Illinois is carrying out an interesting experiment. The Chicago Tribune reports:
Low-wage workers across Illinois will ring in 2020 with a $1-per-hour raise after Gov. J.B. Pritzker on Tuesday signed a bill that sets the state’s minimum wage on a path to reach $15 per hour by 2025.
Pritzker signed the bill into law Tuesday morning during a ceremony at the Governor’s Mansion in Springfield, making Illinois among the first states to approve a minimum wage of $15 per hour, a goal set by the labor-backed Fight for $15 movement. California will hit that level in 2022, Massachusetts in 2023 and New Jersey in 2024. New York’s minimum wage eventually will reach $15 per hour statewide through a series of increases tied to inflation.
The question is which group will flee Illinois faster, low-wage workers because they can’t get jobs or the more prosperous because they’re paying higher taxes? If employment is downwards inelastic, as many proponents of higher minimum wages seem to assume, the state is due to get a windfall of higher tax revenue from more income tax from the workers being paid a higher wage and from increased sales due to increased personal consumption.
My money would be on population and tax revenues continuing to decline.
Back in the early seventies I worked off the cuff for a dairy farmer a mile away. $1/hour. In three summers at that job I learned most of the employable skills that would carry me through life, animal husbandry, forklift operator, field tractors, over the road rigs, irrigation, mechanical skills. I know we broke the law with that arrangement, but I’d hate to think how I would have fared without it.
Now there are quite a few people who think that adults should be able to support a family on entry-level wages.
But my point was that the low wages allowed me to learn skills on the job. At $5/hr, I’d have spent those summers fooling around because I wouldn’t have had a job at all.
And do they really think that? Or does the position just buy votes?
I continue to believe the minimum wage needs to vary based on local conditions. There’s nothing magical about $15 or any arbitrary number. If Illinois is like most other states, $15/hour in rural parts of the state is not the same as $15/hour in Chicago for reasons which should be obvious.
I don’t know what the effects will be, but I bet rural employment will be hurt the most, especially among young people.
It will certainly hurt rural areas but it will hurt cities, too, due to Illinois’s geography. All of Illinois’s major population centers with the exception of Peoria and Springfield are located near the state’s borders and all of Illinois’s neighbors have lower minimum wages. Rock Island and Moline are on the border with Iowa, Chicago is wedged between Indiana and Wisconsin, Cairo is on the border with Kentucky, East St. Louis on the border with Missouri. In many places relocating a business is a matter of walking across the street.