Sid Mohn: Raising the minimum wage isn’t bad for business

 

The State Journal-Register

 

February 22, 2013

 

 

From The State Journal-Register:

Gov. Pat Quinn recently called for an increase in Illinois’s minimum wage in his State of the State speech. His proposal prompted a flurry of debate in the media, but one thing was missing: the facts.

When you look at the data, it’s clear that raising the minimum wage isn’t bad for business. In fact, it would create jobs and an influx of money into the state economy while reducing taxpayer costs by moving workers out of poverty.

Illinois is home to 400,000 minimum wage workers. These are the workers that keep our state running — the men and women that prepare and serve food at our favorite restaurants, pour our morning cup of coffee, clean our office buildings, hotels and homes, bag our groceries, deliver our pizza, and ring up so many of the purchases we make every day.

Like all workers, minimum wage workers are consumers, too. The workers at the lowest end of the pay scale spend the lion’s share of their income locally on basic goods such as groceries, health care expenses, gas and housing.

Increasing the minimum wage would increase household spending, increase the demand for goods and help businesses grow. According to the Economic Policy Institute, a raise in the state minimum wage to $10.65 would infuse $2.5 billion into our economy.

History has shown that raising the minimum wage would not only spur an increase in spending but would create jobs. A study conducted by the Indiana Business Research Center found that job growth patterns between 2003 and 2005 indicate that Illinois’ increasing minimum wage rates did not reduce overall employment growth for private employers. And in 2005, when Illinois increased the minimum wage a full dollar, our state achieved the second biggest improvement in job growth in the Midwest.

Leading economists agree that in recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment. The bulk of the evidence now shows that increases in the minimum wage have had little or no negative effect on the employment of minimum wage workers, even during times of weakness in the labor market.

With a growing service sector economy in Illinois and the increase in minimum wage jobs, more and more Illinoisans are not earning enough to cover basic expenses and to provide for their children. In fact, almost 100,000 workers in Illinois work full-time, year round, and still live in poverty.

For a family of three that means earning less than $17,916 a year. Families earning at or below the federal poverty line are struggling to make ends meet and are often forced to make trade-offs or decisions about what to pay for first — food or medicine, heat or lights, diapers or gas. In addition to stimulating economic growth and putting more revenue into the hands of service sector businesses, raising the minimum wage would help move more Illinoisans out of poverty.

Businesses in Illinois will do better when workers are doing better. A raise in the minimum wage is good for businesses, it is good for workers and it is good for Illinois.

Sid Mohn is president of Heartland Alliance for Human Needs and Human Rights in Chicago and co-chair of the Illinois Commission on the Elimination of Poverty.

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