State should follow Chicago's lead and raise the minimum wage
On July 1, the city of Chicago raised its local minimum wage to $12 an hour. The move is part of an incremental process the Chicago City Council initiated in 2014 to raise their minimum wage from $8.25 per hour to $13 per hour by July 2019.
The policy change was intended to increase earnings for low-income workers and combat income inequality. And new research from the Illinois Economic Policy Institute and University of Illinois Project for Middle Class Renewal shows that it's working.
The economic data from 2010 through 2016 - a period during which Chicago's minimum wage was increased from $8.25 to $10.50 an hour, shows the policy has already increased incomes for more than 330,000 workers in the city. And while low-income workers saw the largest gains, the median income for all Chicago workers has increased as well.
In other words, a rising tide has lifted all boats.
Importantly, our study finds that Chicago's rising minimum wage has not had the negative effects on either businesses or job growth that some detractors feared.
In addition to looking at incomes - which grew as much as 10 percent in some occupations - we compared employment outcomes between Chicago and the Illinois, Indiana and Wisconsin suburbs where the minimum wage hadn't changed.
As Chicago's minimum wage rose, the unemployment rate in the city fell further than it did in the suburbs. And the city's private-sector business growth has consistently been on par with these neighboring communities.
The bottom line is that by giving its lowest-paid workers a long overdue raise, the Chicago City Council increased their purchasing power. And workers have been using it to help stimulate the local economy.
The entire state of Illinois deserves a similar boost.
This is hardly a radical idea. Raising the minimum wage is supported by a majority of both Democratic and Republican voters nationally. That's why 18 states raised their minimum wages in 2018 alone. Among voters in Illinois, two-thirds have said that the state should increase the wage floor, and both of the major candidates for Illinois governor are on record in support of raising the state's minimum wage.
The last time the state increased its minimum wage was in July 2010. If the minimum wage had simply kept pace with inflation, it would be nearly $10 today. Instead, one-in-12 Illinois workers now earns less than $10 an hour, and nearly one-third still earn less than $15 an hour.
If there's criticism to be leveled at Chicago's efforts, it's that while the City Council adopted a balanced approach to raising wages for low-income workers, it didn't include all of them. Teen workers in the city can still be paid 50 cents below the state minimum wage, or just $7.75 an hour. Not surprisingly, our study did reveal slightly higher demand for teen workers, and flatter wages in the food service jobs they disproportionately populate. This can be corrected with an increase in the teen wage.
Aside from this issue, the Chicago Minimum Wage Ordinance has been a success, working largely as intended. Perhaps that is one reason why Site Magazine has repeatedly named Chicago the top city in America for corporate relocation and investment every year since the ordinance went into effect.
It's past time for Illinois to follow suit. Voters of all political stripes want it, their gubernatorial candidates support it, and the Chicago experiment confirms that incremental increases in the minimum wage are good for workers and do not pose a threat to either the business community or the broader economy.
Frank Manzo IV, MPP is the Policy Director of the Illinois Economic Policy Institute. Read his latest research on the effects of Chicago's new Minimum Wage Ordinance by clicking here.
Frank Manzo IV, is policy director for the Illinois Economic Policy Institute in Countryside.