Illinois Needs a $10 Minimum Wage Just to Keep Up With Inflation

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”

Over 250,000 Illinois Workers Earn Less than the 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.


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”

Paper: Raise State Minimum Wage to Stimulate Illinois Economy

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.

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; pciciora@illinois.edu

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”