Lou Lang: Illinois Minimum Wage Hike for 400,000 Workers, 70,000 New Jobs Boost Illinois Economy, Governor Pat Quinn

Guest Column by House Deputy Majority Leader Lou Lang (D-Skokie)

(Skokie, IL) — July 20, 2010. The Illinois economy has recently generated some welcome news on a couple fronts for both Illinois workers and Governor Pat Quinn.

First, the Illinois minimum wage increased to $8.25 an hour on July 1, after increasing to $8.00 only a year ago, while, second, the state witnessed an increase of 70,000 new jobs since January, defying naysayers who said a minimum wage hike would kill job growth.

According to an Economic Policy Institute study, the increase in the minimum wage will help over 409,000 Illinois workers confront the rising cost-of-living and better afford basic necessities like groceries, gas, rent, childcare and medicine, while simultaneously helping to boost the Illinois economy.

“The Illinois Department of Labor has worked diligently to ensure workers receive fair wages, so they can meet their basic needs and have the ability to spend more, which in turn helps stimulate the economy,” said Director Catherine Shannon.

Illinois’ minimum wage rose, due to legislation that I supported, to $7.50 an hour in July 2007, with automatic increases of 25 cents per year built in over the next three following years to $7.75 on July 1, 2008; $8.00 on July 1, 2009; and $8.25 on July 1, 2010. This is the last automatic increase provided for by the law.

Illinois is one of 14 states with a higher minimum wage than the federal standard of $7.25. Only Washington ($8.55) and Oregon ($8.40) have higher minimum wage rates than Illinois. In the Midwest, only neighboring Michigan, at $7.40 per hour, joins Illinois, exceeding the federal level.

Raising the minimum wage to $8.25 an hour will generate an additional $520 in annual wages for a full-time minimum wage worker, up to $17,160 per year. Additionally, full time minimum wage workers in Illinois will earn $2,080 more in annual wages than workers receiving the federal minimum wage of $7.25 an hour, according to the Illinois Department of Labor.

Violators of the minimum wage will face state investigations to help ensure compliance with the law.  In 2009, the Illinois Department of Labor conducted over 1,500 investigations of alleged violations and collected over $1.4 million in underpaid wages to Illinois workers.

Workers under 18 may be paid 50 cents less per hour less than the adult minimum wage. Tip credits may be up to but not exceed 40 percent of the minimum wage.

In a study by the Voices for Illinois Children, the child advocacy group found that more than 80% of minimum wage workers in Illinois are working adults, not teenagers, and one-third of minimum wage earners are sole breadwinners for their families. Additionally, approximately 144,000 of the workers who would benefit directly from the minimum wage increase are working parents and nearly 60% of them are women.

Not every one, however, is a fan of the minimum wage.

Kim Maisch, Illinois Director of the National Federation of Independent Businesses, recently claimed that state lawmakers in 2006 failed account for a potential economic downturn in which businesses would be less able to cope financially with a minimum wage increase.

“This is a classic example why lawmakers should not build in automatic increases to the minimum wage.”

However, the Illinois seasonally adjusted unemployment rate dropped -0.4 points from 11.2% to 10.8% in May, according to data released recently by the Illinois Department of Employment Security. The over-the-month decline is the largest since October 1983.

Additionally, Illinois has added 70,000 jobs so far this year, more than any other midwestern state, according to department data.

“Five months of positive job growth coupled with two consecutive months of declines in the unemployment rate offer reasons for cautious optimism,” Director Maureen O’Donnell said.

While the Illinois unemployment rate remains stubbornly and unacceptably high–and above the national rate of 9.5%–70,000 new Illinois jobs and more than 400,000 workers with more money in their pocket will help jump-start Illinois’ economic recovery.

This is good news for workers and Quinn who is looking to hold onto his job in November.