ILLINOIS NEWS NETWORK
Raising the state minimum wage to $15 an hour would lead to 93,000 fewer jobs across Illinois by 2027, according to a new report released by one of the nation’s leading small business associations.
The report from the National Federal of Independent Business (NFIB) Research Center also shows that raising the minimum wage will reduce the state’s production output by more than $56 billion over a 10-year period.
“93,000 jobs is a gigantic loss for the state as a whole in terms of the various taxes those workers pay, as well as the loss of economic and purchasing activity,” Mark Grant, state director of the NFIB, told the Illinois News Network. “The same holds true for local economies.”
State Rep. Will Guzzardi, D-Chicago, sponsored House Bill 198, which would gradually increase Illinois’ minimum wage to $15 an hour by 2022.
In early April, the House labor and commerce committee voted 17 to 6 to recommend the bill. The first increase, which would go into effect Jan. 1, would move the minimum wage from $8.25 to $9 an hour.
Senate Bill 1738, which calls for the minimum wage to increase to $9.50 on July 1 and gradually to $15 by 2020, was referred to the assignments committee on May 5.
If a version of the bills is passed by both legislative bodies and survives an expected veto from governor, the NFIB’s report shows that it would be detrimental to the state.
Raising the minimum wage to $15 an hour from its current level is equivalent to raising the cost of labor for employers of minimum wage workers by 82 percent. Nearly 56 percent of the forecasted job losses would be in the small business sector of the economy.
Rob Karr, president and CEO of the Illinois Retail Merchants Association, told the Illinois News Network that government-mandated wage increases have negative impacts for everyone.
“Lost jobs reflect an inability to grow sales,” Karr said. “Fewer sales mean less in sales tax collection at both the state and local level as well as less income tax and, potentially, additional outlays in social service spending.”
Mark Denzler, vice president and chief operating officer of Illinois Manufacturers’ Association, said that lawmakers need to stop imposing unfunded and costly mandates on employers.
“The proposed 82 percent hike in the state’s minimum wage will make Illinois’ [minimum] wage the highest in the nation and lead to further exodus of businesses,” Denzler said. “For the last three years, Illinois has led the nation in outmigration of people, largely because of the inability to find good jobs.”
Opponents of the wage increase say the state can’t afford to lose more jobs or impede businesses from expanding or creating jobs.
According to the U.S. Department of Labor, Illinois has added only a net 100 jobs since the year 2000. That means Illinois employers have added 1 new job every two months.
“It’s abysmal,” Denzler said. “Many of the politicians pushing for an increased minimum wage have never worked in the private sector nor met a payroll, but they act like government has all of the answers.”
If the increase gets approved, Denzler said the state may face many more hardships in addition to job losses and reduced hours for current employees.
“It will be much more difficult for young people to get their first jobs,” Denzler said. “In some cases, businesses will further automate by adding kiosks and other technology to replace employees because of the increased cost. Some businesses may raise prices, but they cannot always do it especially when competing with online stores and competition in other states.”
Since Illinois manufacturers pay an average of $75,000 per year with benefits, Denzler urged legislators to find a better way.
“Lawmakers need to look beyond the minimum wage and try to focus on helping Illinoisans get good-paying manufacturing jobs,” Denzler said.