Raising state minimum wage kills jobs


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Posted Online: Nov. 18, 2012, 6:00 am
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By Scott Reeder
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 teens in Illinois had jobs last year, which is the lowest Illinois teen employment rate in the 42 years the U.S. Bureau of Labor Statistics has been tracking this data.

The figures were worst 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 24years 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-age 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 to $10.55 per hour.

"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 of 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 the minimum wage hikes actually reduce 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 raise.
Scott Reeder is a veteran statehouse reporter and the journalist in residence at the Illinois Policy Institute; sreeder@illinoispolicy.org.
















 



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