News

UI Economist Examines Effects of Minimum Wage Increase

UI Economist Examines Effects of Minimum Wage Increase

An increase in the minimum wage could produce several reactions in the economy.

University of Illinois economist Elizabeth Powers says low-wage businesses, like pizza joints, would try to raise their prices. “Consumers would resist that, and they would find that there are plenty of other foods to eat besides pizza, which maybe are not quite as yummy as pizza but are pretty good, and eventually some of these providers would have to drop out, until the price of pizza was sustainable,” she said.

Other possible adjustments: Low-wage businesses could take less profit, they could try to hire a higher caliber of worker who is worth a higher wage in terms of productivity, or they could economize elsewhere.

Powers says there will be instances where jobs are lost if wages have to be higher, but a raise would put money in the economy and increase demand.

Powers says a minimum wage increase affects relatively few workers, but in the food preparation and serving and building maintenance industries, many workers earn at or near the minimum wage.

The Illinois minimum wage is $8.25 an hour; the federal minimum is $7.25. Both the governor and the president want them boosted into the $10 range and then indexed for inflation. Powers says adjusting for inflation makes sense if you believe in a minimum wage.

 

 

Recent Headlines

7 hours ago in Local

Multiple Accident Ties Up Traffic: Police Cite Driver With Medical Emergency

ambulance

A multiple accident ties up traffic in Springfield during morning rush hour.

7 hours ago in Local

Home Health Care Advocates Beg Governor Rauner To Keep Overtime

SEIU_Healthcare

Advocates of Home Health Care push for Governor Rauner to reconsider banning overtime

11 hours ago in Local

Springfield-Based Ag Manufacturer Takes Over Utah Company

brandt fertilizer

A Springfield-based agriculture products manufacturer is on the move once again to expand its portfolio.

11 hours ago in Local

Former Springfield Administrator Officially Out in Galesburg

Tammie Bolden WGIL

A former Springfield school principal and teacher is officially now out of a job at the place she left the capital for.

11 hours ago in Local

McCann: Hard to Get Leaders’ Attention

2-3-16 McCann

State Senator Sam McCann says it would be nice if he could go in and say he wants to vote right now on a budget, but that's not the reality.