Workers, employers assess state's minimum-wage increase

Amanda McGovern remembers the days when she worked for minimum wage and wasn't able to make ends meet.

And now that the Illinois minimum wage is at $14 per hour as of Jan. 1, she still doesn't see how workers can survive.

"Minimum wage hasn't kept up with the increased cost of living, and people are struggling because of it," said McGovern, who works for an organization that serves people with disabilities.

The state's minimum wage jumped a dollar from $13 per hour this year as part of the Lifting Up Illinois Working Families Act Gov. J.B. Pritzker signed into law on Feb. 19, 2019.

Through a series of increases, non-exempt hourly workers are going from a minimum of $8.25 per hour, where they were four years ago, to $15 by Jan. 1, 2025.

McGovern, 28, currently makes more than the state minimum and expects a pay raise when she finishes graduate school. But she says there are many Illinoisans who aren't as fortunate and hopes more employers will see their struggle.

"It's good that it's happening but it's not enough," she said.

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Though most employers agree that a higher minimum wage benefits low-wage hourly workers, the state's seven-step plan to $15 drew significant criticism before the first adjustment happened in January 2020.

Opponents feared $15 would come with huge payroll and tax increases that would ultimately result in the rising costs of everything else and cost the state more than 380,000 jobs by 2025. That was before the pandemic.

The outlook is much different today. Lingering staffing shortages already have companies willing to pay employees more just to keep their operations going.

"We want to make sure our people are happy," said Justin Carner, owner of Velvet Robot Coffee Lab, which has locations in Rockford and Roscoe.

Carner pays almost $3 more than the minimum wage for tip workers because he wants his staff to have a healthy work-life balance.

"But it's hard because you do see your money kind of drop. And if you get into the payroll tax side of things and I pay $11 an hour, I literally end up paying $20 per hour toward an employee. But I am OK with that because people deserve to have a right wage."

Jennifer Furst, president of Furst Staffing in Rockford, said more employers have the same outlook as Carner.

“The marketplace and demand for talent has moved the hourly rate up more quickly than the government requirements,” Furst said.

Furst said entry level positions, those that do not require job-specific experience, are currently paying in the neighborhood of $16 to $17 an hour.

“More skilled or experienced roles are well over the minimum-wage requirement,” she said.  "Employers are still hiring and need to remain competitive in work environment, benefits, compensation."

The minimum wage for tipped workers increased to $8.40 per hour as of Jan. 1 while youth workers under 18 who work fewer than 650 hours per calendar year earn $12 per hour.

“These wage increases have helped Illinois workers pay for the increasing costs of groceries, childcare and other everyday expenses,” said Illinois Department of Labor Director Jane Flanagan.

Hourly workers in the city of Chicago, meanwhile, are paid slightly more that their statewide counterparts, depending on the size of their employer. Since July 1, the minimum wage in the city is $15.80 an hour at companies with 21 or more employees, and $15.00 per hour for employers with four to 20 workers.

Chicago’s tipped workers are paid a minimum of $9.00 per hour for employers with four to 20 workers, and $9.48 at businesses with 21 or more employees. If hourly wages plus their tips do not total the full minimum wage, employers must make up the difference.

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"I am all for it," Carner said. "I think people should be paid a livable wage. But this could hurt small businesses because this is going to make prices go up. You have to fix that somewhere. But on the flip side of this, a lot of these (minimum-wage) jobs aren't meant to be forever."

Jim Hagerty covers business, growth and development and other general news topics for the Rockford Register Star. Email him at jhagerty@gannett.com.

This article originally appeared on Rockford Register Star: Illinois employers already braced for next minimum-wage hike