If you live in Colorado, Montana, Ohio, Oregon, Washington, Arizona, Florida, Missouri, Nevada or Vermont and work a minimum wage job, you'll get a little extra in your paycheck come 2012. Illinois workers won't be so lucky.
Those ten states will all increase their minimum wages, either through a direct hike or an inflation adjustment come next year. A similar effort was put forth in our state this year - SB 1565 -- which would have pushed Illinois' lowest wage, currently $8.25, up by 50 cents a year plus inflation. If it had passed, workers now would be making a minimum of $8.90 an hour, and next year, $9.50. Adjusted for inflation, the minimum wage would have reached approximately $10.65 by 2014, labor activists estimate.
Even though the bill didn't pass this year, the fight isn't over. A coalition of advocacy groups, Raise Illinois, is trying again to get that bill passed during the upcoming legislative session. Next week, a group of minimum wage workers are traveling to Springfield to talk to their legislators about what it's like to earn the minimum wage and how their lives would change if they earned more.
The bill would also continue to index the minimum wage with inflation, saving legislators from having to pass a bill every time they want to boost wages. That's what five of the 10 states that are upping their minimum wage next year already have in place.
I worked a few minimum wage jobs when I was interning in newsrooms in the city. I remember one of my employers commenting on how I would make $8.25 an hour, what she thought was outrageous, considering she remembered minimum wage being something like $3 an hour. It does seem like a huge difference if you're not considering inflation adjustment. According to Princeton economist Paul Krugman, the federal minimum wage of $7.25 an hour is lower than what it was in 1968, if you adjust for inflation.
Still, there are lot of arguments against raising the minimum wage, especially in times of economic peril. Aren't businesses struggling enough without having to pay their workers more? And the Employment Policies Institute says minimum wage hikes could end up hurting the most vulnerable communities, creating "unintended consequences that are particularly harmful to less-educated and minority groups.”
Other studies suggest that boosting the minimum wage doesn't hurt business and actually helps the economy. A 2010 study of minimum wage increases(pdf) in 500 countries showed that wage hikes didn't lead to job losses, according to the Review of Economics and Statistics. A 2011 study in the April issue of Industrial Relations found that minimum wage increases didn't hurt the job market even when unemployment was high.
Raising the minimum wage could also help state government by raising more revenue. Jen Kern, director of the campaign to raise the minimum wage at the National Employment Labor Project, explained it to me this way: if the state pays some workers the minimum wage, then it's going to cost the state some to push up wages. But it also will likely bring in more money through minimum wage workers spending more with their earnings, possibly paying more income tax and those same workers not needing social service programs, which cost the state money.
"There is a cost to the taxpayers for keeping people poor," said Kern. "You either pay people through a paycheck so they can earn a decent living, or you end up paying in other ways."
With the state recently raising its corporate income tax to 7 percent, don't companies already have enough incentive to leave Illinois without us piling on wage hikes? I asked Adam Kader, labor organizer at Arise Chicago, a member of the Raise Illinois coalition. He reminded me that most minimum wage workers are employed by companies that aren't going anywhere - fast food restaurants, convenience stores, laundromats, car washes, etc. Raising the minimum wage won't make McDonalds give up selling BigMacs.
"A lot of those places are not in a position to move," said Kader. "Their customer base is here. All the fast food chains, which all start out at the minimum wage or maybe a dime more, they can't move to Indiana."
And Kader put forth another point. Not only were corporate income taxes raised, but so was the individual tax rate.
"The income tax for workers is also higher," said Kader. "Since now we're paying more as well, we should be earning more to compensate."
In the era of Occupy Wall Street et al., it'll be interesting to see whether bills like SB 1565 have more public and legislative support. Will the 99 percent support raising the wages for the bottom 20 percent? We'll have to wait and see.
Photo credit: Bart Everson