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* My weekly syndicated newspaper column…
Gov.-elect J.B. Pritzker was asked last week about the timeline for passage of a new minimum wage law.
“That’s very important to me,” Pritzker said, “It’s probably something we’ll be able to get done in the first six months in office.”
Pritzker had campaigned to increase the minimum wage to $15 an hour, so he was asked whether he was still on board for that goal.
“Yeah,” he said, and then went on a somewhat long, rambling explanation, during which he repeated a talking point about how he wants to make sure that small business “are not ill-affected” by a minimum wage hike and that “large businesses are implementing it in as rapid fashion as we can make happen.”
I’m told that Pritzker hopes to shield small businesses from excessive harm to their bottom lines by using some sort of tax relief, including tax credits. The devil is always in the details, including defining what is and isn’t a small business, but that’ll apparently be part of the upcoming negotiations.
Illinois’ current minimum wage is $8.25 per hour. Indiana, which has often made a public spectacle of poaching Illinois businesses, has a $7.25 an hour minimum wage. Chicago’s minimum is $12 per hour and will rise to $13 an hour next year. Mayor Rahm Emanuel has claimed an increased minimum wage would attract workers from around the region.
The governor-elect also noted that his team has the “various constituents and stakeholders … at the table. The Illinois Retail Merchants, the entrepreneurs and the labor unions, all at the table.”
The Illinois Retail Merchants Association voted earlier this year to not endorse anyone in the governor’s race, making it the only major business group that didn’t back Gov. Bruce Rauner. It also took a pass on the gubernatorial contest four years ago, but endorsed Republican state Sen. Bill Brady over Democratic Gov. Pat Quinn in 2010.
This year’s decision came after two meetings between Pritzker and Rob Karr, IRMA’s president and CEO. Karr came away impressed, believing that, while Pritzker has some very liberal goals, he will negotiate in good faith on ways of reaching those goals.
Retailers are very sensitive to labor costs, and Karr was instrumental in convincing House Speaker Michael Madigan to not move forward with a minimum wage increase bill in 2014. Instead, Madigan pushed through legislation to put a non-binding referendum on the ballot. It passed overwhelmingly, but Gov. Rauner was also elected that year and he had once said he opposed having a minimum wage at all. A minimum wage hike has been put on the back burner ever since.
Crain’s Chicago Business has referred to the pre-campaign version of J.B. Pritzker as the “unofficial mayor” of Chicago’s downtown business community. Not many of those business titans stepped up to endorse Pritzker, but they also didn’t rise up in strong opposition to Pritzker or in fervent favor of Rauner. So, there’s also a level of trust that Pritzker won’t go totally overboard.
The Pritzker folks say they want to negotiate with all stakeholders on numerous issues, with the minimum wage being just one of them. This is the way things were done before Rod Blagojevich came onto the scene. Blagojevich was a big fan of jamming major ideas through on partisan roll calls.
IRMA has always tried to be an honest and willing negotiator. And its leader Karr was reportedly convinced from his two meetings with the then-candidate that once Pritzker made a deal he’d stick with it and pass it, despite any objections from the hard left.
Pritzker will have his work cut out for him in that regard. The head of the legislative Progressive Caucus, Rep. Will Guzzardi (D-Chicago), recently threw down an online gauntlet about how Illinois “must not” follow the lead of Colorado Democrats, who after taking over their state’s legislature have now signaled that they’ll be more open to negotiations with the business community.
“People elected us because we said we’d make their lives better,” Guzzardi wrote. “Raise their wages, provide decent benefits, make college and healthcare more affordable, etc. We ran on this. We won. And now… we run away? If so, why vote for us at all?”
And Pritzker will also have to deal with more moderate Democrats on this topic. Those I’ve spoken with are not necessarily opposed to a minimum wage increase, but going all the way up to $15 an hour gives them serious pause, even with possible tax credits.
*** UPDATE *** Pritzker was asked about a possible tax credit for small businesses and the phase-in of the higher wage today…
Governor-elect @JBPritzker reaffirmed his support for a gradual minimum wage hike to eventually reach $15/hour this morning. He also confirmed @CapitolFax's reporting that a tax credit for small businesses could be part of a compromise to entice business groups to back the idea. pic.twitter.com/jFiYQLHbfZ
— Mark Maxwell (@WCIA3Mark) December 10, 2018
posted by Rich Miller
Monday, Dec 10, 18 @ 9:10 am
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California and New York have done it regionally and gradually. That along with a tax credit could get agreement.Also it is pretty much ten in small town downstate now.Throw in some tinkering with workmanship comp. Isn’t Madiganbsupposed to be good at this.
Comment by Not a Billionaire Monday, Dec 10, 18 @ 9:16 am
–The Pritzker folks say they want to negotiate with all stakeholders on numerous issues, with the minimum wage being just one of them.–
What a concept, seeking incremental, predictable change through negotiation.
After my-way-or-the-highway, navel-gazing egomaniacs like Blago and Rauner, that simple change in tenor would be a welcome foundation to the new administration.
Comment by wordslinger Monday, Dec 10, 18 @ 9:20 am
I support the idea of a gradual minimum wage raise. However, I would like to point out that this will impact nonprofits who aren’t helped by a tax credit. I would like to see how small to medium nonprofits can be helped too.
Comment by Just Me Monday, Dec 10, 18 @ 9:27 am
Tying a tax credit to help offset a higher minimum wage for small business to timely filing and reporting of withholding and unemployment could be a brilliant move forcing folks to end employee classification fraud and preventing folks paying cash under the table if they want to participate in the credit.
The credit will need to be structured with a gradual phase out, though.
Comment by Anon Monday, Dec 10, 18 @ 9:28 am
=== And now… we run away? ===
It’s not running away when you work with people who are major players in making life better for everyone. It’s not like waving a magic wand and all things will be nirvana.
God save us from extremists on the right and left.
Comment by Norseman Monday, Dec 10, 18 @ 9:33 am
Guzzardi: How are you going to pay for it all? Please tell me it’s not the tired “tax the wealthy” line. Where do these businesses come up with this money? Small businesses have incredibly tight profit margins.
Liberals only think short-term. They never think about the long-term consequences of their shiny ideas.
Comment by Just Me 2 Monday, Dec 10, 18 @ 9:40 am
non profits funded through the state will require an increase in their agency payments to comply.
Comment by retired guy Monday, Dec 10, 18 @ 9:41 am
I would suggest tying the minimum wage hike to one of the economic growth measures. If we hike the minimum wage and there is an economic downturn, it would be a two-edged sword for a small business. But wages do need to keep up with inflation so that workers can earn a living wage. Instead of setting an upper limit that will be gradually eroded, an inflation rate based minimum wage would help smooth out wage increases for both businesses and employees.
Comment by A Jack Monday, Dec 10, 18 @ 9:44 am
Is there any way to tie wage increases to employment numbers? If increases could be halted or lessened in the case of an economic downturn, it could take some wind out of the “unemployment will spike” argument.
Comment by Anonymous Monday, Dec 10, 18 @ 9:45 am
If the minimum wage increase is such a great thing and wouldn’t effect small business: why have tax credits? Tax credits are expensive. Why go to $15 in a gradual way? Also, why not raise it to $20 an hour ? A lot of families couldn’t get by on $15 and hour.
Comment by Steve Monday, Dec 10, 18 @ 9:47 am
What does it say about us that we need to incentive paying people a decent wage?
Comment by Anon E Moose Monday, Dec 10, 18 @ 9:49 am
If the credit is against withholding taxes a business would otherwise have to pay over to the state then it will be fair to all small business and non-profits.
Comment by Anon Monday, Dec 10, 18 @ 9:50 am
I’ve “evolved” on this issue lately.
I used to be rabid
15 and Union
Now I’ve got a kid who is working for minimum wage
teaching at a small studio.
15 an hour would pump more money into the local economy. My kids spends it the second she gets it.
At the same time
I’m not sure she would be employed
if it weren’t for the current minimum wage.
And I’m not sure tax credits
are gonna work in her employers situation.
But in general wages must go up.
I see so many older folks working at Walmart
Bagging at the grocery store.
Cashier at the gas station.
And give me that free market crap
I’m done with the voodoo economics
Comment by Honeybear Monday, Dec 10, 18 @ 9:55 am
Missouri voters approved a $12 minimum wage by 2023 so this sort of deal could make Illinois quite regionally attractive to small businesses.
Comment by Not a Billionaire Monday, Dec 10, 18 @ 9:57 am
===such a great thing and wouldn’t effect small business: why have tax credits?===
You can’t possibly be that stupid.
Comment by Rich Miller Monday, Dec 10, 18 @ 10:06 am
Same tired arguments from Steve. SOME have been crying about wages since wages came into existence. Enough of this tripe.
To the point:I think JB is on a very good path with this. This is the right way to go about implementation.
Comment by Anonymous Monday, Dec 10, 18 @ 10:11 am
Rich:
We hear with enormous conviction that the minimum wage is a good thing or great thing. Why does it need a subsidy ? It’s confusing for those of us who believe the demand for labor is a downward sloping curve and wages are generally based on marginal productivity.
Comment by Steve Monday, Dec 10, 18 @ 10:11 am
I posted in the last $15 Min Wage thread that an Earned Income Tax Credit solve a lot of these issues. It still will. More money to those making minimum wage, without affecting small businesses.
Two birds, one stone.
Comment by ChrisB Monday, Dec 10, 18 @ 10:14 am
I can see a negotiation here for a deal. Maybe the minimum wage is a little smaller with an increase in the earned income tax credit. I would try to give small businesses some reduced costs in UI and Workers Comp costs instead of a tax credit, but maybe they will find something creative. I think they also need to recognize the difference between Chicago and downstate. That differentiation is growing and the politicians from Chicago need to do a better job understanding the downstate perspective, while the downstate folks need to do a better job of understanding the Chicago perspective.
Either way, a minimum wage is just that, we should have a greater focus (and spending) on educating workers to have skills that are in demand and earn more. The state’s neglect of our community college system is darn near an atrocity.
Comment by Anonymous Monday, Dec 10, 18 @ 10:16 am
There was a great tax credit for small businesses that was implemented post 2008 recession that gave employers under 50 employees $2,500 for each new job created. It protected against employers changing job titles or shuffling employees around to qualify for it as well. This is a good program to look at bringing back to the table. It was a modest $50 million for the program. And ideally that would break down to 20,000 new jobs if all the tax credits were claimed.
As for paying for it, how about we cap EDGE and allocate some of that money for a small business tax credit? There is also a estimated $200 million for the collection of tax on out state vendors in the budget.
Comment by peteypablo Monday, Dec 10, 18 @ 10:16 am
People elected us because we said we’d make their lives better,” Guzzardi wrote. “Raise their wages, provide decent benefits, make college and healthcare more affordable, etc. We ran on this. We won. And now… we run away? If so, why vote for us at all?”
Nice to see Representative Guzzardi is backing off “free college” and “free healthcare” to making it more affordable.
The double whammy of proposing record tax increases on their successful small business employers and almost doubling the minimum wage will create, as Ross Perot said a giant sucking sound of jobs leaving the state.
The costs are much higher than projected. Will the wages of those currently making $15 as well have to go up 80% so they aren’t making the same as a brand new hire?
Comment by Lucky Pierre Monday, Dec 10, 18 @ 10:18 am
Tax credits are nice if. If your making a profit. Somehow, we need to coordinate real savings through a combination of property tax reductions and income tax. If possible.
Comment by Blue Dog Dem Monday, Dec 10, 18 @ 10:22 am
Steve, ignoring your snark, it is a great thing, for low wage employees. Right now businesses are content to let their employees suffer just the right amount to keep them in line, as long as they make their profit. Business leaders want to line their pockets so much they don’t mind hurting everyone else. Changing that equation can easily cause chaos and or pain, depending on how the leaders and the economy react. It is a blatant form of wealth redistribution, which I for one think it a good thing.
If you want to get leaders in on this, if you don’t want them to throw fits and take drastic action to defend their own wallets, you have to throw them a bone, one example being tax cuts.
Greed is the only thing they understand. You can’t even really blame them, our society enshrines and worships greed. Yeah, I’m pretty cynical about this, but no one’s proved me wrong yet.
Comment by Perrid Monday, Dec 10, 18 @ 10:39 am
>IRMA’s president and CEO. Karr came away impressed, believing that, while Pritzker has some very liberal goals, he will negotiate in good faith on ways of reaching those goals
I’m less interested in the specifics of the minimum wage issue than the process of negotiating and governing. I hope that Karr’s optimism is warranted. Having plenty of voices contributing to the way the state is governed takes some work but makes for well-considered decisions. There wills still be plenty of things left over which people can remain polarized.
Comment by Earnest Monday, Dec 10, 18 @ 10:41 am
The SBA claims that 30% of small businesses fail in the first two years. 66% in the first 10 years. Its tough out there folks.
Comment by Blue Dog Dem Monday, Dec 10, 18 @ 10:43 am
I am not generally in favor of wage and price controls; either minimums or maximums. They often spawn other regulations to offset the economic effects on certain political groups. The net effect is to add bureaucratic overhead and change market outcomes.
The minimum wage generally has little effect in much of the state. Here in Naperville, it could be easily absorbed. Not so sure about my friends in Paxton.
At least tie it to mandatory use of e-verify, then it helps our citizens.
Comment by Last Bull Moose Monday, Dec 10, 18 @ 10:54 am
Im totally on board with this plan. I have championed this very same idea for years. I just cant understand why we think so little our laborers. Time to get back to a healthy economy where everyone has a chance.
Comment by Generic Drone Monday, Dec 10, 18 @ 11:01 am
–Many businesses aren’t going to hire someone with no work experience and lacking a high school diploma for $15 an hour.–
Not a big market for those workers to begin with.
But let’s play with your Strawman for a bit. If those workers are all a business can get to operate, they will.
You might have to pay another quarter for your Happy Meal.
http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-minimum-wage/
Comment by wordslinger Monday, Dec 10, 18 @ 11:08 am
The competitive effect on businesses that compete locally may be small. The local McDonalds and Burger King will face similar cost pressures and may be able to increase prices to offset the higher costs.
The problem is with the company with competitors who can pay lower wages. This could push some companies out of low wage operations in low cost parts of the state.
Comment by Last Bull Moose Monday, Dec 10, 18 @ 11:25 am
=But let’s play with your Strawman for a bit. If those workers are all a business can get to operate, they will.
You might have to pay another quarter for your Happy Meal. ==
Or you might be dealing with a kiosk rather than a human being behind a counter. Or pumping your own gas and cleaning your own windshield.
Paying someone more than their labor is actually worth is welfare and making the employer do it is a job killer. Giving the employer a credit addresses both of these problems.
Comment by Whatever Monday, Dec 10, 18 @ 11:29 am
===Or pumping your own gas and cleaning your own windshield===
Are you a cloistered billionaire or something? We’ve been pumping our own gas and cleaning our own windshields in this state for decades.
Comment by Rich Miller Monday, Dec 10, 18 @ 11:31 am
–Or you might be dealing with a kiosk rather than a human being behind a counter. Or pumping your own gas and cleaning your own windshield.–
Dude, Rip Van Winkle wasn’t asleep as long as you’ve been.
And it wasn’t the minimum wage that killed the full-service gas station, it was legalized self-service and the chain tire and oil change joints.
The old station I worked at in high school and college converted the old service bays into retail, selling high-margin pop, chips, candy, etc.
Comment by wordslinger Monday, Dec 10, 18 @ 11:54 am
I find the discussion very interesting and also very revealing. Many complain about paying a livable wage to workers yet ignore corporate heads who make tens of millions of dollars for what is in most cases a minimal contribution to the overall enterprise. Look at where CEO salaries have gone in the last thirty years vs the minimum wage. There seems to be an element we are ignoring…….equity.
Comment by Old and In The Way Monday, Dec 10, 18 @ 11:59 am
From my experience small business, while not immune, is far more equitable. Two very different realities for the minimum wage earner, corporate vs small business or sole proprietor.
Comment by Old and In The Way Monday, Dec 10, 18 @ 12:02 pm
===Or you might be dealing with a kiosk rather than a human being behind a counter. Or pumping your own gas and cleaning your own windshield.===
You actually know of gas stations that have attendants pump the gas? Those still exist?
Kiosks/self-service checkout is so unpopular, a MacDonald’s near me has kiosks but never uses them.
Also, low-paid workers in fast food and retail often have to apply for public assistance to make ends meet. That, my friend, is big corporations mooching off you and me and everyone else so they can steal just wages from their employees.
Comment by Nick Name Monday, Dec 10, 18 @ 12:04 pm
These arguments from the anti-people and anti-worker crowd have been parroted for millenia and they have been wrong EVERY time.
Where are the real life arguments against a minimum wage increase? You just see a lot of nostalgia from that side.
Comment by Anonymous Monday, Dec 10, 18 @ 12:08 pm
I can’t believe this argument is still being had. Other states have done it, and there was no sucking sound of jobs leaving. Stop with the red herrings and just get it done. These companies have gotten away with ripping off their employees long enough.
Comment by BJenn Monday, Dec 10, 18 @ 12:09 pm
@Whatever, kiosks for fast food are happening, period. It’ll happen at any wage level. The minimum wage has not even come close to keeping up with inflation, but every company cries about rising labor costs.
McDonald’s CEO is peddling some BS that the employees would transition to something like waiters, so there would be no layoffs, but everyone knows that’s a crock.
Comment by Perrid Monday, Dec 10, 18 @ 12:17 pm
Many of the people who support giving a trillion dollar or more tax cut (over time) to the richest corporations are those who are against paying a higher minimum wage. These people fret over the lowest-paid workers getting a raise but have no concern at all about the harm caused by so much money going to those who’ve been having tremendous gains.
Comment by Grandson of Man Monday, Dec 10, 18 @ 12:25 pm
Pritzker should tell Karr to go pound sand. Raising minimum wage has an important secondary benefit, reducing the number of people who qualify for public assistance. Right now, we taxpayers are paying to provide assistance to low-paid workers in multiple sectors including food service, hospitality and yes, retail. If you want to do something about “welfare” instead of just complaining, ignore IRMA and support a higher minimum wage. Many corporations actually provide instructions to their employees on how to seek public assistance:
https://www.bloomberg.com/opinion/articles/2013-11-13/how-mcdonald-s-and-wal-mart-became-welfare-queens
Comment by Lester Holt’s Mustache Monday, Dec 10, 18 @ 12:51 pm
“Business” is not an undifferentiated entity, and certainly not the automatic enemy of progressives. In fact, many small businesses and their owners are significant victims of the concentration of wealth and power over the recent decades in our country. Tax breaks for small businesses are qualitatively unlike those for large corporations.
Comment by walker Monday, Dec 10, 18 @ 1:05 pm
===Pritzker should tell Karr to go pound sand===
Yes, because that “my way or the highway” gubernatorial attitude has worked so well for the last three incumbents.
Take a breath.
Comment by Rich Miller Monday, Dec 10, 18 @ 1:22 pm
Tax credits always sound like a great idea. Which is why we have so many of them on the books already, each one more complicated than the last.
Comment by notsosure Monday, Dec 10, 18 @ 1:38 pm
To the update. The key word here is, “eventually”.
Comment by Blue Dog Dem Monday, Dec 10, 18 @ 1:45 pm
“Eventually”. I can deal with that. An initial increase to $11 an hour, then $12 by 2020, then 15 by 2022 will be ideal. We must keep up with inflation.
Comment by BJen Monday, Dec 10, 18 @ 1:53 pm
2 points. 1.I’s like to see a tax break swap. Perhaps using EDGE program funds to offset costs.
2nd. If pot is legalized, let many small business have liscenses. This could boost many communities bottom line and possibly minority communities could benefit as well.
Comment by Generic Drone Monday, Dec 10, 18 @ 3:40 pm
Pritzker received a strong mandate in this election and he needs to stick to his campaign promises. I can’t imagine that he would have any issues pushing this through the general assembly. I don’t expect GOP legislators to support it (nor do they need GOP support).
Illinois businesses will need to prepare accordingly. It will be interesting to see how the business climate and economy is impacted by the minimum wage hike.
Comment by JakeCP Monday, Dec 10, 18 @ 4:01 pm
JakeCP, what makes you think he isn’t sticking to his promises? He said he’s pushing for a minimum wage increase. We are now in the weeds of the details, how and when.
Comment by Perrid Monday, Dec 10, 18 @ 4:08 pm
==Yes, because that “my way or the highway” gubernatorial attitude==
Not saying a “my way or the highway” attitude is needed, only that Pritzker be aware that anything comes out of Karr’s mouth is going to be severely slanted against the people who voted for Pritzker. It is Karr’s job to keep the retail corporations that he represents from spending money on anything other than CEO bonuses and stock buybacks, and making sure they can keep taxpayers on the hook for providing “welfare” to their employees is a big part of that. Pritzker should know this, coming from a family of hoteliers that pulls this same stunt, but he says he has no part in the day to day operations of the family business so maybe he needs it explained to him. Easier if he ignores Karr and the rest of the lobbyists, does what he thinks is right.
Comment by Lester Holt’s Mustache Monday, Dec 10, 18 @ 4:08 pm
===Easier if he ignores Karr and the rest of the lobbyists===
Since when is that ever easy?
Did you just fall off a turnip truck? The idea is to get something passed with a hard goal of $15 per hour.
Comment by Rich Miller Monday, Dec 10, 18 @ 4:39 pm
Classic. Good politics. If you scare the bejeezus out of some with the $15/ hr carrot, and graduate to $12 or so, you call it a win and move on. Bravo.
Comment by Blue Dog Dem Monday, Dec 10, 18 @ 5:12 pm
@Blue Dog
The goal is to get it to $15, not negotiate by making completely unrealistic demands so that you get 3/4 of the loaf when you meet in the middle.
That is how Rauner did things, and it did not work well.
My read is that Pritzker want to get it to $15 before 2022, and he does not mind tax credits to smooth the way and dampen resistance from small companies. It will be interesting to see how they manage that without creating a loophole for employees of the fast food giants.
It seems likely the steps will also coincide with the Chicago minimum wage hike.
Comment by Yellow Dog Democrat Monday, Dec 10, 18 @ 5:40 pm
YDD. Care to wager on where this settles?
Comment by Blue Dog Dem Monday, Dec 10, 18 @ 5:55 pm
A previous column mentioned about a day care provider and posted a link via chalkbeat
https://www.chalkbeat.org/posts/chicago/2018/11/20/view-from-the-child-care-trenches-those-of-us-cleaning-the-poop-are-not-making-it/
My question is what the plan is for those social service providers who via economic necessity pay less than $15 per hour now. Will state Medicaid rates and grant agreements / payments increase proportionately?
Comment by logic not emotion Tuesday, Dec 11, 18 @ 2:36 pm