July 11, 2014
$13 Minimum Wage in Chicago by 2018
The Chicago Minimum Wage Working Group reported back earlier this week that the minimum wage in Chicago should be raised to $13 an hour by the year 2018 and linked to inflation thereafter. The group estimated this would raise the earnings of over 400,000 citizens of Chicago while at the same time raise prices on food, health care, retail, and hospitality.
The group, consisting of city alderman, representatives from the labor, business, and civic organizations, voted 13-3 to recommend to the city to raise the minimum wage. After the recommendation was released, Mayor Rahm Emanuel stated this is not a political stunt to increase turnout in the November election, but the “right” thing to do to fight poverty, even though some may lose their jobs as a result due to employers being forced to cut back expenses to fund the increased per employee labor costs.
Illinois currently has the highest minimum wage in the Midwest at $8.25 an hour and the highest corporate income tax rate in the industrialize world. If Chicago were to enact a $13 minimum wage, that amount would increase the rate by 57.5% since only 2003. This is far too drastic of an increase for a small business to absorb.
Increases in the minimum wage fall disproportionately on small businesses who are the least able to absorb such a dramatic increase in their labor costs. It also affects employer costs by increasing unemployment insurance rates and Social Security taxes. This can worsen an already adverse business environment in which employers bear costs that are already stifling their ability to grow and create jobs.
Furthermore, raising the minimum wage has not proven to reduce poverty or narrow the income gap and puts a stranglehold on Illinois’ top job creators: small businesses. The overwhelming majority of economists continue to affirm the job-killing nature of mandatory wage increases: mandatory minimum-wage hikes increase unemployment among the young and unskilled.
Is it also proven that increases in the minimum wage decrease employment among low-skilled and younger workers; recent study has shown that a 10% increase in the minimum wage results in a 2.3% reduction in employment among that category of worker.
It has also proven ineffective at reducing poverty as the percentage of the overall work force earning minimum wage is at its lowest in history at just 0.4%; with just 15% of those earning minimum wage are classified as head of household, the remainder being teenagers living at home or single earners without children.
Increasing the minimum wage will suppress employment opportunities at the very point in time when Chicago’s political leadership should be pursuing policies that will promote increased hiring and reduce unemployment.
The City Council plans to not take up the issue of raising the minimum wage until after the November 4th election when voters will be given a chance to voice their opinion on an advisory referendum to raise the statewide minimum wage to $10 an hour. However, regardless of the statewide vote, the working group recommended to the City Council that Chicago’s minimum wage be higher than the statewide minimum.
What Illinois Employers Should Know About the Hobby Lobby Supreme Court Decision
The Hobby Lobby decision issued Monday by the U.S. Supreme court has the nation in a frenzy. It is important to remember that this is a very limited decision relevant only to four of the 20 contraceptive drugs covered by employers under the Affordable Care Act mandate. Those four drugs are ones that would essentially cause an abortion, also known as the morning after pill. The ACA does not cover abortion services. Therefore, mandating coverage for the four contraceptives at issue in this suit appeared to some as a back door attempt to mandate abortion service coverage. The decision protecting employers from being required to provide those contraceptives is limited in scope, applying only to closely held/family-owned for-profit businesses. This is not applicable to publicly traded businesses. Further, not-for-profit organizations were not addressed in this opinion.
So, where do we go from here? Well, the cost for these contraceptives in the future will be at the heart of many discussions. Will the cost be shifted to the federal government, the individual, or insurers? We anticipate additional litigation challenging the payment for contraceptives in regards to not-for-profits, especially with faith based not-for-profits. Most importantly, the Hobby Lobby decision did NOT change or alter state statutes and/or mandates regarding contraceptives. Those mandates in Illinois have been in place since January 1, 2004 and will have to be challenged in state court. The Illinois state mandates “require all individual and group insurance and health maintenance organizations (HMO) policies that provide coverage for outpatient services and outpatient prescription drugs or devices, [to] provide coverage for all outpatient contraceptive drugs or devices approved by the FDA”.
In conclusion, this is a whole new arena for litigation at the state and federal levels. We anticipate churches/places of worship will challenge statutes and claim religious freedom. We anticipate seeing an attempt to expand the rather limited and small exception for religion in the ACA in federal court.
AND, that’s not the end of the contraception debate here in Illinois. This spring, House Bill 5755 passed both houses. It was sent to the Governor last Friday. He has 60 days to sign it. This bill requires an advisory referendum be placed on the November ballot. When signed by the Governor, the ballot will read: “Shall any health insurance plan in Illinois that provides prescription drug coverage be required to include prescription birth control as part of that coverage?” Will this draw numbers to the polls, even though there has been a state mandate in effect since 2004? Will it encourage lawmakers to change statutes next spring or deter future lawsuits? Time will tell, but what we do know is, this advisory referendum will have no effect on the United States Supreme Court decision in Hobby Lobby.
Annual Illinois Chamber PAC Golf Outing on September 3
You are cordially invited to the annual Illinois Chamber PAC Golf Outing scheduled for Wednesday, September 3 at The Rail Golf Course in Springfield.
Join business leaders, legislators, and candidates throughout the state for a fun filled day of golf and networking outside of the office!
For your convenience, registration is available online by clicking HERE.
Schedule of Events
Noon – Check-in & Lunch
1:00 p.m – Shotgun Start
5:30 p.m – Dinner
Foursome @ $600 each
Individual Golfer @ $150/person
Event Sponsor @ $1,500 includes foursome
Dinner @ $500
Golf Hole @ $250
All sponsors will have their company names prominently displayed for their chosen sponsoring location/activity and in Chamber publications.
For more information, contact Andrew Proctor at 217-522-5512, ext. 296 or email@example.com.