A minimum-wage employee working full time cannot afford a modest one-bedroom apartment in Illinois, Minnesota, Wisconsin, Indiana, or Iowa. In all five Midwestern states, the minimum wage should be at least $10.00 an hour.
States with higher minimum wages have added more jobs over the past 12 months. That’s the conclusion of a new Economic Commentary [PDF] released by the Illinois Economic Policy Institute, which evaluates recent data from the Bureau of Labor Statistics. … Continue reading States with Higher Minimum Wages Added More Jobs Over the Past Year
Happiness levels of Americans vary across the country. However, there are steps that all states, even those with the highest happiness levels, can take to increase the aggregate well-being of their citizens. Happiness economics is a relatively new academic field … Continue reading Ways to Improve Happiness in America
Note: This post is an excerpt from The History of Economic Inequality in Illinois: 1850-2014 [PDF], published and released by the Illinois Economic Policy Institute on March 4, 2016. Although Illinois cannot completely counter national trends, the state and local governments … Continue reading 10 Potential Ways to Reduce Inequality in Illinois
Economists across the country have advocated for raising the minimum wage, claiming that the benefits outweigh the costs. For example, increasing the minimum wage has been found to boost consumer spending and reduce income inequality in the economy.
The federal minimum wage is $7.25 an hour and has not been increased since 2009. Though the federal rate has not increased in 7 years, many states and localities have raised their own minimum wages. Chicago raised its local minimum wage to $10.00 in 2015. By 2019, the City is expected to have a minimum wage of $13.00, per an ordinance passed by the City Council. Continue reading “Illinois Needs a $10 Minimum Wage Just to Keep Up With Inflation”
Analysis of new data from the Current Population Survey (conducted jointly by the U.S. Bureau of Labor Statistics and the U.S. Census Bureau) reveals that 4.8 percent of the Illinois workforce earns less than $8.25 an hour, the legal minimum wage for workers aged 18 years or older in firms with 4 or more employees. In total, an estimated 264,508 workers earned less than the minimum wage in 2014. Among sub-minimum wage earners (SMWEs), hourly pay averages just $6.66, or $1.59 per hour below the minimum wage floor. This translates into an economic loss of $1,654 over the year for part-time employees who worked 20 hours per week in 2014.
While many of these workers are under 18 years old or are employed by small businesses excluded from the minimum wage law, many others are the victims of wage theft. A 2009 study by researchers at the National Employment Law Project, the University of Illinois at Chicago, Cornell University, and the University of California – Los Angeles found that 26 percent of low-wage, “front-line” workers were paid less than the legally-required minimum wage. The highest violation rates occurred in apparel and textile manufacturing, private households, and personal and repair services. Similarly, in a survey of 57 car washes in the City of Chicago, the University of Illinois at Urbana-Champaign found that 76 percent of hand car wash workers earned below the state’s minimum wage and 13 percent earned less than $2 per hour.
Minimum wage theft occurs for many reasons. First, there could be information problems in that employers may not realize that their practices are depriving workers of owed income or that they have misclassified workers as temporary or contingent workers. Second, tipped employees may not be compensated by their employer enough to close the minimum wage gap when the tips fall short. Third, business practices that elevate short-term profits above long-term profitability put downward pressures on wages. Fourth, economically inefficient social issues such as racial, gender, sexual orientation, and religious discrimination could also be factors. Continue reading “Over 250,000 Illinois Workers Earn Less than the Minimum Wage”
On May 20, 2014, ILEPI Policy Director Frank Manzo IV was a panelist on WTTW’s Chicago Tonight with Ted Dabrowski discussing the pros and cons of raising the minimum wage in Illinois. Manzo supported raising the minimum wage to $10.00 per hour while Dabrowski has endorsed abolishing Illinois’ minimum wage altogether. Here is a link to the segment, and below is additional information on the effects of raising the minimum wage in Illinois.
Should we raise the minimum wage to $10 an hour?
The Illinois economy is still recovering from the Great Recession. The unemployment rate is about one and a half percentage points lower today than it was one year ago. But the recovery has seen an ongoing rise in income inequality in the labor market. To partially offset the income gap– independent of any action (or nonaction) at the federal level– Illinois should raise the minimum wage to $10 an hour.
In 2012, 1 million of the state’s 6 million workers earned less than $10 an hour. Of these one million low-wage earners, 57 percent were female, 45 percent were nonwhite, and 60 percent worked full-time (35 hours a week or more). In a study co-authored with the University of Illinois, ILEPI found that raising the minimum wage to $10 would increase worker income by $2 billion for these low-wage workers and lift 60,000 to 100,000 Illinois residents above the poverty line, reducing reliance on government programs and lowering costs to taxpayers. These workers would then spend that new income back in the economy, resulting in $7 billion in new economic output, and either a very small drop or a very small gain in employment. Thus, in Illinois, a state where the cost of living is higher than the national average, a raise to $10 would be beneficial to the economy. See the full report here [pdf].
Why does the minimum wage have a stimulative impact? What about economic theory which says it reduces jobs?
We know that reality is, unfortunately, far more complex than economic theory. Research shows little to no discernible impact of the minimum wage on employment. Most estimates on the supposed reduction in jobs are between zero percent and less than a fraction of a percent— it would be a false representation of economic research to suggest otherwise. We also know that poorer Americans spend higher shares of their incomes in the economy than richer Americans. One 2009 study by the Federal Reserve Bank of Chicago found that “spending increases substantially after a minimum wage hike.” For every $1 increase in the minimum wage, families with a minimum wage earner raise spending by $744 to $869 per year.
Isn’t the minimum wage a job killer for small businesses? Continue reading “ICYMI: ILEPI on Chicago Tonight Discussing Minimum Wage”
Frank Manzo IV is the Policy Director of the Illinois Economic Policy Institute (ILEPI). Visit ILEPI at www.illinoisepi.org or follow ILEPI on Twitter @illinoisEPI. For a PDF one-page (double-sided) version of this post, click: http://www.scribd.com/doc/216145979/Minimum-Wage-Maximum-Benefit-March-17-2014. REPORT SUMMARY With the support of more than two-thirds of the American public and six-hundred labor economists, raising the minimum wage should be an economic priority in 2014. Raises in the minimum wage have been found to have virtually no impact on employment. Although classical economics predicts that minimum wages lead to unemployment, economic research predominately finds that a 10 percent increase in the minimum wage … Continue reading Briefly: The Benefits of Raising the Minimum Wage
The following post appeared as a press release from the University of Illinois News Bureau at this link.
CONTACT: Phil Ciciora, Business and Law Editor 217-333-2177; email@example.com
CHAMPAIGN, Ill. — Raising the minimum wage in the state of Illinois to $10 per hour would reduce income inequality, increase consumer demand and grow the state economy, according to a new study from a University of Illinois labor expert.
Robert Bruno, a professor of labor and employment relations on the Urbana campus, says increasing the minimum wage from its current rate of $8.25 per hour would have a substantial stimulative effect on the state economy but not much of an effect – positive or negative – on employment.
“We analyzed the impact that raising the minimum wage has on employment, hours and income, and concluded that it’s the best way to reduce wage inequality, grow the state economy and ensure that workers are paid a wage that’s commensurate with the cost of living,” said Bruno, also the director of the Labor Education Program in Chicago. “And most importantly, we found that raising the minimum wage would have no discernible negative effect on total employment.”
Bruno and study co-author Frank Manzo IV, the policy director of the Illinois Economic Policy Institute [@IllinoisEPI], also advocate for a host of other public policy recommendations, including: Continue reading “Paper: Raise State Minimum Wage to Stimulate Illinois Economy”