From the Desk of Senator Brian W. Stewart (Feb. 15): Minimum wage

It seems straightforward.  Raise the minimum wage so people won’t have to live in poverty.  The federal minimum wage was introduced by the Fair Labor Standards Act of 1938 and signed by President Franklin D. Roosevelt.  President Roosevelt advocated for the minimum wage saying, “Do not let any calamity-howling executive… who has been turning his employees over to the Government relief rolls in order to preserve his company’s undistributed reserves, tell you – using his stockholders’ money to pay the postage for his personal opinions – tell you that a (minimum) wage… is going to have a disastrous effect on all American industry.”

I’m sure that President Roosevelt had good intentions.  His words tell us that he believed a minimum wage would help people get off government welfare because working would help them provide for their families.  President Roosevelt’s quotation also tells us that business owners were concerned that a minimum wage would hurt the economy.

It’s a debate we’re still having today.  On Valentine’s Day, the Illinois House concurred with Senate Bill 1, an amendment to the Illinois Minimum Wage Law, which raises the minimum wage in stages to a target of $15 an hour by 2025 that was approved by the Illinois Senate February 7.

After the vote, Governor Pritzker said, “Today is a resounding victory for the 1.4 million Illinoisans who will soon get a hard-earned and well-deserved raise… I applaud the House and Senate for passing a living wage with the fierce urgency this moment requires… Whether you’re a home healthcare provider in McLeansboro or a janitor in Rockford, hardworking men and women across Illinois deserve a raise and will get one.”

Is that true?  It sounds as though minimum wage increase almost doubles the hourly wage for 1.4 million (23 percent) Illinois wage earners according to a report by the Illinois Economic Policy Institute (ILEPI).  The questions I still have are, “Why were we forced to vote without providing evidence that raising the minimum wage means fewer working families in Illinois will struggle with poverty?  Why did the Governor and the Chicago machine deny a vote on alternatives? Why were we forced to vote without being able to explain to our constituents how much it will raise their property taxes?

The answer was, to reiterate claims that passing the minimum wage will help people and that they deserve it.  No evidence.  No discussion.  No explanation of the need for tax hikes on working families.

Why?  First, it’s important to be clear.  According to the ILEPI report they’re using to support raising the minimum wage, there are NOT 1.4 million Illinois workers earning minimum wage.  There are 1.4 million who are currently earning less than $15 an hour.  The report does not specify how many Illinois workers are earning minimum wage.  It does not tell us how many of those workers are working families.  We do know that only 6 percent of Illinois workers are earning less than $10 an hour, which is more in line with the US Bureau of Labor Statistics which tells us that the number of US wage workers receiving minimum wage has dropped from 13 percent in 1979 to 4 percent in 2013.

Second, the report also tells us that only 15 percent of those 1.4 million low income workers are likely to be “lifted out of poverty.”  A study published in 2014 titled “Employment effects on minimum wages” provides an explanation.  The study’s author, Professor David Neumark writes, “…a higher minimum wage discourages employers from using the very low-wage, low-skill workers that minimum wages are intended to help.  A large body of evidence… confirms that minimum wages reduce employment among low wage, low skill workers.”  Business organizations aren’t lying when they tell us that increasing the minimum wage to $15 an hour will reduce the number of jobs for low-wage or low-skilled workers.

Lastly, supporters of Senate Bill 1 told us the minimum wage hike means working families won’t struggle anymore.  Newmark writes, “…minimum wages do a bad job of targeting poor and low-income families.  Minimum wage laws mandate high wages for low-wage workers rather than high earnings for low-income families. … The minimum wage is a relatively ineffective policy for achieving the goal for helping poor and low-income families.  More effective policies are those that increase the incentives for members of poor and low-income families to work.” Instead of raising the minimum wage, Neumark supports expanding the earned income tax credit (EITC) because of the data indicating that the EITC helps low-income families overcome poverty.  Sadly, the Senate and House did not consider an Illinois EITC as an alternative.

As we can see, the evidence doesn’t support the claim a minimum wage hike will help working families.  Another concern was the lack of discussion about alternatives.  The Illinois Retail Merchants Association offered two separate options to Senate Bill 1.  The first option was to follow the state of Oregon’s example and have different minimum wages for different parts of the state.

The second option was to follow the state of New York’s example and adopt a regional approach to increasing the minimum wage to a target of $15 an hour.  New York has employed different time frames in three different areas: New York City would have four years to raise minimum wage to $15 an hour, Long Island and Westchester County six years, and the rest of the state 10-12 years.

Both options were ignored.  Working families should remember how proponents of the minimum wage hike ignored the evidence, refused to consider alternatives, and would not tell us how much the minimum wage hike would raise our property taxes, and hold them accountable.

As always, you can share your comments, thoughts and ideas on my website,  and use the contact form to send me an email.

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