SPRINGFIELD — As it considers raising its minimum wage to $15 an hour, Illinois has a few examples to follow.
Wednesday, the Illinois Senate Labor Committee had a hearing on raising Illinois’ minimum wage from $8.25 to $15. There is no agreement on how long the transition would take, or if it should be done uniformly statewide.
Legislation could be sent to the Senate floor as early as Wednesday this week.
Raising the minimum
This year began with 18 states having new, higher minimum wages.
Of those, eight wage increases were automatic cost-of-living adjustments. The other 10 were the result of specific legislation, according to the National Confederation of State Legislatures.
But only three states and Washington, D.C., have approved the significant jump to $15 an hour. And each of those states has done it differently.
Consider California, which was the first state to pass such legislation in 2016. There, it will take 6 years — by Jan. 1, 2022, for the statewide minimum hourly wage to reach $15.
The nation’s capital also passed legislation in 2016, with a slightly shorter timeline of four years.
New York, on the other hand, took a geographical approach. Passing its legislation in 2016, wages in New York City are already $15 an hour for businesses with 11 or more employees. By the end of 2019, that rate will extend to all businesses in New York City, while Long Island and Westchester County will have a $15 minimum wage by the end of 2021.
But in the rest of the state, the minimum wage will increase to only $12.50 an hour by the end of 2020.
Massachusetts is the most recent state to pass a $15-an-hour minimum wage. Its plan, approved last year, takes 5 years to complete. The first increase — from $11 an hour to $12 — kicked in this year.
Andrew Farnitano helped lead the campaign to raise Massachusetts’ minimum wage — twice. The first time was in 2014, when his organization, RaiseUp Massachusetts, found success in legislation that increased the wage from $8 to $11 within three years.
Immediately after, Farnitano’s organization began campaigning for an increase to $15 an hour, succeeding in June 2018.
Farnitano says what happened after the first round of raises was the opposite of what many people and groups, especially business associations, expected.
“As the minimum wage went up, we saw massive job growth, a stronger economy, and the biggest drops in unemployment in the communities where the most people, some 30 or 40 percent of workers, benefited from the increase,” Farnitano said.
Farnitano added that, rather than shutting down or downsizing, many employers had a hard time filling available positions.
“In Massachusetts, there’s places where low-wage workers can’t survive on $11 an hour,” Farnitano said, referencing 2017’s minimum wage. “So they move somewhere else, and then those businesses can’t find people to fill those jobs after.”
Christopher Carlozzi, state director for the Massachusetts branch of the National Federation of Independent Businesses, had competing arguments about the effects of a higher wage.
“Even though we’ve only done the first increase to $12 an hour, we’re already starting to see the effects,” Carlozzi said. “Directly after the new year, there was a string of restaurant closures in Boston itself [citing labor costs].
“We’re especially concerned about the areas outside Boston where you can’t charge $15 for a sandwich at lunch,” he said. “Businesses either have to raise their prices, start reducing workforce hours, or cut or not create new jobs.”
There are no exceptions in the Massachusetts minimum wage law: In a few years, it will be $15 an hour for all employees, regardless of age, experience or region.
Mark Grant, who heads the Illinois branch of NFIB and testified at Wednesday’s hearing, says Illinois cannot handle a universal minimum wage like Massachusetts.
“The Chicago region is a completely different kind of region than everything outside of it,” Grant said. “Our main concern is the businesses that are outside it — would they be able to deal with a $15 minimum?”
As such, Grant says Illinois would need a regional system like New York has, where different areas have different wage floors depending on many economic factors.
Grant also talked of keeping Illinois’ “teen wage” — a lower wage for teenage workers — which could lighten the load on small businesses having to adjust to higher wages.
Farnitano, however, said that one of the best parts of Massachusetts’ bill was not having a teen wage, so that “employers could not cycle through a new teen worker every six months.”
Another variable is to make different minimum wage timelines for different-sized businesses, which happened in California. There, the threshold is on businesses with 25 employees. Those with fewer than 25 have an extra year until the $15 rate kicks in, making a seven-year ramp up, an idea floated during Wednesday’s Illinois Senate committee hearing.
There are also concessions that can be made to the business community, particularly small businesses.
Carlozzi discussed these concessions as part of a “grand bargain” in Massachusetts, where businesses were provided some relief to help accommodate higher labor costs. They included a statewide sales tax holiday, and elimination of time-and-a-half pay on Sundays.
Minimum wage hike likely
Though Grant’s organization, NFIB, is in “full opposition” to raising Illinois’ minimum wage to $15 an hour, he admits that it will likely happen.
“We have to be ready to negotiate,” Grant said. “The governor wants it, and he’s got a legislature that’s more than willing to help him do that.”
Illinois isn’t the only state considering a minimum wage increase. Thursday, the New Jersey Legislature passed $15-an-hour minimum-wage legislation, to be phased in over five years. New Jersey Governor Phil Murphy is expected to sign the bill.