pub­lic assistance.”

The city’s 2016 ordi­nance man­dat­ing paid sick leave for work­ers was rec­om­mend­ed by the Work­ing Fam­i­lies group. But the task force decid­ed to table rec­om­men­da­tions to improve sched­ul­ing, cit­ing the need for more study.

You can get a huge increase in your hourly rate, but what hap­pens if the hours you work get cut?” said Robert Bruno, direc­tor of the labor edu­ca­tion pro­gram at the Uni­ver­si­ty of Illi­nois at Urbana-Cham­paign and a task force mem­ber. The hon­est answer is nobody knows what the impact of the high­er min­i­mum wage has been. Nobody has done a good, sta­tis­ti­cal­ly com­pre­hen­sive assessment.”

The university’s Project for Mid­dle Class Renew­al will ana­lyze the impact of the high­er wage on work­ing hours, sched­ul­ing and earn­ings as part of a larg­er study on low-wage work.

Chica­go enforce­ment spotty

As more cities enact mea­sures to raise the local min­i­mum wage or guar­an­tee sick pay, some have cre­at­ed spe­cial­ized depart­ments to police the new labor laws. Chica­go has not. Instead, the city dumped over­sight of three labor ordi­nances — min­i­mum wage, paid sick leave and a 2014 mea­sure that guards against wage theft — onto the Depart­ment of Busi­ness Affairs and Con­sumer Pro­tec­tion with­out hir­ing addi­tion­al employees.

The scope of this depart­ment has changed and expand­ed, and yet the resourc­ing and sup­ports and restruc­tur­ing of that agency that will be nec­es­sary has not hap­pened,” said Adam Kad­er, who directs the work­er cen­ter at the non­prof­it Arise Chica­go. Wary of the city department’s capac­i­ty, labor activists like Kad­er often encour­age aggriev­ed work­ers to con­sid­er nego­ti­at­ing with employ­ers or tak­ing oth­er action to resolve pay issues, or even to file law­suits in par­tic­u­lar­ly egre­gious cases.

The depart­ment declined to pro­vide copies of the min­i­mum wage com­plaints or files from its inves­ti­ga­tions, or to allow the Reporter to inspect the doc­u­ments, which would pro­vide more details and iden­ti­fy the busi­ness­es involved. The depart­ment claimed this would be undu­ly bur­den­some” and that all files are kept on paper, scat­tered across dif­fer­ent departments.

But data obtained by the Reporter through a Free­dom of Infor­ma­tion Act request show that the depart­ment received 454 com­plaints from July 2015 (when the ordi­nance took effect) to Decem­ber 2016. So far, only 112 com­plaints, or about 1 in 4, have led to inves­ti­ga­tions, most­ly because work­ers don’t sub­mit the required affidavits.

Yet the department’s pro­ce­dures appear to dis­cour­age work­ers from doing so. The depart­ment sends employ­ers a copy of the affi­davit, which activists say cre­ates a fear of retal­i­a­tion among work­ers (espe­cial­ly undoc­u­ment­ed immi­grants). Oth­er cities, like San Fran­cis­co and Seat­tle, keep work­er affi­davits con­fi­den­tial and allow employ­ees to give infor­ma­tion over the phone with­out hav­ing to fill out the paperwork.

Depart­ment spokesper­son Angel Hawthorne said the city doesn’t hes­i­tate to take action. When we receive com­plaints we ful­ly inves­ti­gate them and take action when nec­es­sary,” she said in a state­ment. We have recov­ered tens of thou­sands of dol­lars in wages owed to work­ers and stand ready to shut down any busi­ness found to be vio­lat­ing wage theft laws.”

City offi­cials told the Reporter that the depart­ment recov­ered wages for 51 work­ers. The total amount recov­ered: $82,000.

How­ev­er, the city has not issued a sin­gle fine to or revoked the license of any of the com­pa­nies found in vio­la­tion of the ordi­nance, which states that busi­ness­es shall be sub­ject to fines of $500 to $1,000 per day.

Hawthorne said the department’s goal dur­ing the ini­tial 18 months was to edu­cate Chica­go busi­ness­es and ensure prop­er com­pen­sa­tion for workers.”

Going for­ward the depart­ment will take a stronger approach and issue Admin­is­tra­tive Notices of Vio­la­tions to employ­ers who fail to fol­low the law,” Hawthorne said. This may result in fines imposed by the admin­is­tra­tive court.”

What oth­er cities do

San Fran­cis­co, Seat­tle, New York City and Wash­ing­ton, D.C., are among those cities that cre­at­ed sep­a­rate depart­ments to enforce local labor laws. Their depart­ments also con­duct com­mu­ni­ty out­reach to edu­cate work­ers and busi­ness own­ers about the rules.

There are major dif­fer­ences in approach to enforce­ment in Chica­go when com­pared to cities like Seat­tle and San Fran­cis­co. Inves­ti­ga­tors there auto­mat­i­cal­ly assume that reports from indi­vid­ual work­ers are the result of a sys­temic prob­lem, so inves­ti­ga­tions are com­pa­ny-wide. The premise is that if a com­pa­ny is cheat­ing one work­er, co-work­ers are prob­a­bly being cheat­ed too.

In most cas­es, it’s like­ly to be that the vio­la­tion is across the board,” said Dylan Orr, who directs Seattle’s Office of Labor Standards.

Seat­tle is one-fourth the size of Chica­go but has an inde­pen­dent, 12-per­son office that enforces near­ly a half-dozen local labor stan­dards. Seattle’s civ­il rights depart­ment ini­tial­ly han­dled the work, until city offi­cials and com­mu­ni­ty groups agreed that labor issues demand­ed a spe­cial­ized work­force. The depart­ment is dou­bling in size this year to about 24.

Peo­ple rec­og­nized that there was a lot of work out there for us to do,” Orr said. We were drown­ing in inves­ti­ga­tions. Cas­es were tak­ing a lot longer to con­clude than we want­ed. And we want­ed to be as effec­tive on the enforce­ment piece as possible.”

Inves­ti­ga­tions by the Seat­tle office include a review of the employer’s com­plete pay­roll, not just records relat­ed to one worker’s case as in Chica­go. That pro­tects the con­fi­den­tial­i­ty of the work­er who filed the com­plaint and reduces fear of retal­i­a­tion. Inves­ti­ga­tors have sub­poe­na pow­er and can ask to see pay­roll records and inter­view work­ers on site.

Seat­tle has had sig­nif­i­cant results since tak­ing steps to imple­ment a $15 min­i­mum wage in April 2015. As of Decem­ber 2016, Seattle’s labor depart­ment had opened 132 inves­ti­ga­tions; 37 led to set­tle­ments and pay­ment of back wages. Because mul­ti­ple work­ers were affect­ed in almost every case, the depart­ment recouped near­ly $400,000 for 683 work­ers. That’s more than 13 times as many work­ers helped in Chicago.

The office impos­es penal­ties on egre­gious vio­la­tors who refuse to set­tle up quick­ly, works in part­ner­ship with oth­er city depart­ments to pull busi­ness licens­es and even brings city attor­neys on board to file suit in court on behalf of workers.

But the vast major­i­ty of employ­ers — about 90 per­cent — pay up before the process gets to that extreme. We’ve only sent a hand­ful to busi­ness­es through the license revo­ca­tion process,” Orr says. So far the threat has been enough.”

Melis­sa Sanchez is a reporter for The Chica­go Reporter.
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