The Democrats in the Illinois Legislature are planning to raise the minimum wage through legislation that will mandate an eventual $15 level. The new Governor is endorsing that legislation and will likely sign it into law. This is not a wise plan, and Illinois politicians are demonstrating their tendency toward bad economic policies once again.
When I was in high school minimum wage jobs were what is referred to as “entry level” providing young people with the opportunity to learn a trade or at least learn how to maintain a job. It was a great opportunity for me that I took advantage of working as a waiter and a pizza delivery boy. That experience was invaluable and taught me a lot of life lessons.
Politicians who either know nothing about basic economics or are just being reckless, talk about the need for a “living wage” and other generalities. Since the push for ever-higher minimum wages, youth employment has declined. Many businesses faced with an ever-growing minimum wage have moved towards automation and have cut back on the number of workers they have. On top of that, they have also cut back on the hours they are able to work. Simply put, labor mandates on businesses cost jobs.
Most of my clients are small to medium sized businesses who are not corporate giants that can absorb these increased costs. Together these small to medium businesses employ the majority of workers in Illinois. When they can’t afford to hire “entry level” workers, the opportunities for young people to begin to dry up.
Some of my clients are in the manufacturing sector and that industry is also having a hard time hiring workers. Even though manufacturing jobs are higher paying jobs, there is not enough skilled labor in the marketplace to fill the positions and the value of these workers go up as well.
When I was growing up, some viewed jobs like “flipping burgers” as menial and somehow not good enough. In fact, it is good enough for young people looking to make a little money and learn how to work, but no one should expect to feed their families with that. The politicians are so out of touch that they don’t even realize this.
The minimum wage increase will hit the service industry the hardest. Retail stores and restaurants will take the brunt of it and while corporate giants and chains may be able to deal with it, small businesses will see higher costs which can’t simply be passed on to the consumer.
As always, we should be wary of government intervention in the marketplace.