CHICAGO – Describing it as an overdue pay raise for hard-working men and women, Gov. Rod R. Blagojevich today fulfilled a campaign pledge by signing a law boosting Illinois’ minimum wage by $1.35 an hour over the next 16 months.
Under terms of the legislation – Senate Bill 600 – the state’s minimum wage will rise in two installments starting Jan. 1, 2004, when persons 18 years of age and older will be paid an hourly rate of not less than $5.50 – up from the current $5.15 – and, beginning Jan. 1, 2005, $6.50 per hour. It has been estimated that the raise will directly benefit 450,000 Illinois workers or about 6 percent of the state’s workforce, half of whom earn the current minimum wage.
“When the minimum wage was established by President Roosevelt in 1938, it was about ensuring that working people could afford to support themselves and their families. Maybe you wouldn’t get rich, but you’d get by,” Blagojevich said in signing the minimum wage bill at Manny’s Coffee Shop & Deli in Chicago. “Today, Americans are still working a fair day, but many are no longer receiving fair pay.”
As the governor has repeatedly pointed out in advocating for higher wages, it is nearly impossible for a minimum wage earner to meet the basic family household expenses, such as putting food on the table, buying shoes for the children or paying rent and utility bills, on $10,712 a year – the current annual salary of a person working 40 hours a week, 52 weeks a year, at $5.15 an hour.
The current minimum wage annual salary represents only 55 percent of the 2002 federal poverty level for a family of four ($18,244) and also is shy of the threshold for a single parent with one child ($12,400). The increase to $6.50 an hour will result in a pre-tax gross income of $13,520, an additional $2,808.
According to an economic impact study completed in 2003 by the Center for Urban Economic Development of the University of Illinois at Chicago (UIC), The failure to adjust the minimum wage for inflation has allowed real hourly wages to steadily erode to a nearly all-time low level. Today’s minimum wage buys about a third less than it did a quarter century ago. If the minimum wage had kept pace with increased worker productivity, it would be nearly $14 an hour today.
While many believe the higher minimum wage mainly impacts student workers, nearly 70 percent are actually 20 years of age or older (average age is 31) and nearly one-third are heads of households.
Besides building more of an economic independence for the lowest wage earners, the UIC study also predicted the higher wages could trigger as much as $900 million in additional sales for Illinois businesses.
“Workers who are paid well are more loyal to their employers and more productive. And, because nearly half a million of our state’s workers will have more money in their pockets to spend, businesses will benefit from higher sales,” the governor said. “A better minimum wage is good for business, and it’s good for working families; it’s the right thing to do for our state.”
Illinois joins 11 other states and the District of Columbia that have a minimum wage higher than the federal standard, which has not been increased since 1997. The other states are Alaska, California, Connecticut, Delaware, Hawaii, Maine, Massachusetts, Oregon, Rhode Island, Vermont and Washington.
Senate Bill 600 was sponsored by state Sens. Kimberly Lightford, D-Maywood; Iris Martinez, D-Chicago; Carol Ronen, D-Chicago; Donne Trotter, D-Chicago; and Martin Sandoval, D-Chicago; and in the House by Speaker Michael Madigan, D-Chicago; state Reps. Barbara Flynn Currie, D-Chicago; William Davis, D-Hazel Crest; Edward Acevedo, D-Chicago; and Harry Osterman, D-Chicago.