NEW YORK, Aug 1 (OneWorld) - While millions of low-wage workers across the United States keep hoping against hope for a raise in their salaries, it is no longer just a dream for some who live and work in the Midwestern city of Chicago.

Last week, Chicago took the lead in passing a law that would make it mandatory for mega-retailers such as Wal-Mart, Home Depot, and Target to pay workers a minimum wage of $9.25 an hour (up from the current rate of $6.25 an hour).

The new law applies only to stores with at least 90,000 square feet of space and $1 billion in annual sales across the company.

The law was approved by a majority vote of the City Council following several days of a heated debate and retaliatory threats from the multibillion-dollar retail chains to move operations outside the city.

Proponents of the new legislative action said they believed Wal-Mart and other big retailers could still make more than $1 billion in potential sales by tapping the unexplored inner city retail markets.

In one high-unemployment west side Chicago neighborhood where workers are putting the finishing touches on the city's first Wal-Mart, the new law has been welcome news, according to the National Union of Public and General Employees, a labor group based in Canada with links in the United States.

The Union estimates that the law is likely to help improve the living conditions of at least 7,000 workers employed by more than 40 stores. It says so far about 9,000 people have applied for 450 jobs Wal-Mart is expected to offer when it opens its new store in Chicago next month.

Like the rest of the country, before the City Council initiative, minimum-wage workers in Chicago had no pay raise in the past 10 years.

Last Saturday, the U.S. House of Representatives voted to boost the minimum wage rate from $5.15 an hour to $7.25 an hour.

But the measure passed by the House does not seem promising for workers because it is tied to a Republican proposal to repeal the estate tax, which would benefit primarily the wealthiest Americans. Most Democrats are opposed to cutting the estate tax, and thus are unlikely to endorse the bill on minimum wage in the Senate.

The debate to increase the minimum wage has always been a contentious one in the United States because private businesses generally oppose such measures. They argue that raising salaries would cause price hikes and affect the growth of their businesses.

However, some government workers have experienced pay gains in recent times. In the past 10 years, various cities have issued ordinances to raise the wages of their workers, including Baltimore, St. Louis, Boston, Los Angeles, Tucson, San Jose, Portland, Milwaukee, Detroit, Minneapolis, and Oakland.

The most recent "living wage" ordinance was passed by the Albuquerque City Council in New Mexico. That ordinance states that businesses, as well as city government, will pay a minimum wage of $6.75 an hour by January 2007, $7.15 by 2008, and $7.50 by 2009.

A so-called living wage is the minimum hourly wage necessary for a person to achieve some specific standards of living, according to the user-edited online encyclopedia, Wikipedia.

While appreciating minimum wage increases by local authorities, labor groups say it is time the federal government followed suit. The nation's minimum wage law was first enacted by the government of President Franklin Roosevelt in 1938.

Last week, AFL-CIO president John Sweeney strongly criticized Republican leadership for trying to link the issue of minimum wage with the proposal to repeal the estate tax.

"This is yet another cynical poison pill that cannot be tolerated," he said in a statement, adding that combining the estate tax repeal with the minimum wage increase will effectively kill the bill's chances because the Senate has already rejected the estate tax.

"This is unlikely to change," Sweeney said, "and Republican leaders of the House know it....There is a majority in both houses of Congress for an increase to $7.25 and Republicans are twisting themselves into knots when a simple up or down vote would do."

In Sweeney's words, "minimum wage workers should not have to wait for Paris Hilton to get another tax cut before they can get a wage increase."