Illinois’s new $12 minimum wage will benefit many. Raising working people out of poverty and toward self-dependence is a welcome opportunity.
Bloomington-Normal has a high median wage, thanks to our educational level and insurance, finance and university employment. According to the U.S. Census Bureau, our median household income is $67,507 – but our poverty rate is 12.6%. Many are working, their low wages keep them below the poverty line and government dependent. The median hides a discrepancy – someone has to flip the burgers, wait the tables, scrub the bathrooms and make the hotel beds. For these workers, a higher minimum wage can lift people from poverty.
With every minimum wage increase, the fear is often repeated that this will reduce job opportunities. Business owner surveys claim increased unemployment – yet according to economic studies, not random surveys, what really happens when wages increase? Despite gloomy predictions, multiple economists evaluated this and find more workers gain from minimum wage increases than suffer job loss. Look northward for an example. Six months ago Chicago raised its minimum wage to $15.
In July 2018 Chicago raised its rate to $12 an hour. Just across city limits employers were still paying the lower state rate. Did Chicago workers suffer? According to a 2019 Illinois Economic Policy Institute Study, 330,000 low-income workers received higher pay and the unemployment rate did not change. Chicago’s then 3.8% unemployment rate was lower than the state’s 4.4% rate.
Multiple economists completed numerous studies on higher minimum wages and job loss. 64 different studies found a small drop of 0.2% and 0.6% drop in employment or hours, offset by higher pay. When Amazon raised its minimum to $15 an hour, their applicants doubled. Though Amazon is criticized for many employment practices, it now lobbies for a national $15 an hour rate.
As for inflation, economists studied multiple communities. When Seattle raised its minimum wage food prices did not escalate, even a year later. San Jose’s 10% wage increase resulted in a 1.2% restaurant price increase. For a $3.99 Big Mac, that’s 4.7 cents – I’d happily pay that extra nickel if the fast food server and cook live more securely.
A baseline standard tied to the cost of living is needed for wages in this country – no one who works full-time should need governmental assistance to survive.
If workers are not paid a family living wage, who makes up the difference? You and I, the taxpaying public. People working full-time should not need SNAP (Supplemental Income Nutrition Assistance) nor line up at food banks to eat, nor live in subsidized housing. Currently, we the taxpayers are subsidizing employers. People who work full time should earn enough to cover their housing, food and family needs.
Last February the Congressional Budget Office studied what a national $15 an hour minimum wage would do. They estimated 900,000 Americans would no longer live in poverty.
Rather than lamenting a minimum wage increase, our community should welcome it. More hard working families will care for their own with dignity. This month we celebrate Dr. Martin Luther King Jr.’s birthday. Let’s remember what he shared one year before his death, April 4, 1967, at New York’s Riverside Church: “True compassion is more than flinging a coin to a beggar. It comes to see that an edifice which produces beggars needs restructuring.”
Mike Matejka lives in Normal.