Press Releases | Wages Incomes and Wealth

News from EPI Raising the Illinois minimum wage would boost state economy and help over a million working families

For Immediate Release: Monday, January 30, 2011

Contacts:

Phoebe Silag, Media Relations Director, Economic Policy Institute

202.331.5546

Ron Baiman, Director of Budget and Policy Analysis, Center for Tax and Budget Accountability

708.341.3205

Madeline Talbott, Lead Organizer, Action Now

312.217.2456

Raising the Illinois minimum wage would boost state economy and help over a million working families

A new EPI Briefing Paper finds that increasing the Illinois minimum wage from $8.25 to $10.65 per hour would give more than 1.1 million of the state’s lowest-paid workers a raise over four years and provide a substantial boost to the economy. In The benefits of raising Illinois’ minimum wage: An increase would help working families and the state economy, EPI researchers Mary Gable and Douglas Hall show that the real value of the Illinois minimum wage has eroded and that working families’ incomes have essentially stagnated, reflecting the rest of the nation’s growing wage inequality during the last 30 years.

Increasing the Illinois minimum wage would mainly benefit adults working in full-time jobs, not teenage workers, as is commonly thought. Over 80 percent of affected workers are at least 20 years old, nearly two-thirds (60.6 percent) have total family incomes of less than $45,000, and more than a quarter (28.7 percent) are parents supporting at least one child. An increase would also greatly benefit women, who comprise 47.4 percent of the workforce but 55.9 percent of affected workers, and racial and ethnic minorities, who comprise 33.1 percent of the total workforce but 41.3 percent of affected workers.

Even during economic downturns, raising the minimum wage does not cause job loss. A recent study found that during recessionary periods in the last two decades, including the Great Recession of 2007-2009 when Congress raised the federal minimum wage from $5.15 to $7.25, minimum wage increases did not cause employment declines.

“Increasing the minimum wage would provide a much-needed raise to many Illinois workers and would generate economic activity and new jobs to a sluggish economy,” said co-author Mary Gable. “In fact, it is one of the few budget-neutral strategies available to state governments that would actually provide a job boost in the coming years.”

Increasing the minimum wage to $10.65 across four years would give an additional $3.8 billion to low-income families, who are most likely to spend the extra earnings immediately on basic needs or services. When weak consumer demand is one of the most significant factors holding back new hiring, this projected rise in consumer spending will only boost economic recovery.

“Raising the minimum wage is a practical solution to Illinois’ economic crisis as well as a crucial lifeline to working families that are struggling to survive,” said Madeline Talbott, Lead Organizer of Illinois-based Action Now. “An increase in wages for the lowest-paid workers in our state is both economically sound and morally just. Senate Bill 1565 will put more than $2 billion dollars into the local economy and increase wages for more than 1 million people.”

“Unlike the recently passed bills giving hundreds of millions of dollars in corporate tax breaks that the state cannot afford, this bill is guaranteed to increase jobs in Illinois because it would increase economic activity from the demand side,” said Ron Baiman, Director of Budget and Policy Analysis at the Center for Tax and Budget Accountability, which is also based in Illinois. “It would not cost the state a penny, and it would provide a much-needed boost to the incomes of families at the very bottom end of the wage scale who most need help during these times of continued real wage decline, unabated expansion in inequality, and persistently high and long-term unemployment.”

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