Capitol Fax.com - Your Illinois News Radar » Zigmund study finds raising the minimum wage would grow Illinois’ population, boost state revenues
SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
CapitolFax.com
To subscribe to Capitol Fax, click here.
Zigmund study finds raising the minimum wage would grow Illinois’ population, boost state revenues

Wednesday, Jan 3, 2018

* News Gazette editorial

In a year’s time, many people die — about 33,000 in 2016-17. But births more than offset that; Illinois gained nearly 154,000 new little citizens in that same time frame. Plus, the Land of Lincoln welcomed more new residents internationally than it lost — a net increase of 33,700.

The reason Illinois’ population is falling — while that of most states’, including all neighboring ones, are increasing: More people are leaving than arriving. The state’s “net domestic migration” was a minus-114,779. That’s just in a year’s time.

In the seven years since the last census in 2010, Illinois has seen a net loss to other states of nearly 643,000 people. That’s roughly the combined populations of Champaign, McLean, Macon, Vermilion, Iroquois, Douglas, Piatt and Ford counties.

Why is Illinois losing people while other states are gaining?

* OK, so while I was Googling stuff about the governor’s new budget director Hans Zigmund, I came across a study from the past October that Zigmund co-authored entitled “Dynamic Fiscal Analysis: Increasing Minimum Wage in Illinois.” From the report

Negative effect on employment

    Given that increase in wage is not due to increase in productivity, workforce will be reduced to compensate for increase in labor cost.

Negative effect on Gross Domestic Product

    Higher labor cost & higher cost of goods and services have a detrimental effect on competitiveness. This leads to decrease in exports and business investment.

Negative effect on prices

    Raising labor cost will be translated into higher prices.

Positive effect on Personal (and disposable) income

    Raising minimum wage will increase earnings – personal income- of eligible workers (those that remain employed)

Negative effect on Real personal disposable income

    Given the increase in prices, there is a negative effect on real personal income.

Positive effect on population growth.

    Increased net economic migrants, probably explained by an improved consumption access index in IL and by improved relative real compensation rate in the state.

That last highlighted point is kinda interesting. The study goes on to suggest that some folks would make enough money to get off public assistance programs, lowering state costs.

* And what about state revenues?

The positive effect on personal consumption -due to increased personal income- leads to an increase in Sales Tax revenue.

The positive effect on total wages more than compensates for the loss in employment. The result is an increase in Individual Income Tax revenue.

Hmm.

* Related…

* Downtown growth leads Chicago to highest job peak in decades

- Posted by Rich Miller        

27 Comments
  1. - Arsenal - Wednesday, Jan 3, 18 @ 11:20 am:

    It makes sense in the abstract; people would like to go to a state where they could get paid more.


  2. - 33rd ward - Wednesday, Jan 3, 18 @ 11:26 am:

    As I’ve been saying for years; raising the minimum wage is the answer to Chicago’s finical crisis.


  3. - SAP - Wednesday, Jan 3, 18 @ 11:38 am:

    To pick one example, Washington state has a minimum wage of $11.50 and is 6th on yesterday’s inmigration list. As 33d indicates, the Chicago minimum wage is significantly higher than most of the rest of the state and it is the only part of the state that seems to be adding population.


  4. - City Zen - Wednesday, Jan 3, 18 @ 11:39 am:

    The increased minimum wage/lower public assistance results only happen if the threshold for public assistance remains constant under today’s minimum wage rules. If it moves with the minimum wage, as many suspect it would, there is no benefit. If there were savings, SEIU and the Fight for $15 crowd would have been praising the benefits long ago.


  5. - Jibba - Wednesday, Jan 3, 18 @ 11:42 am:

    My friend’s HS senior kid earned enough working at the local taco joint to pay his first year of college tuition 20 hours a week at $15/hour. How is this bad again?
    Arcane arguments about efficiency and exports pale in comparison to solving real problems for poor and middle class people.


  6. - Jibba - Wednesday, Jan 3, 18 @ 11:46 am:

    Neglected to say that was in Seattle…


  7. - California Guy - Wednesday, Jan 3, 18 @ 11:51 am:

    Perhaps the reduced taxable income in overall State GDP is made up by the income that is taxed several times by an increased minimum wage (income tax, followed by sales tax). Probably the entirety of minimum wage growth is subject to sales tax because they spend practically all of it on cost of living. An increase in State GDP might only lead to revenue subject to income tax, while higher earners save a big portion of their income.

    Not really sure if Illinois would benefit long term by reducing GDP just to pick up more tax revenue at the expense of low income wage earners, but hey #2018.


  8. - City Zen - Wednesday, Jan 3, 18 @ 11:55 am:

    ==My friend’s HS senior kid earned enough working at the local taco joint to pay his first year of college tuition 20 hours a week at $15/hour. How is this bad again?==

    So the benchmark for minimum wage studies should be high school students working part-time living at home rent free?


  9. - Demoralized - Wednesday, Jan 3, 18 @ 11:59 am:

    So a guy who argued that raising the minimum wage would be a positive thing is now the state budget director? Does Rauner know what his “expert” opinion is? Because that sentiment is completely opposite of the Governor’s thoughts.


  10. - Demoralized - Wednesday, Jan 3, 18 @ 12:00 pm:

    And you can bet that the Democrats will be raising this study the first time he sits down in front of a committee. That ought to be interesting.


  11. - Jibba - Wednesday, Jan 3, 18 @ 12:02 pm:

    CZ…my post is a real world example of the good a higher minimum wage can do. Affording college puts poor and middle class students into loan bondage for decades. That has a social cost, too. Perhaps you can add that to your minimum wage study.


  12. - Chicagonk - Wednesday, Jan 3, 18 @ 12:34 pm:

    Just look at the latest BLS unemployment map by county.

    https://www.bls.gov/web/metro/twmcort.pdf

    Now you would expect the manufacturing corridors along the Rock, Illinois, Mississippi Rivers to have higher unemployment than say a rural Iowa county, but what stands out to me is the higher comparative unemployment in the border communities. Anecdotally, I know a lot of people in Moline and Rock Island looking for homes in Davenport, Bettendorf, and Le Claire.


  13. - Annonin' - Wednesday, Jan 3, 18 @ 1:01 pm:

    If one looked hard at the movers press release that cam out yesterday one would have seen the attached map showed a higher percentage of outbound movers from WI, IN & MO left for jobs than those who left IL. Disrupt the big exodus theory GovJUnk, Proft and others push.


  14. - California Guy - Wednesday, Jan 3, 18 @ 1:26 pm:

    @ Demoralized

    ==So a guy who argued that raising the minimum wage would be a positive thing is now the state budget director? Does Rauner know what his “expert” opinion is? Because that sentiment is completely opposite of the Governor’s thoughts.==

    Take a look at the entirety of the study. What economic purpose is served by increasing the number of State residents at the detriment of GDP, employment prospects, inflation (higher prices), and real personal income? Look harder. Negative effects on real personal income = a lower standard of living. It’s literally stating that we’d be at a net loss in real income. The report makes no justification for a minimum wage increase.


  15. - Albany Park Patriot - Wednesday, Jan 3, 18 @ 2:13 pm:

    Wait-Rauner opposes ANY minimum wage and just vetoed an increase…


  16. - Downstate - Wednesday, Jan 3, 18 @ 2:35 pm:

    The effective minimum wage in our downstate community is approximately 15% higher than the state mandate.

    We did it with job growth among small, locally owned businesses. Had we demanded a higher minimum wage, we likely would have curtailed the expansion and growth that occurred in our local businesses.

    If you have any type of work ethic, there are plenty of jobs well above minimum wage.


  17. - Mix_It_Up - Wednesday, Jan 3, 18 @ 3:32 pm:

    I’m all for minimum wage increase if costs of goods stayed the same. However, this will not be the case. Businesses will increase the costs of goods and reduce staff to compensate. Government will benefit from more tax money on income and sales. They will be the biggest benefactor. Our elderly will suffer because their social security will be worth less in buying power and COLAs will not keep pace.


  18. - Demoralized - Wednesday, Jan 3, 18 @ 4:03 pm:

    ==The report makes no justification for a minimum wage increase.==

    It does state that there would be benefits. That’s not exactly the message of this Governor.


  19. - Rich Miller - Wednesday, Jan 3, 18 @ 4:06 pm:

    ===The report makes no justification for a minimum wage increase===

    “The positive effect on total wages more than compensates for the loss in employment”


  20. - Todd Knock - Wednesday, Jan 3, 18 @ 4:37 pm:

    This concept should be tried on an experimental basis in a large, diverse metropolitan area to determine its effects on the overall economic dynamic of that area. I nominate Seattle…
    Wait, what…???


  21. - Anonymous - Wednesday, Jan 3, 18 @ 4:56 pm:

    Let’s look at the entire report… the REMI findings are clear.

    1. Negative effect on employment
    2. Negative effect on GDP
    3. Negative effect on prices
    4. Negative effect on REAL disposable income

    1. Positive effect on personal and disposable income
    2. Positive impact on population growth

    The comment that “the positive effect of total wages more than compensates for the loss of employment” doesn’t provide food on the table for those workers that lose their jobs. Their neighbors may have a few more dollars but I’m not sure this will satisfy those who lost jobs or had hours cut.


  22. - California Guy - Wednesday, Jan 3, 18 @ 5:23 pm:

    @ Demoralized

    Of course it has a positive effect on wages, it requires them to be higher. The net damage is calculated by REAL INCOME. Real income is the value that your income buys you - correlated to the inflation that the minimum wage increase would cause. As the minimum wage increases, the cost of goods and services also increases. This study is describing an inflationary effects that’s greater than the wage increase. That’s a net loss of REAL income. Yeah, you make a buck or two more, but goods cost three of four bucks more, as a rough example.

    The effect, as identified by this study, is that the benefits would be increased tax revenue, not an increase in the purchasing power of Illinoisans. That increased tax revenue would be at the detriment of REAL income.


  23. - wordslinger - Wednesday, Jan 3, 18 @ 6:41 pm:

    Based on this, a whiz kid like Zigmund should be able to calculate the ROI on Rauner’s agenda lickety-split.

    It’s only been a couple of years since Rauner promised those “revised” numbers to Miller.

    https://www.youtube.com/watch?v=Z0YIJQ1jgEI


  24. - wordslinger - Wednesday, Jan 3, 18 @ 6:44 pm:

    – Positive effect on population growth.

    Increased net economic migrants, probably explained by an improved consumption access index in IL and by improved relative real compensation rate in the state.

    That last highlighted point is kinda interesting. The study goes on to suggest that some folks would make enough money to get off public assistance programs, lowering state costs. –

    I’m shocked that the governor hasn’t been barnstorming the state on this economic growth proposal that his staff has put together.

    I kid. Seriously, where did this come from? Was Zigmund just passin’ the time of day, crunchin’ numbers for kicks?

    I doubt very much that the boss asked him to do it.


  25. - Demoralized - Wednesday, Jan 3, 18 @ 6:56 pm:

    California Guy:

    You’re having some big academic debate. I’m not. All I said is that the Governor hired a guy to be his budget director who authored a study that pointed out the benefits of raising the minimum wage. That sentiment runs counter to what the Governor believes. Now, you can continue this lecture if you want. It still doesn’t mean I’m not right.


  26. - Union Thug Gramma - Thursday, Jan 4, 18 @ 8:20 am:

    SMH, the argument that jobs would be lost and prices will go up has been the same argument conservatives have whined about since 1935. Wasn’t true then, not true now. Oh and this study forgot to include the one on how minimum wage workers will make more than better skilled workers…
    If the poorest workers make more money, they spend it…on food, new clothing, better housing, which in turn, spurs the economy. McDonald’s and Walmart may cry poor, but I’m tired of my tax dollars going to subsidize greedy billionaires that don’t pay decent wages to their workers. Costco seems to be doing just fine without teaching their employees how to get food stamps, like walmart does.


  27. - City Zen - Thursday, Jan 4, 18 @ 9:06 am:

    ==Costco seems to be doing just fine without teaching their employees how to get food stamps, like walmart does.==

    Costco’s revenue per employee is nearly three times that of Walmart, one of the advantages of the bulk sales/warehouse model. I’m not sure they could ever match Costco’s compensation package without a drastic change to their business model.

    This coming from a Costco shopper that doesn’t step foot in a Walmart, mostly for the reasons you cited.


Sorry, comments for this post are now closed.


* Reader comments closed for the weekend
* State Journal-Register endorses Rauner "with reservations"
* *** UPDATED x1 *** Pritzker campaign lawyer hints at defamation suit, claims campaign was never served
* Rauner says he's "trying to eradicate" the Madigan machine "cancer," but the "treatments are tough"
* Question of the day
* *** UPDATED x1 - Speaker Ryan to campaign for Davis *** Trump likely coming to Illinois to boost Bost
* Musical Interlude: Try (just a little bit harder)
* Tell me another fairytale, Grandpa
* Rauner again denies any delays at Quincy veterans' home
* "Speed dating" candidates
* Lawyer won't answer simple questions as some anonymous former Pritzker staffers speak out
* AFL-CIO launches "massive" digital ad buy
* SUBSCRIBERS ONLY - Today's edition of Capitol Fax (use all CAPS in password)
* *** LIVE COVERAGE ***
* Yesterday's stories

Support CapitolFax.com
Visit our advertisers...

...............

...............

...............

...............

...............
<


Loading


Main Menu
Home
Illinois
YouTube
Pundit rankings
Obama
Subscriber Content
Durbin
Burris
Blagojevich Trial
Advertising
Updated Posts
Polls

Archives
October 2018
September 2018
August 2018
July 2018
June 2018
May 2018
April 2018
March 2018
February 2018
January 2018
December 2017
November 2017
October 2017
September 2017
August 2017
July 2017
June 2017
May 2017
April 2017
March 2017
February 2017
January 2017
December 2016
November 2016
October 2016
September 2016
August 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004

Blog*Spot Archives
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005

Syndication

RSS Feed 2.0
Comments RSS 2.0
WordPress




Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller