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It’s your friends who hurt you most in this business

Tuesday, Jan 14, 2014

* From last week

“Anyone who wants to see more people going back to work should support lowering the minimum wage,” John Tilman, Illinois Policy Institute, said.

* From this week’s Crain’s we have Illinois Policy Institute writer Scott Reeder

I’ve been covering politics for more than 25 years. I’ve seen politicians prevaricate, flip-flop, quibble and just about everything in between. I’m never surprised when they do it. But it’s still disappointing.

The Illinois minimum wage is $8.25 per hour; the federal rate, $7.25.

Last month GOP gubernatorial hopeful Bruce Rauner told a Moline audience that he favored rolling back the Illinois minimum wage. Now he’s saying he doesn’t want that. He says he was just being “flippant” when he made the statement.

I’m sorry. I’m not buying it.

A lower minimum wage helps low-skilled workers enter the job market because it lowers employers’ costs to hire and train them. This enables more people to be hired and start their way up the ladder toward higher wages.

That’s pretty standard free-market economics, something Mr. Rauner has expressed strong support for. But those principles seem to be butting heads with politics.

* When your allies advise you to jump off a cliff, it’s probably best to find new allies.

Throughout pretty much all of last year, Rauner favored the standard Republican Party line about opposing any increase in the minimum wage. Then, one time in December (that we know of), Rauner switched to the Illinois Policy Institute position and demanded that the minimum wage be lowered. Rauner’s move has seriously damaged his campaign and has opened the floodgates of public criticism.

Let that be today’s lesson. Those guys are politically toxic. Rauner gave the group half a million dollars, but that doesn’t mean he has to listen to them all the time.

- Posted by Rich Miller        


29 Comments
  1. - Joan P. - Tuesday, Jan 14, 14 @ 9:40 am:

    “He says he was just being “flippant” when he made the statement.”

    Assuming, arguendo, that that’s true, do we really want a governor who thinks it’s appropriate to be “flippant” about such things?


  2. - From the 'Dale to HP - Tuesday, Jan 14, 14 @ 9:46 am:

    Here’s what’s bugging me with the entire minimum wage logic from IPI and some/half the GOP Gov candidates: it’s completely wrong. From the Economist a few weeks ago:

    “Scepticism about the merits of minimum wages remains this newspaper’s starting-point. But as income inequality widens and workers’ share of national income shrinks, the case for action to help the low-paid grows. Addressing the problem through subsidies for the working poor is harder in an era of austerity, when there are many other pressing claims on national coffers. Other policy options, such as confiscatory taxes, are unattractive.

    Nor is a moderate minimum wage as undesirable as neoclassical purists suggest. Unlike those in textbooks, real labour markets are not perfectly competitive. Since workers who want to change jobs face costs and risks, employers may be able to set pay below its market-clearing rate. A minimum wage, providing it is not set too high, could thus boost pay with no ill effects on jobs.

    Empirical evidence supports that argument. In flexible economies a low minimum wage seems to have little, if any, depressing effect on employment. America’s federal minimum wage, at 38% of median income, is one of the rich world’s lowest. Some studies find no harm to employment from federal or state minimum wages, others see a small one, but none finds any serious damage…” http://www.economist.com/news/leaders/21591593-moderate-minimum-wages-do-more-good-harm-they-should-be-set-technocrats-not

    The Economist, which I assume any IPI/GOP staffer worth their weight reads, is saying that not only is a minimum wage okay, but it probably needs to be raised in the US. They caution raising it too much (to the levels of France), but the US (and Illinois) probably can raise the minimum wage to $10 with little affect on employment (and I’d argue would increase employment as it would give wage earners a few more bucks to spend, thus creating more jobs).


  3. - wordslinger - Tuesday, Jan 14, 14 @ 9:47 am:

    –A lower minimum wage helps low-skilled workers enter the job market because it lowers employers’ costs to hire and train them. This enables more people to be hired and start their way up the ladder toward higher wages.

    That’s pretty standard free-market economics–

    It’s not economics, it’s dogmatic nonsense.

    Employers hire when they need the help. Wages are factored as a cost of doing business.

    If you’re not hiring at $8.25, you’re not hiring at $7.25.


  4. - Oswego Willy - Tuesday, Jan 14, 14 @ 9:50 am:

    You can buy the “friends”, you just can’t purchase their friendship.

    You are judged by who you associate with and you give these dopes “friendship notes” with pictures of Ben Franklin on them, realize you only bought them as “friends”.

    You can have loads of friends, but honestly, how many friendships do you have?

    Rauner’s Campaign is like a submarine hull; pressure from all sides, and internal strain pushing out… Can’t “dive” too deep either…but they run “silent”, it at least try to.


  5. - chad - Tuesday, Jan 14, 14 @ 9:52 am:

    To have advocated lowering the minimum was a political non-starter. It can’t possibly be achieved, and is likely to repel the typical voter. The only ratiopnal exaplnation for the “flip” comment is that Rauner was trying to motivate his IPI blood brothers. As toxic as IPI guys are, look for their like to move into the second floor if Rauner were to win.


  6. - Gabe - Tuesday, Jan 14, 14 @ 9:55 am:

    If only the IPI could get on the same trajectory as Uncle Brucie.


  7. - Demoralized - Tuesday, Jan 14, 14 @ 9:59 am:

    I guess the IPI is in the business of advocating taking money away from people. State employee pensions? Sure, take it away? People making the minimum wage? Yep, those people are making far too much and we need to cut their wages. It’s almost like their mission is to see what the most ridiculous policy they can think of is and then support that one.


  8. - Knome Sane - Tuesday, Jan 14, 14 @ 9:59 am:

    I would hate to be an employee of the Illinois Policy Institute. It must suck making $8.25 an hour there with the bosses chomping at the bit to lower it to $7.25.


  9. - Bill - Tuesday, Jan 14, 14 @ 10:07 am:

    The whole reasoning for lowering the minimum wage sounds to me like another hocus-pocus called trickle-down economics. Maybe those in favor of lowering it should refer to it as trickle-up economics.


  10. - Wensicia - Tuesday, Jan 14, 14 @ 10:10 am:

    Rauner complains the current office holders are influenced by outside interests. If he’s going to adopt policy from the IPI, how is he any different?


  11. - langhorne - Tuesday, Jan 14, 14 @ 10:10 am:

    speaking of friends, i think i recall dillard saying he would be listening to his conservative friends for input, once elected. that leads me to surmise that might be where he came up w the phrase relating to a jeffersonian marketplace.

    income disparity will be an important part of the discussion about raising the minimum wage. so too, will be a discussion about who earns the minimum, and where they are in life. a 20-something, living w his parents, going to school part time, and playing rock and roll is one profile. a 30-something single mom, w two kids, and little hope of advancement, is another. the latter is becoming more common. steve brown suggested as much last week when he said the nature of minimum wage jobs, and whether they are entry level starter jobs, or more permanent, is an important consideration.


  12. - Bill White - Tuesday, Jan 14, 14 @ 10:10 am:

    === I guess the IPI is in the business of advocating taking money away from people. ===

    I’m good removing the “I guess” from this sentence.


  13. - 47th Ward - Tuesday, Jan 14, 14 @ 10:17 am:

    A smart pol once told me that your enemies help you get elected and your friends help you get indicted. Choose them both carefully.

    And shouldn’t IPI be careful of biting the hand that feeds it? Reeder might be typing his way out of a job if he keeps hammering Rauner.


  14. - walker - Tuesday, Jan 14, 14 @ 10:23 am:

    This might be called “pretty standard free market economics” but that is more a criticism of those oversimplified, mythical economics than a comment on the minimum wage.

    Our own real-world history with increases to the minimum wage, does not support their beliefs. Actual measured impact on hiring overall has been very slight, if any, though of course one can always find some individual exceptions.

    The Economist, cited above, has it right.


  15. - Bill White - Tuesday, Jan 14, 14 @ 10:27 am:

    === The Economist, which I assume any IPI/GOP staffer worth their weight reads, is saying that not only is a minimum wage okay, but it probably needs to be raised in the US. They caution raising it too much (to the levels of France), but the US (and Illinois) probably can raise the minimum wage to $10 with little affect on employment (and I’d argue would increase employment as it would give wage earners a few more bucks to spend, thus creating more jobs). ===

    I agree entirely with this analysis, except for one minor nit-pick . . .

    === The Economist, which I assume any IPI/GOP staffer worth their weight reads . . . ===

    I’m not so sure about this point.


  16. - Grandson of Man - Tuesday, Jan 14, 14 @ 10:40 am:

    “If he’s going to adopt policy from the IPI”

    They all think they’re outsiders. The corporate tax breaks in this state must have just magically appeared.


  17. - Try-4-Truth - Tuesday, Jan 14, 14 @ 10:42 am:

    The economics of Mr. Reeder’s statement are completely wrong. Lower wages do NOT mean more hires. If the cost of producing an item (or service) is too high, then maybe a business cannot sell. But, a company will only use resources (labor, materials,etc) they need to produce a product (or service) that the market will pay for. Raising or lowering the minimum wage marginally, will have very little affect on any specific market for any given product or service. Raising or lowering the minimum wage will have a dramatic macroeconomic effect on the economy as a whole. I really wish some of these people would study economics a little closer.


  18. - ChaiseLounge - Tuesday, Jan 14, 14 @ 10:47 am:

    Illinois Policy Institute is “politically toxic?” Considering how often this site bashes IPI (who for the record, I’m not a big fan of), arguing they don’t do journalism nor lobbying earnestly, it seems unfair to now criticize them simply because of their conservative ideology.

    Half point of think-tanks of any kind is to start conversations. Should they instead just play the role Capitol Fax has so enthusiastically ascribed to them, and echo GOP electioneering tactics?


  19. - Try-4-Truth - Tuesday, Jan 14, 14 @ 10:49 am:

    No, ChaiseLounge, but they should get the facts right. If they are making a macroeconomic argument, then they should know something about macroeconomics.


  20. - thechampaignlife - Tuesday, Jan 14, 14 @ 11:00 am:

    If they really think that a lower minimum will get someone a job and started on a path towards higher pay, how about a tiered minimum with the federal rate allowed for the first year, $8.25 for years 2-4, and $10 for 5+ years?


  21. - walker - Tuesday, Jan 14, 14 @ 11:02 am:

    @ChaiseLounge: A worthy criticism.

    I have two problems with IPI. One is their obvious political activism, while pretending to be some kind of teaching institute. The other is their economics, which I think is more mythical than real-world.

    Perhaps we should concentrate more on the politics on this blog.


  22. - ChaiseLounge - Tuesday, Jan 14, 14 @ 12:01 pm:

    @Try-4-Truth @-walker-

    Yes, it’s a proposal (low or no minimum wage catalyzing hiring) that while dubious, I’d still like to look into. Just the same, thank you for responding.


  23. - Barton - Tuesday, Jan 14, 14 @ 12:16 pm:

    So, let’s look at a hypothetical business that employs eight workers at the minimum wage. Under the Rauner/IPI theory, if Illinois reduced the minimum wage by $1, that would free up eight dollars, enough to pay for one more hire and have 75 cents leftover for additional profit. Do they really think the business would hire one more worker, or pocket the entire $8 savings/additional profit because they already know with their volume of business, they only need eight minimum wage workers? I’ll hang up and listen for your answer.


  24. - PoolGuy - Tuesday, Jan 14, 14 @ 12:16 pm:

    will love to see how he weathers/handles this constant barrage from now to primary day.

    probably the first time in Bruce’s adult life where he’s heard “No” before.


  25. - Fed up - Tuesday, Jan 14, 14 @ 12:33 pm:

    What’s interesting is that ACORN wanted an exemption from CA minimum wage because the more they paid their workers the less workers they would be able to hire. So it seems both sides talk out of both sides of their mouths on this like many issues.


  26. - Norseman - Tuesday, Jan 14, 14 @ 12:35 pm:

    I think we can greatly increase employment levels and foster more small businesses by eliminating the minimum wage and other labor laws that hamper business profits. Really, what do these little people need? All they need is food and shelter. If I were a businessman, I would be happy to hire a bunch of folks for a bowl of gruel and a tent behind the shop. I could even see giving them a turkey sandwich on Thanksgiving and a ham sandwich for Christmas. These employees would be learning some type of skill that could allow them to advance to an actual paying job in 10 to 15 years. They would also be happy knowing all the toys and trips I can have from the money I earn off of their sweat and sacrifice.


  27. - Ahoy! - Tuesday, Jan 14, 14 @ 1:29 pm:

    –Rauner gave the group half a million dollars, but that doesn’t mean he has to listen to them all the time.–

    When you give a group that kind of money it seems like they should be listening to you, not the other way around. This issue is really going to hurt Rauner, not only is it bad politics, he showed that he really didn’t think this through. Then after the fire storm he comes out with a weird counter position. Demonstrating really poor decision making is not a good political platform. If he looses I think this will look a lot like Kerry’s flip flop and McCann’s Palin.


  28. - Greg - Tuesday, Jan 14, 14 @ 3:55 pm:

    “Those guys are politically toxic.”

    No, Rich, it’s pretty much just the guy in charge. I’m sure most of the others have more sense.


  29. - dave - Tuesday, Jan 14, 14 @ 4:35 pm:

    **When you give a group that kind of money it seems like they should be listening to you, not the other way around. **

    Maybe they are listening to Rauner?


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