Wednesday, 14 June 2017

$15 Minimum Wage Could Cost State 382,200 Jobs

This is according to Ben Gitis of the American Action Forum.

The current wage in Illinois is $8.25, but lawmakers are thinking about making it $15 (by 2022). There is also a tax credit for small businesses (under 50 employees) that would give them some of the money back, but that credit is planned to be phased out as the higher wage is phased in, and small businesses would only save a max of around 5% in 2022, and then the tax credit would end in 2023.

The almost 400k figure Gitis got from a study (Meer & West, 2015) that found that a 10% increase in real minimum wage is associated with a 0.3 - 0.5% decrease in net job growth, so, for example, 3 years after such a wage hike, there would be around 0.7% less employment.

Since the Illinois $15 minimum wage represents an 82% increase, employment would be almost 6% lower according to that math. Gitis measured this against projections for the state's employment from IDES, which expects around 370k jobs to be created in Illinois between 2014 and 2022, just a few less than would be negated by the wage increase. In other words, Gitis concluded, the pay raise could cost more jobs overall than the state plans to create over the coming years.

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