Illinois employers are preparing for upcoming minimum-wage hikes, which could potentially result in more job cuts throughout the state. The minimum wage in Illinois will be raised from $14 per hour to $15 on January 1 as part of a series of annual increases outlined in a law signed by Governor J.B. Pritzker in February 2019. Concurrently, the minimum wage for tipped workers will also see an increase from $8.40 per hour to $9, while the youth minimum wage for workers under the age of 18 working fewer than 650 hours annually will rise from $12 per hour to $13.
Governor Pritzker expressed pride in the progression from a minimum wage of $8.25 to $15, positioning Illinois as a leader in the Midwest for attracting skilled workers to the state. When questioned about the possibility of further wage increases at a recent press conference, the governor did not dismiss the idea, stating, “I think we did it the right way when we did it back in 2019. I haven’t seen a proposal yet for a change going forward.”
At the time of the minimum-wage law’s passage in February 2019, Illinois had an unemployment rate of 4.8%. This figure has since increased to 5.3%, ranking third highest in the nation behind Nevada (5.7%) and California (5.4%). The national unemployment rate in November stood at 4.1%. Despite the wage increases, Governor Pritzker emphasized his efforts to stimulate job growth within the state to maintain a competitive environment for Illinois workers.
Compared to neighboring states, all of which have lower minimum wages and lower unemployment rates, Illinois faces economic challenges. Indiana, Iowa, Kentucky, and Wisconsin have a minimum wage of $7.25, while Missouri’s minimum wage is $12.30 per hour. Kentucky currently holds a 5.1% unemployment rate, followed by Indiana at 4.4%, Missouri at 3.7%, and Iowa at 3.1%. Wisconsin boasts the seventh-lowest unemployment rate in the nation at 2.9%.
Despite some research indicating no immediate job losses resulting from minimum wage hikes, Reason.org highlights that the majority of studies suggest a negative impact on employment levels. Economists at the Federal Reserve Bank of St. Louis revealed in 2021 that higher minimum wages could lead employers to opt for automation over costlier human labor.
Following the enactment of Illinois’ minimum wage legislation, the Congressional Budget Office projected the effects of a federal minimum wage increase in July 2019. The CBO’s estimates suggested that by 2025, a $15 federal minimum wage could raise the wages of 17 million workers while potentially causing 1.3 million individuals to lose their jobs.
In a separate development, Chicago recently raised its minimum wage to $16.20 per hour for businesses with four or more employees, with the minimum wage for tipped employees set at $11.02
