Chicago ? Mayor Richard Daley vetoed an ordinance Monday that would have required mega-retailers to pay their workers higher wages after some of the nation’s largest store operators warned the measure would keep them from opening their doors within the city’s limits.

Supporters said the measure would guarantee employees a “living wage,” but in a letter to City Council members released Monday, Daley said the ordinance would drive businesses from Chicago.

The veto was Daley’s first in 17 years in office, and will likely set up a showdown during Wednesday’s council meeting.

The ordinance was approved by the council in late July and requires so-called “big box” stores 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.