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* This was one of the reactions to Gov. Quinn’s budget proposal, which included a $2500 per worker tax credit for small businesses that hire new employees…
“Small-business owners don’t need tax credits. They need customers,” Kim Clarke Maisch, state director of the National Federation of Independent Business, said while noting economic growth comes from areas such as workers’ compensation reform and a lower minimum wage.
* The Question: Do you agree or disagree with Maisch? Explain thoroughly, please.
posted by Rich Miller
Thursday, Mar 11, 10 @ 10:35 am
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Wow the Kimster is down on tax credits….big kiss off for BillTheBuilder…tick tock!
Comment by CircularFiringSquad Thursday, Mar 11, 10 @ 10:40 am
I would say:
“Small-business owners don’t need workers’ compensation reform and a lower minimum wage. They need customers.”
Ironic that she says the key is customers, but then Maisch’s only solutions are on the business expense side, not the customer side.
Comment by George Thursday, Mar 11, 10 @ 10:42 am
‘….and a lower minimum wage.”
Yes, just imagine how much more profitable business could be if we didn’t even have to pay workers!
What a load of baloney.
Why is it that the lowest paid workers get the largest amount of scorn cast upon them? You know I’d be willing to bet if we capped executive pay at $150,000 with no bonus we could hire a lot more workers as well.
Why is it that that proposal won’t go anywhere?
Comment by How Ironic Thursday, Mar 11, 10 @ 10:42 am
I can’t wait until they public the quote of Maisch praising Senator Brady’s nearly identical tax break.
A sassy reporter would call her today and ask her what she thinks of the Brady tax credit plan.
As for her comments, I don’t know how you can argue with a straight face that “businesses need customers” and “we should lower the minimum wage.”
If people don’t have money in their pocket, how are you going to have customers.
What businesses need more than anything at all is health care reform, not “worker’s comp reform.”
Health care costs for their employees are by far the largest rising cost for any business. Reforms that address national health care inflation rates are critical.
Meanwhile, the current worker’s comp laws are the product of the agreed bill process — which means the business lobby signed off on them.
The nicest thing I can say about her comments are “disingenuous.”
Comment by Yellow Dog Democrat Thursday, Mar 11, 10 @ 10:42 am
Businesses need customers dammit! And when more Americans are making $3.50 per hour then more Americans will be good customers.
Because we all know that the U.S. economy is driven by consumption of people making less than $5 per hour.
Comment by Carl Nyberg Thursday, Mar 11, 10 @ 10:51 am
She wants to grow businesses with customers who have less money. Good luck with that.
Comment by Pot calling kettle Thursday, Mar 11, 10 @ 10:54 am
Don’t we take some of the tax money we collect from businesses and use it to fund programs that will help small businesses? Why isn’t that helping?
Comment by Yoo Hoo Thursday, Mar 11, 10 @ 10:54 am
If only we could get back to a $1 for a solid 12 hours of work, our problems would be solved. I’m surprised she didn’t complain about those pesky pollution and workplace safety laws. And how about those kids? Why shouldn’t a 10-year old be allowed to earn that $1/day?
Comment by Pot calling kettle Thursday, Mar 11, 10 @ 10:57 am
Answer the question, please. Thanks.
Comment by Rich Miller Thursday, Mar 11, 10 @ 10:57 am
It seems that politicans who have never worked in the private sector don’t understand that business people make decisions on hiring based on what is going on now and what will happen in the future if they hire an employee. With all the uncertainty about healthcare reform and its associated costs, the enormous debt of federal and state governments, and the failure of the state to pay its bills–from a business perspective, there is little reason to invest in Illinois. Rather, you go to some state who is managing their finances better and doesn’t find constant ways to tax and regulate business. Maybe we should have everyone read “Atlas Shrugged” as a book club project! haha So, I agree with NFIB. The changes suggested would be a start.
Comment by yikes Thursday, Mar 11, 10 @ 10:59 am
Maisch’s point is that Illinois, along with the feds, are piling rule after rule on the backs of small businesses, making it harder and harder to create jobs, expand businesses, invest in new products and technology. Instead of micromanaging the private sector, the government should look more at stimulus that really jump starts the private sector, not more government spending that saps growth.
Comment by Adam Smith Thursday, Mar 11, 10 @ 10:59 am
I think it’s partially true. I’d add that small businesses need access to credit, as well. Today’s WSJ points out that while big business is beginning to grow again — driving economic growth by an annual 5.9% this quarter — small business is still mired in the credit crunch.
Bill’s advantage over Quinn is that from day one, confidence in the IL business climate will climb. Quinn can in no way restore business confidence.
Comment by Greg B. Thursday, Mar 11, 10 @ 11:05 am
While I agree that government places many restrictions on business, if the government does not perform a watchdog role greed, I mean the profit motive, overtakes business leaders.
I heard on NPR the other day that executives make 300 times what workers make compared to 30 times just 25 years ago. While I am not in favor of socialism, there needs to be return to understanding that some sharing of the wealth benefits us all.
My guess is that Ms. Maisch is in favor of bailing out business when they fail because so many people will lose jobs…business wants profits without risk. I don’t think we can have it both ways. The free market left unchecked results in our current growing divide between the elite and non-existant middle class. If we share some wealth from the top then there is more money to be spent by customers…didn’t Henry Ford pay his labor force enough so they could buy his product?
Comment by Double D Thursday, Mar 11, 10 @ 11:08 am
I’d add that small businesses need access to credit, as well.
100% agree. That might be the biggest issue right now and I wish Quinn and IFA had launched a small business loan progran.
Comment by George Thursday, Mar 11, 10 @ 11:13 am
He’s arguing for employers, not the economy as a whole. The credit, lowering worker’s comp, and lowering minimum wage are all methods of lowering the cost to an employer of hiring an employee. Which works best for the employer? Workers comp and minimum wage, probably, because they effect more than just new employees and are not just one-shot deals. Which one is best for the economy? Workers comp reform would be good for everyone. The cost of the credit is shared with all taxpayers. Lowering minimum wage will hurt the employees with jobs, but will also help low-skill employees to get jobs, and I’ve never seen anything that conclusively resolves whether a change in minimum wage is a net gain or loss for employees or the economy as a whole.
Comment by Pat Robertson Thursday, Mar 11, 10 @ 11:13 am
With respect to this particular tax credit proposal Maitch makes perfect sense. A $2500 per new employee tax credit only makes economic sense if the business has, or anticipates *having* enough future business to be able to pay all the rest of the salary and benefits for that new employee. All business tax credits are not created equal and partisan sound bites that pretend the words “tax credits” mean only one thing are disingenuous.
Comment by Responsa Thursday, Mar 11, 10 @ 11:15 am
There are only two things a government can do to build long term wealth: infrastructure and education. Goodness knows we need education reform and high quality teachers, but in this recession that’s not an immediate problem (i.e., force the unions to cut pensions for newer teachers — they ain’t going anywhere). Infrastructure spending needs to be smart — a crosstown expressway along the Cicero Ave. corridor would save us far more in energy and time than high speed chicago to st. louis rail.
Comment by lake county democrat Thursday, Mar 11, 10 @ 11:15 am
I don’t know if a lower minimum wage does much for businesses but she is right that businesses don’t need tax credits. No business will hire a full time employee because of a tax credit that only pays a fraction of the salary. Businesses need a low predictable tax climate, not gimmicks.
She is correct on workers compensation reform as well.
Comment by Ahoy Thursday, Mar 11, 10 @ 11:16 am
Logic Circuit: Businesses need customers. Customers need money. Money requires a job. No jobs requires job creation incentive. Small businesses are now complaining about a tax incentive that rewards them with cash if they hire someone? This is a big incentive if considered in the aggregate. Unreal.
C’mon NFIB. Work Comp reform just happened a couple of years ago (remember, you were at the table and AGREED to it?). The complaint about work comp costs is disengenuous. Health care costs are the REAL problem.
Comment by unspun Thursday, Mar 11, 10 @ 11:17 am
== “Small-business owners don’t need tax credits. They need customers,” Kim Clarke Maisch ==
Well I would have to agree with that, if there isn’t anyone to consume what you produce you are not going to staff up.
Why hire enough people to make 40 widgets a day if I am selling 30.
Not sure if a lower minimum wage or workmans comp rule changes will produce customers but she is right on the first point.
Comment by OneMan Thursday, Mar 11, 10 @ 11:22 am
As a small businessman, I couldn’t disagree with her more. Paying workers comp and the current minimum wage is a small part of the costs of doing business.
I also work mainly for small business owners, and I have never heard one complain about the minimum wage or the corporate tax rate. Let’s face the facts: small businesses (usually S Corps, not C corps) work to make as little money as a company as possible each year, therefore reducing the corporate tax burden. How much they pay themselves and therefore how much personal income tax they pay is another story entirely.
We want customers, and that comes from high employment at reasonable compensation levels. She’s speaking for the big business owners, and many of us are not them. I am tired of hearing the affluent moan about some minor tax increase on their personal income above their first $250,000 in compensation.
Comment by Lefty Lefty Thursday, Mar 11, 10 @ 11:27 am
She’s right….
I won’t hire an employee costing $30K(or more), just to get a $2,500 tax credit, when I have NO extra sales revenue coming.
Just simple math here, folks.
Comment by Peoria Joe Thursday, Mar 11, 10 @ 11:35 am
From what we are seeing in our business, Kim is correct. Without customers coming in the door and acutally buying the products, you can not hire anyone. We are seeing too many businesses closing their businesses or selling out to big box stores.
Comment by Interested Observer Thursday, Mar 11, 10 @ 11:39 am
Businesses only add employees when the demand for products and services outgrow the businesses ability to provide those goods and services. Tax credits only have value when an increase in workforce is necessary and no business makes decision on hiring based on what tax credits are available.
If the governor and legislature want to spur economic growth, the surest way to do it is to pay the vendors who provide the state with goods and services the over $5 billion that is do them for past purchases. This would allow these businesses to rehire workers who had been previously terminated and purchase goods and services that they have not been able to afford by virtue of the state being a deadbeat in paying their bills in a timely manner.
One can only wonder what would happen if the governor and other elected officials wouldn’t receive their paychecks on time?
Comment by WRMNPolitics Thursday, Mar 11, 10 @ 11:41 am
“Small-business owners don’t need tax credits. They need customers.”
For every person hired because of the new tax credit, they become a new customer due to the increase in income they didn’t have before.
Comment by Mat Thursday, Mar 11, 10 @ 11:41 am
The tax credit for new employees didn’t work for Carter and there’s no reason to think it would work now.
Illinois has a lousy business climate. For seven years there has been no effort to improve it, only make it worse with new regulations, new taxes and new fees.
I support Brady and I’m glad Quinn is co-opting him on the tax credits. Now he’ll have to take a much needed more aggressive and much broader look at improving our economy.
As far as the minimum wage. It’s stupid to have a state minimum wage higher than the national one. It causes unemployment. Just look at the figures for youth unemployment.
Comment by Downstate Thursday, Mar 11, 10 @ 11:44 am
Agree that small business owners don’t need tax credits. The tax credit would be a nice extra bit of money in their pocket, but adding a staff position is based on cash flow and work levels.
Disagree on both minimum wage and work comp. Those are not going to impact hiring. Small businesses are going to base their labor on the amount of work that must be done, and adjust pricing and other expenses based on that.
The point above about health care costs is good. Insurance is eating up bigger and bigger parts of the wages/benefits part of the equation. Even with the business assuming as much as they can of those costs, employees are paying more and getting less for their health care. This hurts the business’ ability to retain skilled and efficient employees.
The best place for the state to put effort to help small business is to figure out how to pay vendors and providers in a more timely fashion. Their spending is at a near-standstill, which has a ripple effect.
Comment by Earnest Thursday, Mar 11, 10 @ 11:48 am
—-She’s right….
I won’t hire an employee costing $30K(or more), just to get a $2,500 tax credit, when I have NO extra sales revenue coming.
Just simple math here, folks. Peoria Joe”
Of course businesses won’t hire employees just for the sake of receiving a $2500 tax credit. However, I guarantee that every employer (with a decent bookeeper)that hires an eligible employee takes the credit. This is micro versus macro economics. From a macro standpoint, the fact that every eligible hire puts $2500 back into circulation is irrefutable. Guess what happens when money is circulated?
Comment by unspun Thursday, Mar 11, 10 @ 11:49 am
Small businesses need a climate compatible with business growth.
Tax credits for jobs can be helpful, but because of Illinois’ reputation as a bad state to do business in, much more is needed.
The question was on minimum wage, and it makes no sense to me to have differing wage bases in different states. the state and federal minimum wage base should be the same.
Comment by downstate dem Thursday, Mar 11, 10 @ 11:53 am
While I agree that businesses need customers, it does not follow that lowering wages and workers comp would get you there. The proposed tax credit can be applied to alleviate the costs she is complaining about.
Comment by Pot calling kettle Thursday, Mar 11, 10 @ 11:54 am
Entry level positions and low skilled positions do not necessarily deserve a “living wage”. It is tough when you are just starting out whether you are new to this country, young or changing fields. All the more reason to try harder, work 2 jobs if necessary, share an apartment to lower costs. Lots of ways to make ends meet. There will always be a story of someone doing everything but still coming up short. Life is unfair.
To look at taxes only as a cause for a poor business climate ignores the other issues, regulation,etc. Businesses thrive when the gov’t stays away. Let’s all hear, now, from the people who can prove that the evil businesses must be reined in for their greed. Back and forth, charge-countercharge. Prove your point. Illinois will still be in trouble afterwards. Now what?
Comment by dupage dan Thursday, Mar 11, 10 @ 11:55 am
“Small-business owners don’t need tax credits. They need customers,” Kim Clarke Maisch
She is absolutely right. The minimum wage in Illinois puts us on an island. All our surrounding states have lower minimum wage (at least they did when we raised it). Our workers comp laws make our businesses pay -in some cases- 4 and 5 times more per employee for insurance than our surrounding states. This goes directly to competition for job growth and bringing jobs to Illinois. We have been bleeding jobs to our neighbors ever since the Democrats took control of government and reworked worker’s comp laws and raised the minimum wage.
I have scanned a few comments above and people seem to think these reforms in workers comp and lower minimum wages will just line the pockets of employers. This is not true. Employers know they will make more money through expansion (hence hiring more people), haven’t you ever heard “if you are not expanding as a business you are dying as a business?”
Not to mention -as I referred to above- these topics are 2 huge reasons businesses do not come to Illinois and go to other states. This is why Governor’s from other states send letters to employers in Illinois touting how “business friendly” their state is and how they should “come on over”.
Comment by Moderate REpub Thursday, Mar 11, 10 @ 11:58 am
I can’t believe those who argue with her! Without customers, you have no reasons to hire! It takes a bunch of clueless wonders to think we can turn every business into a mini-GM!
Of course she is right, but to those who never ran a business, they probably can’t understand why someone who doesn’t have enough customers wouldn’t take $2500 to hire more staff. Kim’s critics only understand the short term - so short that they forget that each employee costs more than $2500 each.
Without customers, there are no reasons to hire. How out of touch have these proponents gotten that they have forgotten such basic real world economics?
Comment by VanillaMan Thursday, Mar 11, 10 @ 12:00 pm
Small business owners need tax credits to help offset the costs of HEALTH INSURANCE. That’s why they aren’t hiring - at a rate of about $12,000 per person who can afford to insure / hire anybody these days?
Comment by Jean Weaver Thursday, Mar 11, 10 @ 12:14 pm
Technically, of course, she’s right. But it’s a political talking point. I hope she’ll direct her members not to apply for the tax credit, should they qualify.
Comment by JonShibleyFan Thursday, Mar 11, 10 @ 12:15 pm
I think what she is really telling us is that small business needs more cash flow, or income. Giving someone a tax credit if they spend lots of money to hire another worker is not something the small businessman can really afford to do right now. If you don’t have the cash in your pocket, then spending more just to get a credit doesn’t work.
Ask those who have been running the State of Illinois the past 8 years if this is true or not. Oh, wait! Don’t bother. They will never admit it.
Diminished income. Escalating expenses, including utilities and taxes. Tight or nonexistent credit. Not a very pleasant mix. And not a mix that will generate new jobs.
Comment by Louis G. Atsaves Thursday, Mar 11, 10 @ 12:22 pm
Her premise is correct, but her conclusion is not related to the premise. Lowering the minimum wage and reducing workers comp does not result in additional customers any more than a tax credit to offset those expenses. On the other hand, lowering the minimum wage or reducing worker’s comp would result in less money in the pockets of some (perhaps many) consumers which could result in fewer customers.
Comment by Pot calling kettle Thursday, Mar 11, 10 @ 12:22 pm
The negative psychology generated by announcing a huge spending decrease to education will hugely offset any jobs added with this tax credit proposal. 17,000 teacher salaries vs. 20,000 min. wage jobs? It don’t compute.
People are scared and PO’d. They will hold back until they feel their jobs are secure, their homes stop losing value, they partially refill a hole in their 401K’s, etc.
The business cycle is probably a couple years away from having much prospect of reviving. When customers start opening their pocket books, businesses will start investing in equipment, inputs, and services that generates hiring.
Right now, the best thing that could happen is for the federal gov. to send us home some more of our tax dollars. If not, Illinois will contribute to dragging down the national economy with downsizing in local and state government.
The bubbles are gone forever.
Comment by vole Thursday, Mar 11, 10 @ 12:24 pm
===“Small-business owners don’t need tax credits. They need customers,”===
I agree with this statement 100%. Customers make businesses healthy, and Illinois businesses need more of them.
This, however, is a nonsequiter:
===economic growth comes from areas such as workers’ compensation reform and a lower minimum wage===
You can argue that Illinois’ workers compensation laws increase the cost of doing business here, but for most small businesses (restuarants, construction companies, accouunting offices), niether of these two ideas will generate new customers.
And laying off thousands of Illinois teachers and education employees is going to reduce the customer base that much more.
Comment by 47th Ward Thursday, Mar 11, 10 @ 12:26 pm
Customers are an essential component of most small businesses survival strategy. When people are not buying anything, small business suffers. Although the unemployed may be able to survive for some time (99 weeks?) with state and federal (a lot of it borrowed) benefits, they tend to drop out of the customer base that small business relies on.
If we believe that our national economic model is one where consumer spending drives 2/3rds of the economy, well, you had better have customers for that model to work. It would be a bonus if the consumers in that society had a living wage with some disposable income to keep the wheels turning.
A tax credit to hire new workers is not going to be very helpful to the small business that has trouble enough keeping the doors open today. In my opinion, you would do better giving the money to consumers to buy something, and let the small business figure out how to meet the demand.
Could be based on the “Homestar” model recently proposed by the President - make the consumer buy something tangible, not something to pay off an existing debt.
Comment by Das Man Thursday, Mar 11, 10 @ 12:30 pm
If my math is correct, it essentially is lowering the minimum wage for new hires by almost a dollar. Full-time work week is 40 hours. Work year is 52 weeks. 2080 hours a year. 2500/2080. Thats more than a dollar an hour the employer gets off the minimum wage. Am i missing something?
Comment by Charlie Wilson Thursday, Mar 11, 10 @ 12:30 pm
I’m going to ignore the chicken and egg debate above, and go another way.
As a rule small businesses are always under-capitalized, betting the farm that they will hit into positive profits before their start-up money is all gone. Which is why 2 out of 3 of them fail after a year. You need to be capitalized to nurture a start-up biz in a way that you can lose money for more than two years if you don’t want to fail. Why are they under-capitalized? They can’t get enough cheap credit over that two-three year hump, and lines of credit that help even out their early cash flow are likewise hard to get at reasonable rates. Only franchisees, using the power of the national franchise organization to help carry them, are able to weather those start-up dry spells. A mom and pop has nothing like that behind them.
Add to this the fact that their rents for their shop locations are high, and no wonder so many fail.
If you want to incubate new small business, don’t attack minimum or fair wages and benefits, instead, work to get them the capitalization they need to really establish healthy roots, and see if you can get them a break on the rents for their real estate for an initial period. This is the kind of thing DCCA/ DCEO should be doing, instead of romancing multinationals as if they were whales in Vegas. We comp these whales with so many perks and write-offs, hoping they will dig in and stay, but they up and move the instant they find cheaper conditions elsewhere. A small businessman or woman LIVES in the town they serve, they don’t want to move to a maquiladora in Mexico to shave 3 cents off the margin. If you invest in letting these small guys take root their first 3 years, they will STAY and grow on from there.
Comment by Gregor Thursday, Mar 11, 10 @ 12:36 pm
I agree with Kim. Raising the minimum wage reduces the number of jobs. The government is writing pink slips for employees all across the state when it increases the minimum wage. By the way, it is going up again next year.
Another component that hampers job creation in Illinois is unemployment insurance. It is too costly to consider investment in Illinois compared to surrounding states because of the costs associated with changes in your labor force. You have to factor that for every dollar invested in Illinois it may cost you more than a dollar to divest from it. Perhaps you’re in it for the long term, but in those cases you’re Miller Coors, United Airlines, Boeing, Republic Windows & Doors or Willis Equity and government controlled TIFs are your private banker.
Private investment isn’t the only imbalance. Illinois maintains an uncompetitive environment, but even with that it still only brings home 75 cents on every dollar it sends to Washington. If you’re going to only get 75 cents back, why not send 75 cents in the first place?
You could examine the sweetheart deals for Miller Coors, United Airlines, and Boeing in another way. They all argued that their employees wanted to work in the city. They’re workforce is younger. They want to be urban. Fine. So they use CTA for transportation. Well the CTA loses about $7 on every fare they collect. Taxpayers pay for that too.
Our current political market says we need to increase taxes to pay for the growth in spending. I’ll borrow from Paul Krugman and ask why not just borrow our way to a balanced budget? Rates are low.
Comment by Brennan Thursday, Mar 11, 10 @ 12:39 pm
When I owned a small biz (for 10 yrs), when times were lean I didn’t try to get more credit, hire more people (duh!) or provide overpriced health insurance to existing employees. I took to the field with my employees and worked. I didn’t lay off employees, I saved $$ by getting dirty and doing the work.
Never would I have hired someone (even at $15/hr) to get a measly $2500 back. I would save $2500 by doing the work myself and paying my bills on time.
Comment by Fan of Cap Fax Thursday, Mar 11, 10 @ 12:57 pm
Entry level positions and low skilled positions do not necessarily deserve a “living wage”. It is tough when you are just starting out whether you are new to this country, young or changing fields. All the more reason to try harder, work 2 jobs if necessary, share an apartment to lower costs. Lots of ways to make ends meet. There will always be a story of someone doing everything but still coming up short. Life is unfair. —dupage dan - Thursday, Mar 11, 10 @ 11:55 am:
agreed 100 + percent!
Comment by Will County Woman Thursday, Mar 11, 10 @ 1:33 pm
Disagree.
Small business owners are also customers. Putting more money in their pocket will enable them to patronize neighboring businesses for goods and services. The great circle of business life.
Comment by keepitsimple Thursday, Mar 11, 10 @ 1:35 pm
The $2500 tax break would not cover the cost of the unemployment penalty one would have to pay if the employee was released after a year. More business is the only thing that justifies hiring a new employee.
Comment by Cincinnatus Thursday, Mar 11, 10 @ 1:39 pm
How many small businesses met the needs of the employees at Brachs Candy Company or Fannie Mae Chocolates?
Part of the problem with a reduction in jobs is protections within trade agreements that protect domestics producers for products like sugar. Brachs and Fannie now employ laborers in Mexico because it was too costly to pay the price premiums granted to US domestic sugar producers.
I advocate for free trade, but a large portion of our so called free trade agreements still protect certain interests in the United States. Does Illinois just trade the protections for US Sugar producers in exchange for protections for US Corn producers?
So, back to that 100 cents out and 75 cents back from Washington. Any ideas to reduce this trade deficit?
Comment by Brennan Thursday, Mar 11, 10 @ 1:43 pm
Lowering the minimum wage is a race to the bottom. Henry Ford had it right…pay your employees enough so they can afford to be customers.
The small business that I work for would have more full time employees and less temps if the cost of health care wasn’t so crippling. A national health care system would stimulate both small and large business growth by removing this burden.
Comment by Dr Kilovolt Thursday, Mar 11, 10 @ 1:51 pm
As a small business owner, I agree with the part of the statement that says this tax credit will not make small business owners hire. Fundamentally, small business hiring is driven by cash flow. So a $2500 tax credit that I will not see until probably a year after I hire someone (if I hired today, I’d get the credit on next year’s taxes), won’t make me hire. Is it helpful? Sure. Does it put more money in my pocket? Yup. But it won’t drive job growth.
I agree with the commenter who said help on the credit side would make the biggest difference.
Oh, and dupage and WCW, you live in very interesting worlds. Nobody is talking about the minimum wage being a living wage. It’s not even close. The reason you have a living wage is for the working poor. You may think they’re lazy. But I’ve personally talked with a lot of these people who more often than not, work really hard and get paid crap. Increasing the minimum wage has made a meaningful difference for these folks, though usually not enough to lift them out of poverty.
One of the keys to a successful min wage is make it bigger in geographic scale. I would always prefer a national to a state minimum wage. And I oppose locally higher standards because it’s too easy to go elsewhere. But in general, it’s good policy.
Comment by Chicago Cynic Thursday, Mar 11, 10 @ 1:52 pm
Maisch also misses the point.
This ain’t about what businesses want, its about what voters want.
And voters want a job.
That’s why the tax credit is tied directly to job creation.
Unlike lowering worker’s comp and reducing the minimum wage, which will only have the direct effect of increasing corporate profits. Which, as others have pointed out, aren’t going to be used to create new jobs unless there’s an increased demand for new widgets.
Comment by Yellow Dog Democrat Thursday, Mar 11, 10 @ 1:55 pm
CC,
While you may have “talked with a lot of ‘these people’”, I have been one of “these people. There are those in gov’t who think of the minimum wage as something that should be a living wage. It is unsustainable. Businesses will increase hours of current employees before they hire people at a high rate of minimum wage. Let the market decide what a wage is to be. Get out of the business of business.
Chicago has, for years, prevented WalMart from opening a store because of the wages they pay. While that may seem laudable, remember, there are people who earn little who would love to pay the low prices that WalMart charges for their goods. It goes both ways. Minimum wages and living wages are a form of wage control. Add price control and you have the mess created by Pres Nixon. How well did that go?
BTW, YDD, it is those profits that make the world go round. False economies & false markets are the product of soviet 5 year plans. How well did that work out?
Comment by dupage dan Thursday, Mar 11, 10 @ 2:15 pm
===Chicago has, for years, prevented WalMart from opening a store===
DuPage Dan,
Stop playing the Walmart-Chicago card. Read a newspaper or something.
Walmart
4650 West North Ave
Chicago, IL 60639
Comment by 47th Ward Thursday, Mar 11, 10 @ 2:49 pm
Do a lot of people actually earn the minimum wage outside of landscaping, housekeeping and restaurant work? I’ve got friends who work for law firms, small tech shops, etc. and not one of them has earned anywhere near minimum wage. One chart I saw once stated that 10% of workers earn the minimum wage, so if that’s true wouldn’t reducing it not buy all that much for small business?
Comment by cermak_rd Thursday, Mar 11, 10 @ 3:07 pm
I agree that an overall improved economy will help businesses more than than credits because that is the only way to generate customers, but the state cannot provide “more customers.” As far as the proposal goes, it seems reasonable and not something to oppose. I think the knee-jerk opposition to Democratic initiatives - which have dominated the General Assembly since 1996 - seems like a sure-fire way to solidify certain business groups in the position of standing on the outside looking in. The IMA and IRMA have learned how to triangulate - seems like not too many others have.
Comment by Far off observer Thursday, Mar 11, 10 @ 3:37 pm
This is exactly the point Mitch Daniels has made in Indiana. I think he knows more about job creation than the assorted Democrats on these boards combined.
Comment by Tom Parking Thursday, Mar 11, 10 @ 4:04 pm
I agree with Maisch. A company is only going to use the tax credit if they are already on the bubble about needing new personnel. However, if they don’t need new employees, the tax credit won’t entice them to spend $15,000 to get a $2,500 tax credit.
Allow everyone to keep more of their money, so they can spend it at small businesses who will then NEED to hire new employees.
Comment by Fan of the Game Thursday, Mar 11, 10 @ 4:35 pm
Employers want stability and predictability that is not currently present in Illinois. It is obvious that many commenters here have never met a payroll.
Here are examples in similar vein to Kim’s remarks:
1. Stop passing health care mandates. These increase the costs for employers of all sizes and if it becomes unaffordable, they drop health care. State mandates cost account for more than 25 percent of Illinois premiums.
2. Reform Workers’ Compensation. FIrst of all, much of the system was in place before the Agreed Bill Process and secondly, while business helped negotiate some changes, they don’t work if the Work Comp Commission refuses to implement them correctly.
I’d like to hear justification for why employers should have to pay 100 percent of WC costs for an injured worker under the influence of illegal drugs or alcohol???
3. Businesses want to operate efficiently. Many use the internet and do things electronically and then legislation is introduced by Jakobsson that requires all employers to accept paper applications. So much for saving trees and using 21st century technology!
Comment by 4 percent Thursday, Mar 11, 10 @ 6:49 pm
I agree with Kim! Lets lower wages to ensure productivity rises! employees should work 3 or 4 jobs for less and just be happy they are working. And maybe some day they will be able to afford healthcare…maybe Kim should lead by example, go ahead do your rail polishing for minimum wage or better yet only take pay for 2-3 days a week to intice more small buisness.
Comment by bwana Thursday, Mar 11, 10 @ 6:59 pm
Wow I have read a lot of ignorant things, like lower wages, have people work more than one job, have multiple families living in one apartment.
A tax break will not create more jobs, I agree with Kim on that, and also she is right small businesses will not hire just for a tax break per head.
I have done accounting for many small business owners and when things are tough they cut and cut corners, using cheaper products, paying employees half cash (of course I tell them just tell me how many hours you want the payroll done for, that’s it) We all know they will offer cash jobs at a better price, and then pay cash. And you can see why they do this, just the monthly, not to mention the quarterly payroll taxes are enough to encourage this. An employer must match what is taken out for Medicare and Social Security taxes. Then there is the 940s and 941 taxes.
Nope $2500 per head, not going to help or encourage small business’.
Comment by South of the Loop Thursday, Mar 11, 10 @ 8:09 pm
Wow, 47th Ward, I stand corrected. All of those people in Englewood will be able to trek all the way the hell up to 4600 W North Ave for those great deals. Wow. One store in the entire city. WOW.
Comment by DuPage Dan Thursday, Mar 11, 10 @ 10:09 pm
Dupage,
Just because you were a ne’er do well when you were paid min wage doesn’t mean everyone is. I stand by my point.
And for the record, i’ve yet to see a single credible study - not anecdotal evidence, but an actual study, that shows employment declines when a reasonable min wage is raised. On the contrary, employment has done quite well when that has happened.
The exception is when out of whack local ordinances are adopted which is why I oppose those.
Comment by Chicago Cynic Thursday, Mar 11, 10 @ 11:23 pm
My experience as a “ne’er do well”, as you so put it, only involved starting out at the bottom as an unskilled laborer. I learned on the job and became a coast guard certified welder in a shipyard. Started out w/minimum wage. Lived w/some friends in a rented house and shared expenses. Put some money in the bank by being frugal and not wasting my resources on non-essential items. Worked extra outside jobs when necessary. Yeah, I was a outlaw alright. My wanted posters still in the post office and all that.
Wow, on the record, too. You are a risk taker. I would opine that there are so many variables involved in such studies that a statistician could push those figures around depending on their political bent. You know the old saying, “there are liars, damn liars and statisticians”.
Having said all that, I would agree that out of whack local ordinances (and for that matter, out of whack aldermen) what cause problems. The city of Chicago interfering with widespread WalMart stores is a good example. I wonder if you have any studies about that?
Comment by DuPage Dan Friday, Mar 12, 10 @ 12:21 am
The opponent of additional Wal-Marts in Chicago is organized labor. Elected officials just weight their political options. For those that can sustain the attacks of organized labor they push for Wal-Mart. For those that need organize labor they attack Wal-Mart.
I think the battle is close to being won by Wal-Mart. All of the scare tactics used to oppose the location on the west side haven’t come to fruition. Go check out the parking lot on any given day of the week. Go inside as well. It is successful. It’s delivering price parity to a population that hasn’t had it for many years now.
Comment by Brennan Friday, Mar 12, 10 @ 8:42 am
I agree with Maisch — I think in ranking tax credits and customers, the latter wins out in the immediate future. Regarding customer growth, each year the nonprofit I work for honors the North American top small company workplaces, and the interesting thing about these firms (fewer than 750 employees) is that they concentrate on that by investing heavily in employee development. They see that people who stay longer not only keep their costs down — because they don’t have to spend as much recruiting to replace those who leave — and more to the point, more committed workers are more productive and innovative, which helps satisfy existing customers and attract new ones at great enough rates to keep above water.
Thanks for asking this important question, and glad to see so many opinions on it!
Comment by Mark Tuesday, Mar 16, 10 @ 3:50 pm