Illinois minimum wage increase benefits women, households, local economy and businesses         

Jan. 1 increase to $6.50 an hour benefits nearly half a million Illinois workers

[JAN. 4, 2005]  CHICAGO -- Gov. Rod Blagojevich was joined Monday by workers, lawmakers and low-income family advocates in celebrating the final phase-in of the minimum wage increase he signed into law in 2003. The new wage of $6.50 an hour that went into full effect on Jan. 1 benefits an estimated 450,000 Illinois workers -- or about 6 percent of the state's work force -- who were making $5.15 an hour before the new law was signed.

The original legislation, Senate Bill 600, raised the state's minimum wage in two phases. On Jan. 1, 2004, the rate went from the federally mandated minimal level of $5.15 an hour up to $5.50; on Jan. 1, 2005, the rate increased again to $6.50 an hour.

"For so many working families living on the brink of poverty, this wage increase provides a much-deserved boost toward financial independence," said Blagojevich. "The new, higher wage will mean an additional $2,800 a year for a full-time worker, meaning more money to pay bills, feed their families and try to save for the future."

The governor pointed out that -- contrary to popular belief -- most minimum wage earners are not teenagers, but adults over age 20. In fact, the average minimum wage earner is 31 years old and female, and nearly one-third are heads of households.

Prior to the increase, a full-time minimum wage earner made only $10,712 a year working 40 hours a week, 52 weeks a year. That's well below the 2004 poverty level of $12,500 for a two-person household. With the full increase in place, a full-time worker earning the minimum wage will earn $13,520 annually.

Gov. Blagojevich pushed for a hike in the minimum wage in light of research showing a significant erosion in the value of the wage since it was first enacted. The federal minimum wage of $5.15 an hour buys about a third less than it did a quarter century ago, according to a study completed in 2003 by the Center for Urban Economic Development of the University of Illinois at Chicago.

Illinois' new, higher minimum wage is expected to benefit businesses as well as workers. Low-income workers are more likely to spend their wages locally than any other group of workers. A recent study suggests that the higher minimum wage will increase business sales in Illinois by more than $900 million, and by more than $1.2 billion when workers earning near the minimum wage are taken into account.

"With this wage increase, workers will have more money to spend," the governor said. "That puts money back into the local economy, and businesses will ultimately benefit from higher sales. In addition, workers who are compensated well tend to be more productive and loyal to their employers. A better minimum wage is good for working families and businesses alike."

"This minimum wage raise comes as excellent news for hardworking men and women who are struggling to make ends meet," said Beatrice Jackson, president of the Illinois chapter of the Association of Community Organizations for Reform Now. "On behalf of ACORN, I want to thank Governor Blagojevich and our state legislature for their leadership and determination to improve the lives of hundreds of thousands of Illinoisans."

Illinois is among 14 states that have passed minimum wages higher than the federal standard of $5.15 an hour, which has not been increased since 1997. The other states are Alaska, California, Connecticut, Delaware, Florida, Hawaii, Maine, Massachusetts, New York, Oregon, Rhode Island, Vermont and Washington.

[News release from the governor's office]