Mayor of Chicago Richard Daley has formally vetoed a controversial minimum wage ordinance for large scale retailers passed by Chicago’s City Council.

There will now be a veto override vote at the next council meeting tomorrow (13 September).

The controversial ordinance, the first of its kind in a major US city, stipulates that from next July, retail stores larger than 90,000-square-feet or that generate more than US$1bn in annual sales should pay workers a minimum of $9.25 an hour and $1.50 in fringe benefits, rising to $10 and $3 respectively by 2010. Automatic annual cost-of-living increases would apply thereafter.

Daley believes the legislation will drive employers away from Chicago. “I understand and share a desire to ensure that everyone who works in the city of Chicago earns a decent wage,” Daley said in a letter addressed to the council. “But I do not believe that this ordinance, well intentioned as it may be, would achieve that end.”

If the law were eventually passed, it would impact on major retailers such as Wal-Mart, which is preparing to open its first Chicago store.

Michael Lewis, senior vice president and store operations president, Midwest Division at Wal-Mart, commended Daley for vetoing the measure. Lewis said: “His action encourages desperately needed business investment and development in the city, with job opportunities and savings for those who need it most.”