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Minimum wage increase bad for Illinois business

Published: Friday, Feb. 15, 2013 9:01 a.m. CDT

(Continued from Page 1)

This editorial appeared in The Pantagraph, Bloomington, on Feb. 14:

(MCT) — Gov. Pat Quinn wants to raise the state’s minimum wage to $10 an hour over the next four years.

During his annual State of the State message, Quinn said, “Nobody in Illinois should work 40 hours and live in poverty. That’s a principle as old as the Bible.”

While that’s a nice line for a speech or a political campaign, at this point in the state’s history it’s the wrong approach.

Although Illinois needs to address the unfunded pension problem and its backlog of unpaid bills, the solution for long-term financial health requires growing the economy. A more robust economy leads to more tax revenue — and the only way to grow the economy is to create more jobs.

So, the governor should be asking whether raising the minimum wage to $10 an hour would result in more jobs?

The answer is that it won’t.

Illinois already has the highest minimum wage of surrounding states at $8.25 per hour. That’s $1 higher than the federal minimum wage.

The key to growing jobs, and the economy, is centered on creating new businesses, according to a recent study by the Illinois Policy Institute. The coming and going of big corporations has been mostly a wash over the last 15 years. In states that grow jobs, more new businesses get started than quit.

So the state’s strategy on job growth should center on helping these emerging businesses gain solid footing. New businesses, especially in the digital age, have multiple options about where to locate. So, why would Illinois make the state less alluring to those types of businesses by increasing the minimum wage?

There are undoubtedly other arguments. Retailers and businesses say increases in the minimum wage actually result in job losses because companies hire fewer workers. There is some evidence suggesting that happens after a hike in the minimum wage, but the number of jobs soon returns to similar levels. There also is evidence that increases in the minimum wage lead to higher prices, although there are a number of factors that play into the cost of living. Illinois has the highest minimum wage in the region, but is second in cost of living to Wisconsin.

Illinois does, however, have a jobs problem. Other states are gaining jobs at a much faster rate than Illinois. In fact, by some measures, Illinois is last in the nation in job growth over the last several years. New jobs will lead to a stronger economy, which will lead to more state tax revenue. It’s a simple equation.

Increasing the minimum wage in Illinois, however, would restrict job growth and the economy. Quinn’s proposal may be politically popular, but it’s a bad policy for the future of the state.

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©2013 The Pantagraph (Bloomington, Ill.)

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