Illinois Governor J.B Pritzker signed today a $15 minimum wage bill to go into effect by 2025.
While this could work for Chicago and its suburbs, it will crush Central and Southern Illinois — the majority of Illinois — which is mainly farmland. While Central Illinois is known for the University of Illinois, Southern Illinois is known for one thing: prisons, because even if inmates escape, they have nowhere to run.
I live in a Carbondale, home of Southern Illinois University, a sleepy college town full of small businesses. Most entry-level and even higher jobs start at $10 or below. Unless you work in healthcare, for the college, or for the state (which arguably shouldn’t count as productive employment), your job most like doesn’t have any healthcare benefits.
As learned by past wage hikes, businesses handle a higher minimum wage in several ways. They raise prices, cut benefits, fire low-skilled workers, cut hours, and replace workers with automation. Or in the long term, businesses leave.
Fewer employees will be expected to supply the same level of service as before. For sit–down restaurants, this will make an already difficult job nearly impossible. The effect is no different than a tax; longer wait times, fewer drink refills, and overall poorer customer service. Time is money.
Higher prices will hurt business suppliers of food and drinks, and the employees’ hours who survived the firing may be cut so much that they don’t actually bring home a bigger check.
Another large employer in the area is factories that create generic cereal. By definition, this employer can’t raise prices. They already give little to no benefits and their profit margins can’t survive paying all of their employees such a high wage until they can automate further. So they, like so many other businesses, will move across state lines. Wisconsin, Iowa, and Indiana have $7.25 minimum wages, while Missouri’s is $8.60.
One newspaper has already moved it’s printing station to an automated factory in St. Louis.
Proponents of the $15 minimum wage say it will act like a tide and raise all low paid workers out of poverty. But this will cause businesses to fire the most unskilled workers who can’t produce $15 worth of labor, arguably who need the job the most. Those with little experience, especially teenagers and new graduates, will be fired while older, more experienced workers keep their jobs.
More than 114,000 left Illinois in 2018, and that number will most likely rise in the coming years. Illinois has a $3.2 billion budget deficit and a $15 billion debt from unpaid bills. It’s interest on its pension debt alone cost $9.1 billion each year. Instead of cutting spending, they’re still trying to tax their way out of it — from Playstations to lap dances.
Southern Illinois is a beautiful part of Ilinois, but I don’t believe it will survive this wage hike by 2025. I dread the day I come back to see only a shell of a town known for its nature adventures instead of its college, restaurants, and nightlife.
We’ll see in about a year when the real impact of higher labor hits this region.