ROCKFORD (WREX) — On Jan. 1, 2020, Illinois will raise the minimum wage for the first time since 2010. The goal is to eventually raise the minimum wage to $15 an hour by 2025.
Here is a chart from the Illinois Department of Labor that shows how the state plans to gradually phase the increases in over the next five years:
But with those increases, the question for economists and business owners becomes, how will this impact local economies?
13 WREX spoke to Matt Idzikowski, who owns three restaurants in Rockford: Vintage @ 501, Blue Line Sports Pub and Omakase. With minimum wage going up, Idzikowski and other small business owners know that prices will need to go up as the cost to pay employees also increases.
"[You're going to see] everyone raise prices because they'll have to offset their new costs," Idzikowski explains.
In addition, the tipped wage also increase to $5.55. Like the minimum wage, it will also increase, going as high as $9.00 by 2025. But Idzikowski doesn't believe the increase to the tipped wage will have a big impact on his businesses.
"It helps increase our labor costs, however, I don't think that will be the big blow that some people think it's going to be," Idzikowski says.
According to Rockford University Associate Professor of Economics Bob Evans, this is the perfect time to raise the minimum wage.
"If you're going to do it, the time to do it is when the unemployment rate is low," Evans explains.
The last unemployment numbers were released in October and showed Illinois at 3.9 percent, the lowest in the state's history, according to the Illinois Department of Employment Security.
"There are workers who are in-demand right now," Evans says. "In other words, employers are seeking workers. They [employers] would be likely to pay a higher wage."
There's also a provision in the new minimum wage structure that applies to workers under 18 year of age. New workers can be paid under the minimum wage because, as Evans explains, younger workers possess fewer skills. This way, employers have the opportunity to determine their worth and see their work ethic before making a more substantial financial commitment to them.
"That's to make it attractive to hire them, [even] when they're tentatively dis-hirable to hire for the employer," Evans explains.
Evans describes raising the minimum wage as a "test" to see how it impacts Illinois' fragile economy. He says if we were to see negative effects of the new minimum wage increase, problems at smaller businesses would arise as the first sign because those businesses tend to operate closer to the bottom-line.
Nonetheless, the minimum wage test is one economists like Evans are intrigued to see the outcome of in the years to come.