CFL News
November 03, 2011

Study: O'Hare, Midway concessionaires' 'living wage loophole' costing Chicago communities millions annually

Closing a loophole in Chicago's living wage ordinance for airport concessions workers would bring in an additional $8 million for local communities according to a new study from the University of Chicago and Roosevelt University

The loophole in Chicago's Living Wage Ordinance that has enabled O'Hare and Midway Airport concessionaires to skirt the City's living wage could be costing Chicago communities up to $8 million a year, a new study from faculty at the University of Chicago and Roosevelt University finds.

The study is a cost benefit analysis of the Stable Jobs Stable Airports Ordinance, introduced last month by 28th Ward Alderman Jason Ervin and cosponsored by thirty (30) other aldermen. The ordinance would close the concessionaires' loophole as well as ensure job stability and labor peace as the City undertakes the largest airport concessions overhaul in its history, handing out $250 million worth of lucrative food and retail concession contracts.

"We estimate that there would be a net annual increase in local purchasing power up to $8 million per year [from adopting the ordinance]. Most of this additional purchasing power would be spent locally, resulting in increases in tax revenue for the city and state," said Virginia Parks, Associate Professor at the University of Chicago's School of Social Service Administration, lead author of the study.

Around 70% of O'Hare and Midway concessions are controlled by multinational companies based overseas, so profits generated at the airports do little to stimulate Chicago's economy.

"With 84 million passengers passing through our airports in Chicago, with sales that are six times as much per square foot as any other place in the City of Chicago, and with bulk of these concessions controlled by multinational corporations that take profits away from the City of Chicago, we have to stand up and act," said Ald. Jason Ervin, lead sponsor of the Stable Jobs Stable Airports Ordinance, when the ordinance was introduced last month. Ervin also spoke at the "Our Airports, Our Communities" public forum Tuesday at Roosevelt university, where the academics released the study.

"We know these companies can afford it.  This is not money that is staying here in Chicago, a lot of it goes overseas," said Boddrick Barnes, a cook at O'Hare Airport and resident of Chicago's West Englewood community. "If we had a living wage, this is money that we would spend in our neighborhoods.  This would bring business back to the community.  This is why we are fighting for this [ordinance]."

Around the country 18 other airports - including LAX, JFK, Miami, and Cleveland - have adopted standards to protect workers and communities, ensure smooth operations for travelers, and/or protect City revenue from disruptions during big contract turnovers.