Illinois Senate Considers Raising Minimum Wage
Illinois Senator Kimberly Lightford introduced legislation that would raise the minimum wage by 50 cents plus the rate of inflation annually until it reached the equivalent of $1.60 per hour in 1968.
by Amanda Griffin-Johnson
In light of the burden the recent income tax hikes will pose on workers, the Illinois Senate is considering raising the minimum wage. Currently, the only states with higher minimum wage rates than Illinois ($8.25) are Oregon ($8.50) and Washington ($8.67). The federal minimum wage is $7.25. The Chicago Sun-Times reports:
Sen. Kimberly Lightford (D-Maywood) introduced legislation that would raise Illinois $8.25-an-hour minimum wage by 50 cents plus the rate of inflation annually until it reaches its historic level.
The legislation defines that level as the equivalent in todays dollars of what $1.60-an-hour was in 1968 when the inflation-adjusted buying power of the minimum wage peaked. Today, that rate would equal $10.03 per hour.
But as businesses also struggle with the recent tax hikes, such a significant increase in the minimum wages could have adverse effects. By increasing the cost of labor, some businesses may have to reduce the number of people they employ, and the increase could also add another reason for businesses and entrepreneurs to move to states with more business-friendly environments. Along with the immediate effects, there may be negative long-term effects of such a policy. A paper from the Heritage Foundation highlights research in this area:
The fact that minimum wages reduce educational attainment suggests examining their long-term effects. In a recent study, Neumark and Olena Nizalova, of Michigan State University, examined the incomes of adults who had been teenagers when minimum wages rose in their states. They found that minimum wage hikes reduced both the probability of holding a job and the incomes of workers exposed to them over a decade later. They also found that this negative effect is larger for African-Americans than for whites, perhaps because more African-Americans hold jobs that pay near the minimum wage.
Raising the minimum wage has these negative long-term effects because it alters the choices that people make today in ways that have long-term consequences. It induces some students to drop out of school, reducing their long-term employability. By raising unemployment and eliminating entry-level jobs, minimum wage hikes also eliminate opportunities for workers to gain valuable experience and skills that prepare them for future jobs. These unintended consequences severely hamper low-income workers’ future job and earning prospects.
Raising the minimum wage to help lift the burden of the tax hikes may not have the intended effect and will likely have a host of negative consequences. Instead, the tax hikes should be repealed.