I have heard some interesting responses to the Illinois Minimum Wage Increase Question that was on the November 4, 2014 ballot as an advisory question.
This was basically a non binding referendum which was approved. The measure asked voters whether they supported increasing the hourly minimum wage to $10 by January 1, 2015. Currently the state’s minimum wage is $8.25 per hour.
People who have not made the minimum rate for decades were exclaiming that this is a great thing for those who earn the minimum wage. But, these people also have no idea what is required to run a small business and the risks that are involved in raising the minimum wage.
With some businesses, they will cut jobs because the profit margin is that small or tight. Others will not hire that next employee because they just don’t feel they can afford the increase, as well as all of the other fees that go up along with the salary.
In most cases, an increase in the minimum wage also increases the worker’s compensation insurance premiums. These go up with every salary increase. There may also be increases in state unemployment payments, if they are part time and have not passed the threshold yet. There is also the employer’s portion of FICA that needs to be covered.
So that non-binding vote of $1.75 per hour will cost the employer much more than that rate.
I personally believe that employees should earn what they are worth, for my business I have never paid anyone in my office the minimum wage; even my son who cleans the office.
But I am amazed when people do not realize that if they don’t do their job properly there may not be the money to pay their wages, either.