updated 9/13/2006 9:39:46 PM ET 2006-09-14T01:39:46

The so-called “living-wage” ordinance that would have required mega-retailers here to pay their workers higher wages was successfully turned back Wednesday as supporters on the City Council could not muster enough votes to override Mayor Richard Daley’s veto.

Daley, who vetoed the ordinance this week saying it would cost the city jobs and hurt people who need those jobs the most, was able to convince enough aldermen who voted in favor of the ordinance in July to change their votes. The vote was 31-18 in favor of overriding the veto — three short of the necessary votes to do so.

During a 2 1/2 hour hearing, proponents of the measure reiterated their contention that the measure would guarantee employees a “living wage.” But they were outnumbered by aldermen who said the measure would prompt such businesses to open outside the city and take their jobs, desperately needed by residents of some of the city’s most economically depressed areas, with them.

Some of the nation’s largest store operators including Wal-Mart Stores Inc. warned the measure would discourage them from opening their doors within the city’s limits.

“I’m glad for the veto because it gives my community an opportunity,” said Carrie Austin, an alderman whose ward is in the city’s South Side. “It gives my people a stepping stone. It’s not a great job, but it’s a job.”

In California, Gov. Arnold Schwarzenegger vetoed legislation on Wednesday that would have required Wal-Mart and other large employers provide health care benefits for their employees or pay into a state health fund.

In a veto message, Schwarzenegger said the bill was the wrong approach to tackling spiraling health care costs.

“Singling out large employers and requiring them to spend an arbitrary amount on health care does nothing to lower costs or guarantee that even one more person has health care coverage,” Schwarzenegger said.

Supporters had argued the bill was needed to prevent companies with at least 10,000 California workers from shifting their health care costs to public-assistance programs.

The vote in Chicago comes two days after Daley issued his first veto in 17 years in office.

The council had approved the ordinance by a vote of 35-14 in July. The ordinance would have required large retailers to pay workers at least $10 an hour plus $3 in fringe benefits by mid-2010. The rules would only apply to companies with more than $1 billion in annual sales and stores of at least 90,000 square feet.

The minimum wage in Illinois is $6.50 an hour and the federal minimum is $5.15.

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