Minimum Wage: The Debate is Churned Up at the State and Federal Levels

Apr 1, 2014

Gone are the days a candidate can make a campaign appearance before a friendly crowd of party faithful, nearly a year before an election, and think his remarks will fade from memory as fast as the mass-produced fried chicken or roast beef the audience was likely served during the event. 

After all, YouTube is good for more than videos of babies and puppies (or even videos of babies and puppies playing together). It’s the ideal repository for the opposition to catalog a candidate’s remarks on the campaign trail, as the Democratic and union-funded Super PAC American Bridge 21st Century did when it posted a video of Bruce Rauner, the sleeves of his checkered shirt rolled up to his elbows, telling a group of Republicans in Gibson City last September: “I am adamantly, adamantly against raising the minimum wage.” 

The video surfaced just after Rauner had professed support of raising the minimum wage, under certain conditions — a stance he took following a media uproar over yet another YouTube clip, of a December candidate forum in the Quad Cities, during which Rauner seemingly advocated for lowering Illinois’ $8.25 minimum wage by a dollar, so it was in tandem with the federal rate. 

It seems odd now, given all that was stirred up a month later when the clip attracted a swarm of media attention, that in the short video the other three Republicans vying for the party’s nomination for governor don’t appear to be taken aback at all when Rauner, at times using his left hand to emphasize the point, responds to an audience question about his position on the minimum wage by saying, “I will advocate moving the Illinois minimum wage back to the national minimum wage. I think we’ve got to be competitive here in Illinois; it’s critical we’re competitive. We’re hurting our economy by having the minimum wage above the national, and we’ve got move it back to the national.”

Though Rauner later called making those remarks “flippant,” it could well be viewed as the opening salvo to both the 2014 legislative season and this year’s gubernatorial election, no matter whom the GOP winds up with as its gubernatorial nominee, but particularly if Rauner holds onto his apparent front-runner status through Election Day. 

Republicans are doing what they can to cast the blame on Democratic Gov. Pat Quinn for Illinois’ lingering title as a state with one of the highest unemployment rates in the nation; Quinn is just as quick to cast the Republican Party and Rauner, with his $53 million income in 2012, as elitist, money-grubbing and out-of-touch. 

 

The debate over the minimum wage is at once emblematic of the opposing prescriptions for the Illinois economy and of the campaigns’ messaging. 

Gov. Quinn, ever casting himself as a populist, had signaled his desire to raise Illinois’ minimum wage even before the YouTube/Rauner stir. Quinn got on board with President Barack Obama’s call for a minimum wage hike in early 2013; during Quinn’s State of the State address that year he said, “Nobody in Illinois should work 40 hours a week and live in poverty. That’s a principle as old as the Bible. That’s why, over the next four years, we must raise the minimum wage to at least $10 an hour.”

The cause got relatively little attention in Illinois thereafter, and Quinn, ostensibly focused on public pension changes, didn’t expend much effort to make it happen. 

But, just as Obama heightened his attention toward increasing the minimum wage during his 2014 State of the Union speech — announcing an executive order raising federal contract workers’ wages to $10.10, then embarking on a broader effort to “give America a raise” — Quinn had a similar message when he gave his state address this January. 

“This year, we really need to get the job done,” Quinn said. “Raising wages for workers who are doing some of the hardest jobs in our society is not just the right thing to do. It’s also good for our economy.’’

The reviews on whether Quinn, and Obama for that matter, is right are mixed.

A highly publicized report from the nonpartisan Congressional Budget Office released in February found that the Democratic-championed plan to push the federal minimum wage to $10.10 could begin to gnaw ever so slightly at the widening income inequality gap, by lifting 900,000 American families out of poverty. But the report also found that a half million jobs could be lost. Business groups like the National Federation of Independent Business have fought previous minimum wage hikes. But the NFIB’s Illinois State Director Kim Maisch says the wineries, coffeehouses, theaters and other small businesses that comprise the group’s membership are more afraid than ever before of what a forced payroll increase would mean for their survival. While the economy is recovering from the recession, times are not flush like they were in 2006, when under former Gov. Rod Blagojevich, Illinois last raised the minimum wage.

Maisch points to data, such as that recently released by the federal Bureau of Labor Statistics, which shows Illinois was one of only two states to see average unemployment rates rise in 2013. “We are not recovering like we should be,” she says. 

Already, she says, Illinois businesses on the border are at a competitive disadvantage because Illinois’ pay floor is a dollar higher than in neighboring Indiana, Iowa, Kentucky, Missouri and Wisconsin, a competitive gap she says would deepen if Illinois were to raise the floor.

There’s also the argument economist Elizabeth Powers makes in her 2009 Institute of Government and Public Affairs “Policy Forum” — that the Earned Income Tax Credit is “arguably a superior policy.”

“It is better targeted to poorer families,” Powers writes, as only low-income families are eligible for it, as opposed to the across-the-board application of the minimum wage, which makes no exception if an earner comes from a middle-class household, or even a wealthy one. 

Likewise, Powers argues, “subsidizing wages is a pro-employment policy” that comes at no cost to employers (and, she writes, could even make low-income workers more attractive hires.)

Gov. Quinn, who in 2012 demanded Illinois double the state’s EITC from five to 10 percent of the federal EITC as a condition for retooling the state’s corporate tax to advantage the Chicago Mercantile Exchange and Sears, called in his State of the State address for Illinois to double it again. The governor gave himself time, calling for the tax relief to double “over the next five years.” 

Charles Leonard, a visiting professor at the Paul Simon Public Policy Institute at Southern Illinois University, is doubtful a minimum wage increase has a chance of passing this year, either in Congress or in Illinois’ General Assembly, but he says the EITC effort could succeed. 

“Nobody’s going to protest against it,” he says, making for smooth passage. Historically, Republicans have been on board, and it doesn’t take a direct cut out of businesses’ profits.

Even so, while Quinn has publicly reiterated his call for a hike in the minimum wage, rarely since his January State of the State speech has he mentioned the EITC proposal. 

Leonard says that’s a political calculation. 

“You can’t run on the EITC. It doesn’t fit on a bumper sticker,” he says. “And what [Quinn’s] trying to do is make Bruce Rauner, the billionaire — well, I don’t know if he’s a billionaire; the really, really rich guy — stand up and say, ‘I’m against raising the minimum wage for poor people.’” 

Whatever Quinn’s political motivations, Sen. Kimberly Lightford, the Democrat from Maywood who has long pushed for Illinois to institute a $10.65 minimum wage, says she’s keeping focused on that grassroots campaign.

“We really appreciate [it,] and we’re hoping that it would help in our effort,” Lightford says of Obama’s and Quinn’s calls for a $10.10 and $10 minimum wage, respectively, “but we want to stick with our strategy and our plan.”

For one, Lightford says, she’s unsure of either of those target levels.

Lightford — and on this point she has Maisch’s agreement — says the $10 figures seem to have been plucked out of nowhere, whereas her $10.65 plan is what she calls the “historical level,” i.e., what Illinois’ minimum wage would be had it kept up with inflation since its implementation in 1968.

Still, Lightford says she is open to negotiations as she works to get the “magic number” of 30 votes needed to pass a bill out of the state Senate. Given the Democrats’ super-majorities in both chambers of the General Assembly, getting to that point would appear easy, particularly given its popularity with voters, as has been demonstrated consistently in polls.

But Leonard, who is based in Carbondale, says the economy downstate is different and the cost-of-living lower, than in Chicago, which will make it hard for Democrats who represent the region to sign on to a $10 minimum wage. 

“Small businesses down here aren’t going to like paying $10 an hour to have our floors swept,” Leonard says.

And though business groups are traditionally thought of as Republican allies, Leonard says, “big retailing and manufacturing still have friends in the Democratic Party and will be sure to dig their heels in.”

“Corporate interests … know where the political power is,” he says.

To that end, Maisch says there is no minimum wage hike that would be acceptable.

“We are not pikers. We are not cheapskates. We have been a dollar higher than the federal wage for a long time,” Maisch says. “It’s not as if we’re paying ... I just feel like from the NFIB’s perspective, and the message is loud and clear from my membership, that we don’t have any wiggle room on this issue. So we are no. If it’s a dime, if it’s $10, we are a ‘no’ on raising Illinois’ minimum wage.”

But the two main minimum wage proposals introduced in the General Assembly signal potential opportunities for negotiation.

Most notably, the plan introduced by Rep. Art Turner, a Chicago Democrat, House Bill 3718, phases in a hike to $10, where it would remain until the next push. Though Lightford has four amendments attached to her Senate Bill 68, each of which vary the proposal some, her preferred version virtually guarantees future bumps by tying Illinois’ minimum wage to the Consumer Price Index. In a December press release, Quinn voiced support for that concept. But already wary businesses don’t like the added layer of uncertainty a wage fixed to the CPI would bring.

Lightford says it’s a “goal” but says she won’t hold out for it. Lightford says as a legislator, she’s a realist, who doesn’t want her entire measure to tank because of an insistence on attaching the minimum wage to the CPI. 

Leonard has another reason to be doubtful of the chances for an indexed wage, more as a matter of politics than of policy: Doing so rips away a future campaign issue.

Leonard says a politician likely views it like this: “If we peg the minimum wage to the CPI, one time we get credit for that and from then on it’s automatic.” Meaning that “down the road a new crop of Congressmen don’t get to say, ‘We stood up and fought for the little guy.’”

There has also been some talk of making a vote easier on downstate legislators by crafting a more targeted minimum wage: one that takes into account the cost-of-living discrepancies in Chicago versus downstate by instituting a regional wage in Illinois.

However, Lightford isn’t keen on that concept. “Yeah, Cairo may be a little less expensive than Chicago … but then — what do you do when everybody in Cairo says, ‘I’m going to Chicago because they pay a higher wage,” she says. “You lose a consistency in the state of Illinois, in the beauty of the state of Illinois.”

In response to businesses’ claims that most minimum wage workers are students or those for whom the job is supplemental income, another possibility under consideration is establishing tiers: perhaps extending the 50-cent discount employers can get on teenagers’ hourly wages, so it applies through, say, age 25 instead of 18. The aim would be to help the primary breadwinners, those for whom a minimum wage paycheck is all they have to get by on.

But, here again, Lightford and Maisch reach common ground in their skepticism.

“Just because you’re 25 years old or under 25 doesn’t mean that you’re not an individual who’s the head of your household. It doesn’t mean that you’re not self-supporting,” Lightford says, calling the request “a little far out.” 

Maisch says that employers’ ability to pay teens a lesser wage is one of the reasons 16- to 18-year-olds haven’t been completely shut out of the job market. “If you were to have a tiered wage like that, I’m guessing that for many jobs, employers would go for the one where they could pay the lesser wage. You’d be shutting the very people out who proponents claim they want to help.”

Amanda Vinicky is Statehouse bureau chief for WUIS radio in Springfield and Illinois Public Radio.

Illinois Issues, April 2014