labor lawAdivision of labor law center

Recent changes to the Illinois minimum wage mean that the state rate is higher than wages in other Midwestern states. In 2003, when Governor Rod Blagjoveich took office for his first term, the state’s minimum wage had been frozen at $5.15 for 6 years.  That year, the Governor spearheaded efforts to increase the rate by $1.35 to $6.50 per hour, which took effect in 2005. That put Illinois’ minimum wage on a par with other Midwestern states, including Missouri and Wisconsin. The rate was still lower than that of 17 states, plus the District of Columbia.

Effective July 1 2007, the state minimum wage increased again by $1.00 per hour, to $7.50. This places the minimum wage in Illinois higher than any other Midwestern state. The Illinois rate of $7.50 is even higher than in neighboring Michigan, where the minimum wage was recently increased to $7.15 per hour.

The $1 per hour increase will add up to an extra $2,080 per year for a full-time worker, not including overtime. About 310,000 Illinois workers make the minimum wage, while another 340,000 made more than the minimum but less than $7.50 per hour last year. According to Voices for Illinois Children, more than 80% of the affected workers are  adults, and one-third are the sole breadwinner in their family.  The increase will make it “a little easier for thousands of Illinois families to pay their bills, put food on the table or buy clothes for their kids,” according to Governor Blagojevich.

But this most recent Illinois increase is merely the first in a series. Under the current statute, the state minimum wage will increase by 25 cents per year on July 1 for a total of three years. Under this plan, on July 1 2008, the state minimum wage will go to $7.75 per hour. It will increase again, to $8.00 per hour on July 1 2009. Finally, on July 1 2010, the rate will increase to $8.25 per hour. 

Under current state and federal laws, employers are required to update their state minimum wage posters each time the rate changes. This is true of every employer in the state, even if they have no employees who earn wages near the minimum wage.

The current Illinois law does include a few exceptions. Under this plan, workers under the age of 18 may be paid $7.00 per hour, but only until their 18^th birthday.

The state rate for tipped employees is $4.50 per hour. Again, this rate is substantially above the wage in other Midwestern states. In Michigan, for example, the minimum wage for tipped employees remains at $2.65 per hour. In Wisconsin, tipped employees earn just $2.33 per hour. By contrast, the federal minimum wage is currently $5.15 per hour and $2.13 per hour for tipped employees. The federal wage is scheduled to increase later this month.

This move affected more than half a million workers, including many who earn more than $6.50 per hour, but less than $7.50. While some critics argue that any minimum wage increase reduces the number of jobs, some employers say the opposite. Jim Noh,l personnel director at a chain of 20 small retail stores, says he will add more workers to avoid paying overtime at the higher rate.

Despite job growth in the state, not everyone supports the increased in minimum wage. According to Kim Clarke Maisch, Illinois Director of the National Federation of Independent Business, the move may harm some small businesses. “It’s very frustrating for small business owners who are struggling to keep their doors open. Wages should be set by the marketplace based on what an employer can afford. If your wages go up to high, people start losing their jobs.”

The increase in the minimum wage hits businesses in the retail, restaurant and service industries the hardest, according to economists.

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