Gardi, Haught, Fischer & Bhosale LTD.

The Minimum Wage Increase: What Employers Should Know

By Gardi, Haught, Fischer & Bhosale LTD
January 19, 2015

The Associated Press reports that twenty states and the District of Columbia will increase their minimum wage in 2015. These reforms were led by cities on the west coast, and joined by a patchwork of states across the nation. Both Seattle and San Francisco passed $15 dollar minimum wage laws, while Los Angeles has announced it will likely increase its minimum wage to $13.50 very soon. Chicago has similarly followed suit, with plans to raise its minimum wage to $13 by mid-2019. These leading cities will be observed as a “national experiment” that will take shape by the end- of the fiscal year and reveal how the wage increase can impact local and statewide economies.

Up until now, staunch supports of the wage increase, both for and against, have pointed to data from economic analyses and predictive statistics and drawn different conclusions. In reality, the consequence of a wage increase on an entire city is simply too difficult to predict without the scientific observation of an experimental city. There are simply too many variables in the equation.

However, the “pro” and “con” positions concerning the wage increase are clear. Supporters argue that a wage increase is necessary to help 25 million of the nation’s poor keep up with the ever-increasing cost of living. They also assert that increasing the minimum wage would result in billions of dollars in taxpayer savings as low-wage workers would no longer need to turn to federal and state benefits to make ends meet. Meanwhile, opponents argue that the change will in turn increase the cost of living as companies pass on the additional expense to consumers, thereby exacerbating poverty. They also argue that increasing the minimum wage will hurt the already razor-thin profit margins of small and medium-sized businesses in our country–the very companies that have helped tenuously tether many Americans to the middle class during these difficult economic times.

Last November, Illinois voters were asked to consider a referendum favoring a minimum wage increase to $10 an hour by January 1, 2015. 64 percent of voters were receptive, which has helped garner recent support for a state-wide increase. However, the newly elected Governor, Bruce Rauner, has doggedly opposed the raising of Illinois’ minimum wages in a sweeping fashion, much like Pat Quinn did during his tenure. Rauner has said he only supports a wage increase if paired with business reforms such as workers’ compensation.

So how can employers prepare for the minimum wage increase?

1. Stay knowledgeable about the laws development.

If you have a Google account, set up a Google News Alert, which will send you news reports written about the increase.  You can also follow some of the players or news outlets involved in the effort on twitter such as: Illinois Review (@IllinoisReview), Illinois Report (@Illinoisreport) or Reboot Illinois (@rebootillinois). Many of these organizations post the latest articles and current developments about the issue.

2. Keep an eye on the state agencies charged with enforcing the law.

Go to the state agencies’ websites for the latest developments. The Illinois Department of Labor posts the State’s employment laws and regulations, has an “answers to common questions” board, and provides a plethora of charts and facts about Illinois labor.  Similarly, the US Department of Labor offers a number of links about Illinois’ labor issues, as well as the rest of the country’s labor statistics and current developments.

3. Be prepared to change

If Illinois does decide to increase its minimum wage statewide, it’s important to be prepared. Begin to develop a contingency plan. Assess your present labor costs. Do you have minimum wage workers that your company will be required to pay more? If so, can your present budget maintain these additional costs?  As a first step, make a list of the essential services employees must perform and where costs can be scaled back in order for your company to operate profitably.

As with any change, knowledge is power. Stay abreast of the changes, and if you have any questions about implementing the minimum wage law at your firm, feel free to contact us at 847-944-9400.

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