Just this week, Illinois’ new governor signed a bill that will raise minimum wage to $15 an hour. A series of increases over the next 6 years will nearly double minimum wage in the state of Illinois. How will this affect communities like Decatur where wages are much lower than Chicago and Chicago suburbs?
I’m not an economist so I’m not going to pretend to be one but I think common sense and a little bit of college economics 101 can help paint the picture.
Will businesses hire fewer people due to a higher minimum wage? I’m sure some will try that route but you can only cut off so much meat until your skeleton crew crumbles into a pile of dust. Productivity will suffer, employee retention will fall and so will the business.
It’s my firm belief that if you overwork and underpay your employees you’re going to have an inferior business and a lousy product. That’s not economics. That’s just the way it is. Unhappy workers don’t give their best.
That said, I would expect a decrease in employment, maybe until businesses can adjust. And yes, I would expect higher costs to be passed on to consumers.
But retail and consumer spending has changed a lot over the past decade or so. We consume less and less from local businesses and more and more from online retailers.
With Illinois having a higher minimum wage, Illinoisans are going to have more buying power nationally. It will be interesting to see what the ripple effect will be nationally. For the state, increased sales tax revenue from online sales can be expected which will help a state buried in debt.
Most of my major purchases are made online, mostly because I can’t find those same products here in Decatur because we have so few retailers left. Have you seen the mall lately? There just isn’t much to choose from. Plus, it’s just a heck of a lot more convenient to make purchasing decisions online where I can read reviews, price compare and make the best choice.
So while we might have to pay more at the local grocery store, we’ll have more purchasing power online where a lot of us are shopping.
Also, many household bills likely won’t be impacted significantly by a higher minimum wage because power companies, car manufacturers, etc., already pay their workers more than the minimum wage. Those bills aren’t likely to increase.
Where I do see costs being passed on to the consumer is in food service, retail and healthcare. These are areas where workers have been woefully underpaid forever and I don’t feel sorry for them for having to pay a living wage. They should have been paying it all along, especially in healthcare.
According to a quick Google search, 48.5% of women earn less than $15/hour nationally and 35.2% earn less than $12/hour. [Source] The numbers are even worse for black and hispanic workers.
The increase in Illinois is going to help lift a lot of women and minorities out of poverty.
Should anyone working 40 hours a week be living in poverty? I don’t think so. In fact, the minimum wage was created to ensure that living wages were being paid to workers. A minimum wage wasn’t meant to keep people in poverty. The minimum wage was meant for families to be able to live a decent life.
I keep reading the same arguments against a minimum wage increase and two themes keep repeating. One, people feel that you should have to gain better skills and climb that corporate ladder to be paid a living wage.
While I think employees with more experience and skills should be rewarded with higher incomes, I don’t believe that those just entering the workforce or working in notoriously underpaid positions should be forced into poverty.
After all, somebody has to prepare your food at the restaurant, somebody has to care for you in the nursing home, and somebody has to stock the shelves at the grocery store, etc.
Should those somebodies be forced to accept a life of financial insecurity so you can buy a cheaper Happy Meal or bag of potato chips? Do you think you’re better than them?
And I think that’s what that argument all boils down to. I think a lot of workers making above minimum wage like having people beneath them. It makes them feel better about themselves.
Who cares if all those millions of people working low wages can’t afford homes, health care, transportation, etc., as long as my fast food is still cheap and I have people to step on.
And another argument that drives me crazy is that people are stereotyping low wage workers as flipping hamburgers at McDonald’s. There are millions of low wage workers and most aren’t working in fast food.
And what’s a living wage? According to the Massachusetts Institute of Technology, in Macon County the living wage for one person supporting themselves is $10.96/hour. For a household consisting of one adult and one child that increases to $24.41/hour. [Source] That’s why both parents have to work because not many people in Decatur are making $24/hour or above. And if you have two kids, you’ll need to make more than $30/hour, if you’re the sole breadwinner, or collectively if you’re combining two salaries.
With all of that being said, I do understand $15/hour will be tough on small businesses at first. But you know what’s tougher? Trying to live on less than $15/hour.
There are many rewards to reap when you pay better wages to your employees.
Nothing breaks up a marriage faster than not having enough money. Not much hurts kids more than broken families and impoverished neighborhoods.
Take a look around Decatur and you’ll see the effects of a high percentage of residents living at or below the poverty level. It’s the number one issue dragging the city down.
When unions were attacked, manufacturing jobs left, and wages were knocked down so was Decatur. I know because I lived through it and saw it happen. I remember the before and the after.
People making $15/hour or more might just be able to buy a home or make repairs on the one they’re living in. They might stick around in the community and make a positive difference.
Pay garbage wages and you’ll have a trashy looking city. After all, you get what you pay for and that’s what it’s all about.