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Illinois small businesses brace for two minimum wage increases next year

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Tuesday, September 10, 2019  |  Article  |  By Greg Bishop | The Center Square

Business (10) , Economy (34) , Minimum Wage (10) Murphy, Mike -- State House, 99

While one Republican lawmaker plans to push legislation that would pull the reins back on Illinois’ upcoming minimum wage increase, he noted that it was a longshot.

Gov. J.B. Pritzker signed the minimum wage increase as one of his first acts earlier this year after Democratic majorities passed the legislation through the statehouse in the first few weeks of the legislative session. No Republicans supported the legislation.

While Cook County has its own minimum wage increase stepping up to $15 an hour over time, the first statewide increase comes Jan. 1 when the minimum wage goes from $8.25 to $9.25 an hour. A second increase to $10 an hour goes into effect July 1, 2020. After that, there’s a $1 an hour increase until the statewide minimum wage reaches $15 an hour in 2025.

The higher wage costs will make it “impossible” for convenience stores to make a profit, Illinois Association of Convenience Stores Executive Vice President Bill Fleischli said. He said owners are looking for ways to reduce costs.

“I think technology is going to come to the convenience industry faster, in other words, self-checkout and those kinds of things,” Fleischli said. “And I think you will see less employment of the 17- and 18-year-old young people.”

Fleischli and others have said that as the minimum wage increases, less-experienced workers will get passed over for entry-level jobs.

Knodle Limited Farms operator Heather Hampton-Knodle said the minimum wage increase “hits huge” for her Montgomery County operations.

“I think the real irony to me is when you increase minimum wage, the people it hits first and the hardest are the minimum wage workers because it automatically shows up in the price at the gas tank and it shows up in the price of a loaf of bread,” she said.

Hampton-Knodle said Knodle Limited Farms already pays employees more than the state's existing minimum wage. However, the higher costs will mean the business will limit the number of hours offered to seasonal workers as the statewide minimum wage increases incrementally.

Supporters of raising the state's minimum wage, including a coalition of labor unions, have said it’s a fair wage for entry-level work.

“We work hard and we’re still stuck in poverty. It’s not right,” a post to the FightFor15.org website said. “It’s time to pay people enough to survive. It’s time to pay people what they deserve.”

Some corporations, including Amazon and Citigroup Inc., have announced raising their company minimum wages to $15 an hour. Small businesses could have a more difficult time with additional expenses.

State Rep. Mike Murphy, R-Springfield, said a restaurateur told him expansion plans were on hold because of the upcoming minimum wage increases.

“He says ‘my investors are just so afraid of the labor situation that they’re not going to expand,’ ” Murphy said. “They had hopes to go to Champaign and Bloomington by now and that’s not happening.”

Small businesses aren't alone. Murphy said he’s heard from school administrators that the increased minimum wage will squeeze their budgets.

“That’s another unfunded state mandate we’re putting on people,” Murphy said. “Once again where’s that pressure going to be felt? It’s going to be felt in property tax, very simply.”

Murphy said he will back a measure to allow for regional consideration in the state's minimum wage law with smaller increases in rural areas. However, he said not hopeful such a measure will advance.

A regionalization effort earlier this year failed as the statewide measure passed.