WJBC Voices: Raising the minimum wage–is it so traumatic?

By Mike Matejka

Newly-elected Governor J.B. Pritzker has promised to raise the Illinois minimum wage.  The Illinois minimum is now $8.25 per hour, one dollar more than the federal requirement.   Predictably, this wage increase for lower-paid workers has business organizations wringing their hands, claiming this will decrease employment and drive businesses out of state.

It was in 2008 that Illinois raised the wage one dollar.  I went searching back in an 11 year-old Pantagraph to see what the reaction was.  It is almost verbatim to what is being said today.

Then McLean County Chamber of Commerce director Mike Malone was cited as saying that increasing the minimum wage would prompt business to locate in a state with a lower minimum wage, like Indiana.  (Holliday, Bob, Increase good for workers, difficult for small business, Pantagraph, March 15, 2008, page 47).  How many local minimum wage businesses have fled McLean County since 2008 for Indiana?  From the beginning of the minimum wage in 1938, misplaced fears about businesses fleeing and closing recur with regularity, but with little evidence to back these claims up.

There is no doubt that a minimum wage increase may be a challenge for small business.  Small businesses and fast food are often used as the example of entry-level minimum wage jobs.   However, many adults are dependent upon minimum wage jobs.  Think of fast food restaurants, particularly beyond a campus town like Bloomington-Normal.  You are just as typically served by an adult as by a young person.   And there are large retail, warehouse and other employers, that pay the minimum wage.

On January 24 Bloomberg Business featured a story by wealth manager Barry Ritholtz, that touted a more nuanced approach. (https://www.bloomberg.com/opinion/articles/2019-01-24/u-s-economy-higher-minimum-wages-haven-t-increased-unemployment),   He cited a National Bureau of Economic Research paper, published last month, that found few jobs lost because of minimum wage increases. Studying 138 minimum wage increases between 1979 and 2016, the researchers could find no link between higher pay and decreased jobs.  Ritholtz’s other thought was that the minimum wage is so low compared to productivity gains and inflation, that an increase has no impact on the supply and demand for workers.

So far, I’ve cited economic research.  Here’s another moral point.  If someone works, they should make enough to support themselves.   Minimum wages are so low, many minimum wage workers depend upon government aid and charities to survive.  In a country as prosperous as the U.S., that is an insult.   It also means we the taxpayer are subsidizing businesses that pay sub-standard wages, because we the taxpayer fund those government aid programs.

Finally, raising workers’ wages means more money circulating at the economy’s consumer base.  Workers don’t hide their earnings in Cayman Island bank accounts.  They pay their bills, feed their family and pay rent or mortgages.   Those increased dollars then circulate to the businesses most vocally against paying a livable wage.  It’s a win-win, for the business community and for the workers.

Mike Matejka is the Governmental Affairs director for the Great Plains Laborers District Council, covering 11,000 union Laborers in northern Illinois, Iowa, Nebraska and South Dakota. He lives in Normal. He served on the Bloomington City Council for 18 years, is a past president of the McLean County Historical Society and Vice-President of the Illinois Labor History Society. He currently serves on the Normal Planning Commission. 

The opinions expressed within WJBC’s Voices are solely those of the Voices’ author, and are not necessarily those of WJBC or Cumulus Media, Inc.

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