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Wage increase a jobs killer

2006-10 hikes left state with third highest jobless rate

Published: Wednesday, Feb. 26, 2014 1:15 a.m. CST • Updated: Monday, April 7, 2014 8:50 a.m. CST
Caption
(AP)
Illinois Gov. Pat Quinn delivers the State of the State address to a joint session of the General Assembly in the House chambers at the Illinois State Capitol Jan. 29 in Springfield.

The Congressional Budget Office last week laid out the consequences for low-wage workers if Democrats succeed in raising the national minimum wage to $10.10 per hour.

People who earn the current minimum wage of $7.25 would make more money if they were paid $10.10, the nonpartisan analysis found. Well, duh. That's arithmetic.

The more crucial revelation was the CBO's confirmation that raising the minimum wage costs jobs. Potentially, a lot of jobs.

If the $10.10 plan championed by President Barack Obama is enacted, the CBO found, employment nationwide would plunge by an estimated 500,000 as of mid-2016.

In other words, if employers had to pay more to each worker, they would have 500,000 fewer workers.

The White House tried to spin its way out of that inconvenient truth, to no avail. Jacking up the minimum wage would help to lift around 900,000 Americans out of poverty, according to the CBO, but also would be a job killer – period. Some people would earn more money at their jobs. But other people would have no jobs.

Given the improving economy nationwide, some locales might decide they can afford to give up a measure of job creation for the sake of guaranteeing a higher wage to workers who make the least.

Illinois is not one of those places.

This state is desperate for jobs. It is failing to keep up with job creation in neighboring states. It is failing to keep up with the rest of the nation. It is failing to give its employers a reason to locate and expand their businesses within these borders, instead of growing elsewhere.

Minimum wages directly affect only a small slice of the workforce. But minimum wage laws do matter. When government sets a prevailing wage that isn't competitive, it sends a "Don't hire here" message to employers who otherwise might.

In Illinois, the evidence of that discouraging message – and of its grim consequences – is all around us. The state jacked up its minimum wage four times from 2006 to 2010.

Right through the worst of the recession, as other states made job creation a priority, Illinois made it more expensive to hire the lowest-wage workers. Often they're the youngest, least skilled, and most eager job-seekers – people trying to land not a lifetime job but a first job.

No surprise, then, that unemployment in Illinois is the highest in the Midwest at 8.6 percent, and third-highest in the nation, after Nevada and Rhode Island. A recent survey by the independent financial research firm Moody's Analytics concluded that Illinois has the worst job prospects of any state.

Presiding over this employment tundra is a governor who wants to raise the minimum wage again, from $8.25 per hour ($1 more than the current federal rate) to at least $10.

We wish Gov. Pat Quinn would take a long, hard look at the CBO report — and then take a long, hard look at the already disadvantaged communities in his state that would suffer the negative effects of a higher minimum wage. ...

Give 'em a break, Governor. No matter how simple it sounds to some voters, the frantic job-seekers of this desperate state can't afford another hike in the minimum wage.

So set aside the political appeal. Take a quiet moment and ask yourself:

If raising the minimum wage is the great idea some of your supporters claim, why have those four increases of recent years left Illinois with the third-highest unemployment rate in America?

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