News Local/State

Gov. Rauner Veto Stalls Fight For $15 Minimum Wage

A rally for a $15 per hour minimum wage in Chicago.

A rally for a $15 per hour minimum wage in Chicago. Flickr User Anna Waters/(CC x 2.0)

Illinois's fight for a $15 an hour minimum wage hit a roadblock last Friday after Gov. Bruce Rauner vetoed the bill that would make it happen.

The Illinois General Assembly approved a plan in late May that would raise the minimum wage gradually from $8.25 to $15 an hour over the next five years.

But, after two months on the governor's desk, Senate Bill 81 was shot down.

The substantial-raise proposal remains polarizing.

Rob Karr is president and CEO of the Illinois Retail Merchants Association. He says the economy has moved beyond the current minimum wage, but not to $15 an hour.

"As you see, particularly in the city of Chicago, Seattle [and] other places where they’ve taken these steps," Karr said, "they’re seeing unemployment lagging, they’re seeing economic development lagging, they’re seeing record unemployment continue to plague underdeveloped neighborhoods."

Karr says proponents of a substantial minimum wage increases often point to the salary of a company’s CEO as the culprit for impoverished lower-rank employees.

"Let’s assume we paid the CEO of McDonald’s nothing, zero, next year and gave it all to the workers. They would make an extra 4 dollars and 16 cents next year," Karr said. "Not an hour…for the year. The math just doesn’t work."

But Seattle's unemployment rate for July was just 3.5%, which is below both the Washington state average (4.5%) and the national average (4.3%).

And Chicago's unemployment rate in July was 4.8%, which matches the Illinois statewide average.

David Cooper, senior analyst at the Economic Policy Institute, says there are several ways for businesses to offset the cost of a wage increase.

Cooper says that, when wages are higher, employee turnover rates go down. This saves money on recruitment and training costs.

Higher wages often result in a boost in productivity, he says. And these same workers are the most likely consumers to go out and spend, driving more business activity.

And if that’s not enough?

“Because labor, especially low-wage labor, is just a portion of businesses’ overall operating costs, most businesses are able to absorb those additional labor costs with very modest price increases," Cooper said.

Cooper says some studies have found a minimum wage increase of 10 per cent would require a 0.6 per cent increase in menu prices at fast food restaurants.

But fast-food workers are only a portion of the lower-wage labor pool.

State Representative Will Guzzardi, D-Chicago, is the lead sponsor of the bill. He says the current minimum wage is offensive to people who work hard in jobs where they struggle even to get full-time status.

“We’re talking about people who are cleaning the buildings in which we live and work," Guzzardi said. "We’re talking about people who prepare food for others. We’re talking about people who are caring for senior citizens and people with chronic disabilities. People are doing incredibly difficult and incredibly important jobs."

Guzzardi says lawmakers settled on $15 an hour because that’s the minimum required to lift working-class people out of poverty. He says anything lower is not sufficient to get by.

Guzzardi attributes Rauner’s hesitance to approve the bill to his billionaire status.

"This is someone who simply doesn't understand what it's like to have to decide whether you're going to pay the light bill or the heat this month," he said. "This is someone who doesn't understand what it's like to have to send your kid to school without the school supplies they need so you can put food on the table that night. The sort of decisions millions of Illinoisans have to make every single day, they just simply don't register for Governor Rauner."

Rauner said in a statement after the veto that he rejected the bill because of the impact it would have on employers.