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Fri March 28, 2014
A Slow Go for Illinois' Economy
An economist predicts raising the minimum wage would hurt already poor job growth in Illinois.
Illinois’ current minimum wage of $8.25 an hour is already a dollar more than the federal rate. Governor Pat Quinn wants to make it $10 an hour.
Senior Economist William Strauss with the Federal Reserve said that would likely cost Illinois jobs.
“You raise the price of anything and less of it gets consumed, whether it’s ice cream cones or whether it’s labor,” said Strauss. “So we’re going to see less activity in the job market and I worry about a time where we have such high employment rates especially among the young.”
The federal government is also considering increases to the minimum wage nationally from $7.25 to $10.10 an hour. The Congressional Budget Office estimates that increase could cost 500,000 workers their jobs.
Strauss says there are several other ways to help low-income families including government assistance programs. He says an across the board increase to minimum wage will instead benefit a majority of part-time and inexperienced workers.
Illinois already has the worst unemployment rate in the Midwest and the second highest in the nation.
Strauss said that’s largely due to Illinois budget deficit slowing economic and employment growth in the state. He calls Illinois’ fiscal position “the worst in the country.”
“Employment growth continues in Illinois,” said Strauss. “Although the pace of growth has been definitely on the slow side relative to the country as a whole. We are growing at the slowest pace in the region.”
Strauss says Iowa is also seeing slow employment growth, but for an entirely different reason. Iowa can’t get enough workers.
During the economic downturn in 2008, the U.S. lost 8.7 million jobs. The nation has been recovering them over the years and Strauss says we’re on track to gain the final 700,000 of the jobs lost by this summer.
That will put the U.S. at its peak level of employment, but Strauss said he won’t be celebrating.
“I’m going to be recognizing that there are millions of people that have been added to our workforce with all the people who have come of age and graduated from college between 2007 and today,” said Strauss. “Millions of people, who have entered the job force and we should have jobs for them.”
Strauss says the real indicator of recovery won’t come for another two and a half years when the country’s unemployment rate will drop to pre-recession levels in 2016.
Bill Knight – November 14