Reeder: Higher minimum wage would mean fewer jobs
By Scott Reeder November 14, 2012 10:30PM
Updated: December 19, 2012 11:39AM
These days, teenagers start asking Springfield water park owner Doug Knight for summer jobs before Christmas.
“It used to be we didn’t hear from anyone until Easter, but employment being what it is today among young people, they start looking early now,” Knight said.
In fact, only 27 percent of teenagers in Illinois had jobs last year, which is the lowest Illinois teen employment rate in the 42 years that the U.S. Bureau of Labor Statistics has been tracking this data. The figures were worse for African-American teens in Chicago, where only 10 percent had jobs.
These numbers are significant because, nationally, 49 percent of all people earning the minimum wage are 24 years old or younger.
“Nobody aspires to finish their career making the minimum wage, it’s what people start out making,” Knight said. “They take these jobs and learn basic skills — like showing up for work on time. It also gives them something to put on their resume.”
Each summer, his business, Knight’s Action Park, hires about 200 people, mostly high school and college students.
“The last time the minimum wage was increased, I moved my closing time from 7 p.m. to 6 p.m. to reduce costs,” Knight said.
Another consequence of raising the minimum wage is that businesses will reduce labor costs by employing fewer people.
Senate Bill 1565, sponsored by state Sen. Kimberly Lightford (D-Chicago), would raise the minimum wage in Illinois substantially to $10.55 per hour.
It’s now $8.25 per hour, which is $1 per hour higher than the federal minimum wage. For a full-time worker in Illinois, that comes to $17,160 annually. There are exceptions to the law for tipped employees, some student workers and other exempt occupations.
Illinois’ minimum wage last was increased Jan. 1, 2011 when it rose from $8 per hour, according to the U.S. Labor Department.
“I think raising the minimum wage is a good idea because these people are working,” Lightford said recently. “They aren’t asking anybody for anything. They just want to work.”
But two economists, one affiliated with Miami University (Ohio) and another from Trinity University in Texas, calculated that the proposed minimum-wage increase would result in 10,576 fewer jobs in Illinois.
Jon Stewart, president of Tri Star Marketing in Champaign, which operates Super Pantry convenience stores in Illinois and Indiana, said increases in the minimum wage actually reduce job opportunities.
“When the minimum wage goes up, what happens is we really start scrutinizing for places to cut our labor costs,” Stewart said. “The first time Illinois raised the minimum wage, we cut 40 positions. The next time, we cut 12, and most recently we cut two or three positions.”
Stewart’s firm employs 545 people.
But beyond the economic consequences of a minimum-wage hike, what are the societal costs?
Our economy rewards people for the skills they have to offer, the ingenuity they exhibit and their personal industriousness. After all, we are an aspirational society that creates incentives for people to better themselves.
Pay raises by government edict rather than personal achievement send a message of dependency rather than accomplishment.
It’s like trying to improve education by requiring schools to give out higher grades to students rather than encouraging children to learn more and perform better.
And yet, that is exactly the message a minimum-wage increase would send to workers — look to government rather than yourself if you want a pay raise.
Scott Reeder is a veteran statehouse reporter and the journalist-in-residence at the Illinois Policy Institute, a nonprofit research group that supports the free market and limited government.