Minimum Wage: The Debate Is Churned Up At The State And Federal Levels

Dec 1, 2014

This story first appeared in the April 2014 issue.

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 now-Gov.-elect 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.” Rauner later called making those remarks “flippant.”

Gov. Pat Quinn did his best to tie his bid for reelection to the issue. Ever casting himself as a populist, he 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. But after a ballot question on increasing it to $10 an hour was approved with overwhelming support from voters in November, a change to the minimum wage could go from campaign talking point to a reality in Illinois.

“On Tuesday November 4th the voters of Illinois overwhelming singled that they want the General Assembly to raise the Illinois [minimum] wage,” says Maywood Democratic Sen. Kimberly Lightford, who has supported an increase for years and sponsored several versions of legislation that would do it. Lightford’s most recent plan, introduced during the first week of the fall veto session, would increase the wage for all workers 18 and older to $10, starting in July of 2015. Under the proposal, 50 cents would be added in 2016, and the minimum wage would go up to $11.00 an hour in 2017. Lightford has also expressed support for tying the minimum wage to inflation after 2017, but as of publication time, she had not added that to her plan.

A highly publicized report from the nonpartisan Congressional Budget Office (CBO) 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. Gloria Davis says she could be one of those lifted out of poverty, or at the very least, she might be able to afford a place to live.

Davis works in a meatpacking plant in Chicago for minimum wage. “Despite the fact that I am able-bodied and more than willing and wanting to work, I’m homeless.” She says that transportation costs and other expenses mean that she cannot afford rent. Davis moves from shelter to shelter. “We’re out here, and we’re drowning,” she says of herself and other working poor Illinoisans.

But the CBO 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. 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, says an increase to the EITC was likely a more realistic goal for Quinn. “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, Quinn publicly reiterated his call for a hike in the minimum wage, but rarely since his January State of the State speech did he mention 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.

Quinn is still pushing for a wage increase, even as Rauner has asked the legislature not to make any major policy changes in the twilight of Quinn’s term. Republican legislative leaders say they recognize that the issue needs serious consideration. During veto session, they asked Lightford to wait on a vote and try to strike a deal that includes business friendly components, such as changes to the state’s workers compensation system. “I think we’ve passed the threshold of whether or not we should take a look at this issue,” says Senate Minority Leader Christine Radogno. “If we tie the two together, we create more winners.”

Lightford says she has been negotiating with business groups for some time, and those conversations informed her proposal. She says that she has already compromised by doing things like not giving teens, new workers or workers who make tips the full increase. Teens and new workers would make 50 cents less an hour and tipped workers would make 60 percent of the minimum wage. “That was all negotiated,” she says.

It will soon be clear if lawmakers in Quinn’s party, who have had a rocky relationship with the governor, will send him out of office with a parting gift. If not, Illinoisans may get to find out where Rauner stands on the issue once and for all.

Illinois Issues, December 2014