NEW YORK (CNNMoney.com) -- Chicago Mayor Richard M. Daley on Monday vetoed a "living wage" ordinance that would force big-box retailers like Wal-Mart and Target to increase their hourly pay and other benefits.

In July, Chicago City Council approved the ordinance by a 35 to 14 vote. It would require large chain store retailers with more than $1 billion in annual sales and at least 90,000 square feet to pay wages of at least $10 an hour plus $3 in benefits by 2010.

"I understand and share a desire to ensure that everyone who works in the City of Chicago earns a decent wage. But I do not believe that this ordinance, well intentioned as it may be, would achieve that end," Daley wrote in a statement.

"Rather, I believe it would drive jobs and businesses from our city, penalizing neighborhoods that need additional economic activity the most. In light of this, I believe it is my duty to veto this ordinance," he said.

Wal-Mart (Charts), which plans to open its first Chicago store this year, applauded Daley's decision. "[Daley's] actions encourage desperately needed business investment and development in the city, with job opportunities and savings for those who need it first," company spokesman Michael Lewis said in a statement.

But Daley's vote can still be overridden when the City Council meets on Wednesday. It would require a total of 34 votes in support of the ordinance.

If passed, the ordinance would apply to other large retailers such as Target (Charts) and Home Depot (Charts).

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