Editorial: Illinois can’t afford to raise minimum wage
Editorials April 5, 2013 7:28PM
Illinois Gov. Pat Quinn answers questions from the news media at the Abraham Lincoln Presidential Library and Museum in Springfield, Ill., Monday, June 28, 2010. The state's minimum wage is set to go up to $8.25 Thursday. (AP Photo/Seth Perlman)
Updated: May 8, 2013 6:40AM
A plan afoot in Springfield, led by Gov. Pat Quinn, to bump up Illinois’ minimum wage to $10 an hour over the next four years — a full $2.75 higher than most neighboring states — is the wrong economic medicine for a state struggling to keep jobs and businesses, let alone trying to attract new ones.
Right now, Illinois’ minimum wage of $8.25 already is $1 higher than Kentucky, Indiana, Iowa and Wisconsin and 90 cents higher than Missouri. In fact, Illinois’ minimum is the fourth-highest in the nation. Raising it any further would put the state at too much of a disadvantage in the competition for jobs.
This page is not philosophically opposed to a minimum wage, either on a federal or state level, especially when the gap between America’s highest and lowest earners is as wide as at any time since the robber baron days of the 19th century. How much has that gap been widening? If the federal minimum wage had kept pace with productivity gains since 1960, it would now be $21.72 an hour, according to the Center for Economic and Policy Research.
But trying to remedy that imbalance on the state level would send jobs over the border or into oblivion. Any hike in the hourly minimum wage should be done nationally, where the current wage translates to about $15,000 a year, or some $3,000 below the 2011 federal poverty threshold for a family of three. President Barack Obama has proposed bumping it up to $9 from $7.25.
We understand the need for a minimum wage to protect workers. As well-paying manufacturing jobs have declined, more people rely on low-paying work, often in the service economy, to pay the rent and raise a family. These are not just jobs for middle-class teens who work at McDonald’s after school. We also understand there’s a need for a higher wage in states such as Illinois where living costs are higher. The New York legislature last month voted to raise its minimum to $9 by 2016. A California bill would increase the wage there to $9.25 in 2016, and then index it to inflation.
But Friday’s jobs report should give Illinois pause. U.S. employers added just 88,000 jobs in March, the fewest in nine months, signaling that the economy may be heading into a weak spring. Our unemployment rate already is two points higher than the national average. Businesses warn that another hike in the minimum wage will force employers to cut back their work forces. We would ignore that warning at our peril.
Eighteen states and the District of Columbia have minimums above the federal level. But besides Illinois and Missouri, the only other Midwestern state that sets its minimum wage level higher than the feds is Ohio, at $7.70 an hour. Illinois is in a Midwestern neighborhood where there’s no room to boost its minimum wage any further without risking that overall employment will go down.
A drop in low-wage jobs could hit teens especially hard. According to Tanya Tricher, vice president and general counsel of the Illinois Retail Merchants Association, teen employment has dropped to 28 percent in Illinois from 50 percent in 2000. Teen employment is 48 percent in the city of Chicago, and in African-American communities only 8.7 percent of teens have a job. And while minimum-wage jobs don’t pay much, they can be starter jobs for young people who need work experience. These jobs are where they learn to get to work on time, contend with a cranky boss and do a job right. It’s the first rung on the ladder.
Putting more money in the pockets of workers is a laudable goal. But this bill is not the way to do it.