La Grange: An increase to Illinois’ state minimum wage would grow the state’s economy and boost the paychecks of as many as 1.4 million workers by up to $6,000, according to new research from the Illinois Economic Policy Institute (ILEPI) and Project for Middle Class Renewal at the University of Illinois Urbana-Champaign.
The policy brief assesses the economic impacts of three different proposals (increasing to $10 an hour by 2019, to $13 an hour by 2022, and to $15 an hour by 2024) to raise the state’s current minimum wage, which has been set at $8.25 an hour since 2010.
“Increasing the minimum wage is a win-win-win for workers, taxpayers, and the economy,” said ILEPI Policy Director Frank Manzo IV. “It means higher wages and less poverty for workers, more spending across the economy, higher tax revenues, and less reliance on welfare programs.”
Among the three scenarios studied, researchers found that a minimum wage increase would increase paychecks for 6%-23% of the state’s total workforce.
The report finds that the increased consumer spending associated with wage increases would grow the economy by $5 billion-$19 billion per year.
The researchers note that wage increases have not produced the negative impacts on employment often claimed by opponents. A recent study found that job growth in the City of Chicago, which began increasing its minimum wage in 2014, has more than kept pace with surrounding suburbs that made no changes to their minimum wage policies. Additionally, researchers note that 9 of the 13 states with minimum wages of at least $10 per hour have unemployment rates that are the same or lower than Illinois.
In Illinois, a full-time worker earning today’s state minimum wage rate brings home just $17,160 in annual income. This is $3,620 below the federal poverty line for a family of three and $7,940 below the federal poverty line for a family of four. By increasing incomes, a minimum wage hike could lift as many as 212,000 workers out of poverty.
“A minimum wage that keeps up with the cost of living can make a significant difference in the lives of working families,” added study co-author Jill Manzo. “If Illinois’ minimum wage was indexed to inflation, it would already be $10 per hour and tens of thousands of families would be lifted out of poverty.”
Using industry-standard IMPLAN economic modeling, researchers were also able to assess the potential impact of minimum wage hikes on public budgets. In all scenarios, the wage hikes improve tax revenues, while reducing spending on government assistance programs, such as Food Stamps.
“Increasing the minimum wage is good policy for taxpayers because it means more revenues to invest in vital public services like education, infrastructure, and public safety while reducing reliance on the social safety net,” added study co-author and University of Illinois Professor Dr. Robert Bruno. “The question isn’t whether we should increase the minimum wage— it’s why haven’t we done it already.”