Illinois Governor Signs Bill To Increase State Minimum Wage To $15 By 2025

Low-wage workers in Illinois have something to celebrate this year: a pay increase. Illinois Governor J.B. Pritzker has signed a bill that will raise the state’s minimum wage to $15 an hour by 2025. “Today is a victory for the cause of economic justice,” Pritzker said in a press conference at the Governor’s Mansion on Tuesday, February 19, 2019.

Illinois Raises Minimum Wage To $15 By 2025

Now entering his second month as the Governor of Illinois, Pritzker is delivering on one of his main campaign promises. He was flanked by advocates from the Fight For $15 campaign at the bill signing ceremony, along with Illinois Senate Majority Leader Kimberly Lightford, a Democrat who has been proposing minimum wage increases for years.

“I’m so grateful that I’ve been able to just stay the course,” Lightford told The Southern Illinoisan, adding that Pritzker had accomplished in just “30 days” what she had been attempting to get done over the course of 10 long years. Minimum wage increases have been opposed at every turn by Illinois’ Republican establishment. A 2017 bill that Lightford sent to former Republican Governor Bruce Rauner would have ramped the minimum wage to $15 by 2022, but was vetoed on the Governor’s desk.

Illinois Joins Select Group Of States

In signing the bill, Governor Pritzker launches Illinois into rarefied territory, as the state becomes one of the first to commit to a minimum wage of $15. Illinois now joins California, Massachusetts, New Jersey, New York and Washington, D.C., which have all passed proposals to raise the minimum wage to that level over the course of several years.

California is set to hit $15 in 2022, with Massachusetts coming in at the new rate in 2023 and New Jersey in 2024. New York is set to increase its own minimum wage gradually over several years in a calculation tied to the rate of inflation.

How Minimum Wage Increase Will Work

Estimates suggest that around 1.4 million residents of Illinois will benefit from the bill’s passage, seeing their wages rise from the current minimum of $8.25 to $9.25 on January 1, 2010. The minimum wage will further increase to $10 in July of 2020, then increase by $1 every year until reaching $15 in 2025.

Republicans Strike Out Against Wage Increases

Governor Pritzker and Senate Majority Leader Lightford say the new bill is a compromise between the interests of business and labor, but Republican members of the State Assembly are already blasting the measure. “This is only the beginning of J.B. Pritzker’s war on taxpayers and small business,” said Illinois Republican Party Chairman Tim Schneider. “Nearly doubling the minimum wage will destroy entry-level jobs, raise prices for consumers, and bust budgets at every level of government.”

Illinois House Minority Leader Jim Durkin offered a similarly-dire warning, saying, “it’s very disappointing that a major issue of this type, which is one of the biggest policy decisions we’ll have made in some time – that it’s going to have an impact on every business small and large, every public institution, every nonprofit – that there is absolutely no desire to negotiate with Republicans. The consequences, short-term and long-term, are going to be very, very devastating upon the state of Illinois.”

Speaking to the Daily Northwestern, Nina Barrett, owner of Bookends and Beginnings, a small bookstore in Evanston, said she supports a living wage, but stressed the financial difficulties legislation of this sort poses for small business owners.

New Tax Credit Could Ease Burden On Small Business

For Barrett and many other small business owners, an important part of the bill comes in the form of new tax credits to ease the financial burden of higher wages – tax breaks often afforded only to “juggernaut, monopoly” corporations such as Amazon. Under the new law, businesses with 50 or fewer employees will be able to claim a tax credit for 25% of the new bill’s cost, but the tax break will phase out over the course of several years, decreasing by 4% each year and leveling out at 5% for two years. The tax credit will be extended another two years for businesses with five or fewer full-time equivalent employees.

Bookstore Owner Hopes Bill Won’t Squeeze Small Business

Barrett continued to say that, while Bookends and Beginnings won’t have much trouble in transitioning to a higher minimum wage, other small businesses may suffer. She pointed out that many small businesses are already being squeezed out by “juggernaut” online retailers like Amazon, even as rents in Evanston and Chicago continue to rise. Barrett expressed “hope” that the new minimum wage law won’t force small businesses to shut their doors.

“We all agree, I think, that people should be paid living wages,” she said. “You just have to be careful of the unintended consequences of legislating things that are a good idea, but they’re not a good idea if you haven’t figured out the details of how everyone is supposed to get there.”

Some other business owners in Illinois have taken a favorable view of the new bill. “Raising the minimum wage to $15 is pro-business,” says David Borris, owner of Hel’s Kitchen Catering in Northbrook. “Local small businesses have a deeply personal interest in the financial health of the communities we do business in. The wellbeing of our customer base and our workforce shows in our bottom line. A healthy economy needs money circulating widely in a virtuous cycle of rising wages, consumer demand and job creation.”

Bill Represents “Compromise,” Restaurant Association Says

Business interests are likewise split on the bill’s impact. While the Illinois Retail Merchants Association and the Illinois Manufacturers’ Association have criticized the bill’s fast-track path to a signing, other business organizations have characterized the new law as a “compromise.”

One such voice is raised by Sam Toia, President of the Illinois Restaurant Association, which represents employers with about 577,000 employees. “The legislation signed by the governor today is a reasonable, balanced approach that takes into account many of the concerns of the restaurant industry,” Toia says. “This was a compromise. I rebut anyone that says this wasn’t a compromise.”

Illinois Law Preserves Tip Credit, Introduces Training Wage

In particular, Toia lauded the bill for preserving a tip credit that allows employers to pay tipped workers a reduced wage (equal to 60% of the minimum wage) if hourly tips make up the difference. A new training wage for teenage workers is also being introduced, which will allow employers to pay between 50 cents and $2 less than the minimum wage over the bill’s six-year rollout. Workers under 18 years of wage who work fewer than 650 hours in a calendar year will be eligible for the reduced wage.