A minimum wage hike is a maximally bad idea, and small business owners from Illinois to San Francisco can tell you why.
WASHINGTON, February 17, 2015 — During his last State of the Union address, President Obama talked a a great deal about his inflated accomplishments and intellectually dishonest plans for the future. During a State of the Union speech, that is typically what presidents do.
The long presidential laundry list for 2015 touched on numerous issues. But one that stood out more than the others was Obama’s plan for doubling down on his already counterproductive minimum wage push.
The president’s predictable call to arms, coupled with his demand for higher taxes, was an echo of his party’s decades-long stance at both the federal and state levels. Those calls, in almost every case, have inevitably hurt Americans at the state level. The latest example is unfolding in Illinois.
But just as Social Security, Medicare and Medicaid have been stretched far beyond the government’s original intentions, it has been a long standing liberal policy to push for federal minimum wage hikes at every turn, regardless of the voters, prominent economists, and common sense saying otherwise.
Obama ignored the fact that there is no proven correlation between a federal minimum wage increase and a decrease in the poverty rate. He also ignored the reality that only about 3 million workers currently earn the minimum wage: less than 5 percent of the work force.
The data suggesting that federal minimum wage hikes hurt the economy and don’t bring people out of poverty is overwhelming. That conclusion has been supported by report after report, most notably one done by the Heritage Foundation. It’s common knowledge at this point.
However, Democrats nationwide have ignored the evidence and successfully pushed for minimum wage increases in several states across the country.
The result? Exactly what the studies predicted. The most recent casualty of this wage hike myth is the economy of the state of Illinois, President Obama’s home state.
Illinois, a state long controlled by Democrats and notorious for the rampant corruption that has sent many of those Democrats to jail, has had an extremely difficult time recovering from the recession. In fact, the state currently employs 300,000 fewer people than it did before the recession, putting it dead last among all states in terms of economic recovery.
A big reason Illinois is experiencing so much trouble is that it has become an extremely inhospitable place to conduct business. A recent survey of 13,000 small businesses in the state gave Illinois an “F” rating for economic friendliness. The failing grade was underscored by the resulting mass exodus of businesses from the state. In 2014, 95,000 jobs were lost to other more business-friendly states. Entrepreneurs in particular are leaving Illinois in droves.
The state’s response to these economic woes was to increase a minimum wage that has already been increased several times over the past 10 years. This move, which has proven to harm the economy more than it helps, will raise Chicago’s minimum wage to $13 an hour by 2019. The state minimum wage will rise to $11 an hour.
As expected, retailers who are already suffering tremendous losses say they will have to cut jobs to counteract the additional cost. It’s no wonder businesses are hesitant to enter or expand operations in the state. An already hostile business climate is being poisoned by people in power.
There are many reasons why Illinois has had so much trouble. It can’t all be blamed on the minimum wage, but it can almost entirely be blamed on the Democrats who have been in charge over the last few decades. Their party has played a major role in every setback the economy has faced.
In 2011, in the middle of a state-wide recession, Democrats passed a massive hike in the state income tax, which raised the rate by 67 percent. This brought the meager recovery to a screeching halt almost overnight. Since the hike, Illinois ranks last in the Midwest in job creation and near the bottom nationally.
There is hope for the state, however. Illinois voters recently elected Bruce Rauner as their governor, the first Republican to hold the office in almost 20 years. He has called for a sensible raise in the minimum wage which represents 10 percent over the course of approximately 10 years. This would give businesses time to adapt to the new cost. But predictably, state Democrats want nothing to do with that plan.
Small business owners are usually intelligent people, and the fact they are leaving the state shows that they are paying attention to Illinois downward business and employment spiral. The state government’s continuing obsession with raising the minimum wage instead of helping the poor in ways that have been proven to work has created a very tentative business climate to say the least.
Increasing the Federal earned income credit and finding ways to improve access to education, which empowers workers to move up the ladder, are far more sensible options than forcing employers, some of who do not have the means, to pay their employees a couple dollars more an hour.
Illinois is clearly having a hard time recovering from the recession. The voters showed up to choose a governor with a different vision than the one that has been failing over the past few years.
Time will tell whether conservative policies will be able to gain traction in the land of Lincoln and pull people out of poverty like they have elsewhere across the country, as in Wisconsin, Texas and Ohio.Click here for reuse options!
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