Chicago Minimum Wage Increases Could Reduce Opportunities

Chicago Minimum Wage Increases Could Reduce Opportunities

Every year, on July 1, hourly pay in the City of Chicago increases per the Minimum Wage Ordinance. On July 1, 2026, Chicago’s minimum wage increased 45 cents, from $16.60 to $17.05 per hour, for employers with four or more employees. While the Ordinance and the wage increases are meant to help those in need, they can reduce the number of jobs available to younger workers, especially minority teenagers.

Specifically, the fast-food industry could see a drastic reduction in available jobs. California, for example, on April 1, 2024, raised its minimum wage from $16 to $20 per hour for fast-food workers employed at chains with more than 60 locations nationwide. This was one of the largest one-time minimum wage increases in U.S. history, and one of the few focused on a single industry. However, the change cost the state about 18,000 jobs.

The purpose of raising the minimum wage is to increase take-home pay for low-income families, but this can result in limited opportunities for young workers who need entry-level jobs. While some youths will benefit from the increase, many will be unable to find work, delaying labor market entry and reducing lifetime incomes. Further, employers may reduce or eliminate on-the-job training opportunities they had previously funded through low entry-level and training wages, also contributing to lower lifetime incomes.

Evidence suggests that reducing or eliminating the minimum wage for young unskilled workers reduces these negative effects. To solve this problem, policymakers could implement policies that improve the labor market opportunities of younger workers but do not increase the cost to employers of hiring these workers. This could include providing cash welfare payments to young workers if their earned income falls below some guaranteed level and providing in-kind support, such as food or housing assistance.

If you have questions about the City of Chicago’s minimum wage increase or its implications, contact the qualified attorneys at Rock Fusco & Connelly, LLC.