SPRINGFIELD – Divisions between business and labor interests were on display Wednesday, Jan. 30, at the Illinois Senate Labor Committee’s hearing on raising the state’s minimum wage from $8.25 to $15 per hour over an undefined period of years.
Exact details of a proposal have not been released, but Senate Majority Leader Kimberly Lightford (D-Maywood) said she plans to introduce bill language as early as next week to advance Gov. J.B. Pritzker’s first major legislative agenda item.
Since 2010, Lightford said, she has filed four bills to raise the minimum wage, the most recent of which was vetoed by Gov. Bruce Rauner last year. If any of those bills had passed, the minimum wage would be more than $10 per hour right now, she said.
Lawmakers, lobbyists and activists agreed to discuss the following issues as negotiations progress.
Length of the Rollout
Lightford said rate increases would be phased in, and the $15 rate would not take effect until at least 2025, although an exact timeframe for the increase is not yet defined.
Business representatives at the committee preferred a longer-term rollout. Lobbyist Mike Noonan, representing the Illinois Restaurant Association, said his industry would be OK with a seven-year rollout – $1 each year for the first six, then 75 cents the final year.
Worker rights advocates, such as Greg Kelly of the Service Employees International Union, preferred a more timely increase. He said 41 percent of all workers in Illinois make less than $15 per hour, and more of those workers are in their 40s, 50s and 60s than are younger than 25.
Kelly added that more women than men make less than $15 per hour, and 48 percent of African Americans and 61 percent of Latinos make less than $15 per hour. He said 52 percent of those making less than $15 per hour work full time, and 15 percent of Illinois working families receive food stamps.
“Folks who make less than $15 per hour cover the gamut of workers in this state, and raising their wage would have a tremendous impact on millions of workers in Illinois.”
Regional Rollout
Mark Grant, Illinois director of the National Foundation of Independent Business, favored a regional rollout of the minimum wage similar to what the New York and Oregon Legislatures have enacted.
In New York, there is a higher wage for workers in New York City than upstate New York and the rest of the state. The bill also has different wages for large and small employers – those with more than 10 employees, and those with 10 or fewer.
In Oregon, the rate is higher in the Portland metropolitan area and lower in non-urban counties.
Lightford said a regional rollout has been discussed, but she questioned the constitutionality of it and said it would further divide Illinois counties along economic lines.
State Sen. Linda Holmes (D-Aurora) also asked about a geographic approach and noted that the cost of living is much more expensive in suburban Kendall County than it is in Springfield.
“You bring up something so valid in that no one on minimum wage would be able to live in Kendall County,” Lightford said. “You create a divide between poverty. Those who work and can live in Kendall County and those who work and will never be able to live in Kendall County.”
While labor advocates said the money generated from a minimum wage increase would go back into the economy, Grant said the bill would cause businesses to close, costing almost 100,000 jobs for the lower wage workers the bill is designed to help.
State Sen. Cristina Castro (D-Elgin) asked how many businesses left the state from 2006 to 2010 when the last minimum wage increase occurred, and Grant did not have an answer.
“So you’re making a broad statement, but yet you can’t give me any statistical facts that any businesses during the last minimum wage increase left the state or closed shop?”
Grant responded that over the past decade, many businesses have left Illinois for “a variety of reasons.”
“The business that told me they would leave in 2003 were the same businesses that told me in 2006 that they would leave, who were the same businesses in 2010 who told me that they would leave,” Lightford said. “I have not been given any data at any point that told me that businesses shut down because of a minimum wage increase.”
State Sen. Dave Koehler (D-Peoria) floated the idea of having a statewide minimum wage with regional opportunities for tax breaks for employers.
Medicaid Reimbursement
While Kelly and the SEIU advocated for the need for health care workers to be paid more, Pat Comstock, executive director of the Healthcare Council of Illinois, a health care facility advocacy group, said the state’s Medicaid reimbursement rate makes doing so difficult.
She said Illinois reimburses Medicaid-funded nursing homes at a rate of $55,000 per person annually, while it costs closer to $70,000 to care for a patient. That number makes Illinois 49th in nursing home reimbursement rates. Several homes have closed recently because of this, she said.
“Right now, the crisis that we have been talking to you about is happening,” she said. “We want to pay whatever the state of Illinois decides that we should be paying our workers. But there’s no more room in our system to do this without help from the state of Illinois in our Medicaid wages.”
Comstock said the Healthcare Council would introduce a bill or work with Lightford to increase the reimbursement rate along with minimum wage increases.
Tipped Workers
Shirley Holden, a Chicagoan who works in the service industry, testified to the “instability” and “constant stress and anxiety” she has felt in her 20 years as a worker whose pay is based on tips.
State law requires employers to pay 60 percent of the $8.25 minimum wage, with the other 40 percent made up of tip money. That equals a minimum wage of $4.95 paid by employers, an obligation that would increase if the other 40 percent of the $8.25 is not met by tip income.
Holden said despite the tip minimum wage, wage theft is a problem in the service industry. Noonan, the IRA lobbyist, said there are a few bad actors and the industry was committed to exploring options to hold them accountable.
Lightford added that strengthening labor laws for tipped workers would be on the agenda as discussions progress as well.
