Sangamon Sun

Increasing Illinois' minimum wage to $15 an hour would be devastating to small businesses and cost the state 93,000 jobs, the National Federation of Independent Business (NFIB) Research Center forecast recently.

“Small businesses rely heavily on entry-level, hourly workers,” NFIB State Director Mark Grant said. “Small businesses will bear the brunt of the cost, and their employees will pay the price in the form of fewer jobs and fewer opportunities.”

The analysis examines a proposal that would raise the wage from $8.25 to $15 from now until 2022: $9 in 2018 to $10 in 2019 to $11.25 in 2020 to $13 in 2021 and finally to $15 in 2022. It would mean a nearly doubling of the minimum wage in a five-year span.

“Raising the minimum wage to $15.00 per hour from its current level is equivalent to raising the cost of labor for employers of minimum wage workers by 82 percent,” the report says. “This increase to the cost of labor is not inconsequential. According to the Bureau of Labor Statistics, there are 19,000 workers in Illinois who currently earn the minimum wage and would be directly and immediately affected by an increase in the state minimum wage.”

The report says the wage increases would also apply to the minimum cash wage, the minimum amount that employees who earn tips must be paid. Illinois law requires that the minimum cash wage be at least 60 percent of the state’s effective minimum wage. Further, workers with employees making more than the minimum wage might need to give them raises proportionately higher than the increased minimum wage in order to maintain employee morale, the NFIB said.

Business expenses would also increase, of course.

“Using the Business Size Insight Module (BSIM)…it was estimated that over a ten-year period beginning in 2018, the proposed wage schedule would reduce Illinois private sector employment by over 93,000 jobs and result in a cumulative reduction in Illinois real output of over $56 billion over the ten-year forecast window,” the report says. “Nearly 56 percent of the forecast job losses are jobs that would have been in the small business sector of the economy.”

Grant argues that a minimum wage increase would make life harder for workers, limiting their ability to find work and get experience. Faced with increased operating costs, businesses would choose to hire fewer people rather than increase prices, he said, and with fewer employees, it becomes imperative that the employees hired are capable and reliable, so there would be fewer entry-level positions. 

“The truth of the matter is that Illinois can’t afford to pass any legislation that makes it even harder for small businesses to expand and create jobs,” Grant said. “We need the Legislature to stop playing politics and pass a budget and work with Gov. Rauner to help Illinois attract and keep good-paying jobs.”