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Minimum-wage hike would hurt low-income workers

By   /   August 29, 2013  /   18 Comments

By Benjamin Yount | Illinois Watchdog

SPRINGFIELD  —  Minimum-wage workers, many of whom spent Thursday striking, should look at Illinois before convincing themselves that a higher minimum wage will solve their problems.

HIGHER WAGE, FEWER PROBLEMS? Low wage workers aren't always helped by higher minimum wage.

HIGHER WAGE, FEWER PROBLEMS? Low wage workers aren’t always helped by higher minimum wage.

Illinois is one of the best paying states in the country, but the economic reality in the Land of Lincoln proves why a higher minimum wage does not make things better for low wage workers.

Illinois’ $8.25 an hour is the fourth highest minimum wage in the country. Only Washington, Oregon and Vermont pay more.

But Illinois has the second highest unemployment rate in the country. Only Nevada is worse.

Illinois’ 9.2 percent jobless rate dwarfs the national rate — 7.2 percent.

“While we can’t place all the blame of our state’s woes on the minimum wage, it clearly is a factor and one of the reasons Illinois continues to seriously lag behind our neighbors,” Kim Clark Maisch, Illinois’ director for the National Federation of Independent Business, said.

In other words, someone working a minimum wage job in Iowa earns a dollar less, but because Iowa has half the unemployment — 4.8 percent — there more jobs to be had.

If nearly one in 10 people not having a job wasn’t bad enough, Maisch said the figures are far worse for the people who usually work minimum wage jobs.

“In fact, teen unemployment (16-19 year olds) is around 26.5 percent in Illinois and 48 percent in the city of Chicago,” Maisch said.

LET BUSINESSES BE: Maisch says Illinois businesses want the government off their backs.

LET BUSINESSES BE: Maisch says Illinois businesses want the government off their backs.

That means half the young people in Illinois’ largest city cannot find a job. No minimum wage, no matter how high, is helping them.

And don’t kid yourself, young people are the ones doing most of the work for minimum wage.

As a 2012 Bureau of Labor Statistics report notes “Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the federal minimum wage.”

Maisch said most minimum-wage workers are only part time, few are the heads of households, and less than 5 percent are adults who work full time.

But even full time at minimum wage does not make someone poor.

The federal government’s poverty threshold defines a single person making less $11,490 as poor. Working 40 hours a week, someone making Illinois’ $8.25 an hour would earn $17,160 a year.

The feds say a family of four is poor if they earn less than $23,550. If both parents work minimum wage jobs in Illinois, they’d bring home $34,320.

That family of four would earn more than $40,000 a year if Illinois Gov. Pat Quinn has his way.

Quinn has been pushing to raise Illinois’ minimum wage to $10 an hour.

Maisch said if Illinois can’t find jobs for its citizens while paying $8.25, what will the state look like at $10 an hour.

$40,000 A YEAR: A $10 minimum wage equals about $40,000 a year.

$40,000 A YEAR: A $10 minimum wage equals about $40,000 a year.

“If government would stop intervening by setting artificial wage rates, mandating expensive and burdensome regulations like Obamacare, and stop throwing roadblocks up to starting small businesses our state and our country would be much better off,” Maisch said. “ When I ask my members – small business owners – what do you need to help you succeed in your business they say “tell government to get out of the way.”

Contact Benjamin Yount at Ben@IllinoisWatchdog.org or find him on Twitter @BenYount.

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  • Sammie Jo

    What the workers haven’t thought about, IF they got their way, it would bump most of them right off the welfare roles, out of public housing.
    They would have to move into more expensive apts, they would have to put up deposits, pay moving expenses etc.
    Not too worry though, they won’t get their ridiculous raise, and they’ll be lucky if they still have a job.
    I would have immediately put a NOW HIRING sign in my window and had the striker’s final paycheck ready for them.
    They have the right to strike, I have the right to fire.

  • Factchecker

    You have a math problem. For$10 per hour to equal $40,000 you assume that you work 80 hours per week. I guess that you know that your readers do not know math and just believe you. In addition the fact that IL has a higher wage than Iowa and twice the unemployment rate does not mean that one caused the other.

  • Dude

    If BOTH parents work …. Try reading it again

  • The Invisible Hand

    This an almost valid argument to consider, i.e. higher wages=greater expenses due to entering a higher tax bracket, which in turn disqualifies lower wage workers from certain social programs such as Medicaid, Food Stamps, public housing, etc. However, if you work over 30 hours per week then the gross pay would exceed the poverty threshold of $11,400 (by a few dollars only of course), and as a result it would put most social safety net programs out of reach for a single working adult. Thus, I understand any businesses rationale to keep its operating expenses at a minimum, but I also recognize the importance of a “living wage,” on both the individual and economic levels. It’s a conundrum of sorts, but the bottom line is the private sector’s unwillingness to raise wages, provide benefits, etc., often results in shifting the burden on the taxpayer, the property owner, etc., which most likely the business owner is, in the form of increased taxes to fund social welfare programs. In short, there’s greater profit on one side but increased expense / obligation on the other; I guess it depends which side you prefer to pay on. Again, if you are single and work a “full-time” minimum wage job you are likely already ineligible to receive benefits from social programs. In other words, this boils down to the simple “get a 2nd, a 3rd, or a different job” argument. And in that respect, I believe the private sector and the government need to realize that a living wage from a single full-time job is in everyone’s best interest.

  • Sammie Jo

    I remember working 2 jobs for many years so I wouldn’t have to rely on the govt for support.
    Even if you are single, you still are eligible for certain benefits, it depends on your state.
    Usually HUD housing for sure.

  • John V

    Liberals read? Like that would happen.

  • Falindraun

    The sooner people realize that minimum wage jobs are for people to learn how to have a job ie: geting up on time to get to work on time, how to deal with customers, ballancing your schedule with what you need to do (go to work) with what you want to do (have fun), ballancing your personal budget (expences vs income). Basicly one of the main points about a minimum wage job is about learning how to have a job and responseability.

  • Invisiable Hand

    Yep, I agree, nothing wrong w/ two jobs. I did it as well for a long time. My point is this: say you work for $8.25 per hour totaling 20 hours per week, you would net about $127 per week in Illinois (http://www.paycheckcity.com/calculator/salary/result). So now you have to start adding hours / jobs. Thus, to net just under 25K you’d need 4 jobs and roughly 80 hours per week:
    Job 1: (20 hours) $6096 net p.a.
    Job 2: (20 hours) $6096 net p.a.
    Job 3: (20 hours) $6096 net p.a.
    Job 4: (20 hours) $6096 net p.a.
    and now the worker is paying taxes on 4 paychecks (I don’t know what the average would be but you could
    figure it out). I’m a proponent of hard work, self-reliance, and free enterprise, but I don’t think this is exactly what Adam Smith had in mind in “The Wealth of Nations,” or even Friedman in “Capitalism and Freedom.” W/ the latter I find myself agreeing more and more that
    a Guaranteed minimum income and a flat tax without loopholes is the only way to go (get rid of social welfare programs entirely), and corporations should be incentivized to hire for full-time employment. In brief, the free market must benefit all interested participants while keeping bureaucratic interference at a minimum.

  • IzzyKiddnya

    But I thought it would be a GOOD thing if workers’ wages increased to the point where they could get OFF welfare!

    Aren’t you one of those who complains about “Welfare Free-loaders”? Eliminate the “Moral Hazard” associated with the dole!
    Why not a living wage for those lucky enough to have a job despite the current austerity?

  • Sammie Jo

    It would be a good thing, but not for them, they make more on welfare and low income jobs than working for a higher salary. You have seen the articles about how if you’re on welfare you can make $40,000.00 a year in cash and benefits, haven’t you?
    As soon as they discover they’ll lose bennies, they’ll be upset.
    Perhaps if they stayed in school, got an education, learned a trade, didn’t get knocked up at 16, they wouldn’t have to work for min wage.

  • Mic Jones

    Wow this article is so flawed. They based everything on a single state. They say it is the 4th highest minimum wage. I looked up the other 3, their unemployment rates are 4.0, 6.9 & 8.0, so they are all over the place. And what about Nevada, it was the worst but with a minimum wage rate of 7.25, same as N Dakota in the top spot. It seems to me they have failed to link the two together. You must take all 50 states and show that after wages when up, unemployment went up or show that statistically across the states, higher wages = higher unemployment. Picking 1 state is just plain biased. I can pick two state, Illinois and Nevada, and claim their high unemployment is based on having 3 vowels in their names. They are the worst 2 and both have that it common. Much more likely based on that logic than this article tied its premise together.

  • pwgotribe

    if you look at all the TV and internet interviews you’d see all these complaints from single moms with 3 or 4 kids around them, moaning they can’t survive on minimum wage. That’s the real issue. If a single woman worked a full-time job plus some overtime (or a second job) even minimum wage would pay her bills if she lived modestly. But if she’s got all the kids and no working father in sight, she can’t make it. What she needed was a lesson in avoiding non-marital pregnancy.

  • forrealcommonsense

    If minimum wage is good why not make it $100 an hour? Isn’t it common sense that when the minimum goes up so do prices and jobs go down? After all what business is not going to wanna recover the expenses, its not like he has a money tree in the backyard or a government printing press…

  • H. Ford

    Raising wages will be worse for the employees because they might end up making a living wage like assembly line workers in car factories.

  • Plop

    If these people could easily make $40,000 a year off the government, why on earth would they strike to earn a whopping $15 per hour so they can stay at their lousy jobs? Oh, because you think that poor people are stupid and deserve a life of servitude if they didn’t get an abortion (male or female).

  • Real

    Or an abortion.

  • Logic

    Right! My burgers are already too expensive. If they raise minimum wage for them, then that means my dinner costs more and then I have to ask for more money (which I never do because that would raise prices and cut jobs) and then my boss would have to ask for more money and then we’d all become gay!

  • Sammie Jo

    I think you’re stupid if you think males can have an abortion or would even have the need for one.
    They’re poor because they didn’t stay in school, they got knocked up and they have no skills, not my fault, their fault.
    Why strike? Because they haven’t thought that far ahead to realize they’re going to lose all their benefits and, they haven’t figured out that they’re not going to get a 40 hour work week either.