Saturday, February 07, 2004

Time for the rest of the Midwest to raise the state minimum wage

Illinois has a higher state minimum wage than the rest of the Midwest. Check out this chart from the Department of Labor. (And thanks to Sam Smith of the Progressive Review for the pointer).

Now that the Illinois minimum wage will be $6.50 as of January 1, 2005 (and it is around $6 as of 1/1/04), while the federal minimum wage is stuck at $5.15 an hour, the other Midwest states have every opportunity to raise their state wages. One policy argument against a state raising the minimum wage is that the low-paid jobs will then move to other states (at least, those that can be moved). A gas station on the border might close up shop in Illinois and open up in Indiana. Or a fast food place.

But the race-to-the-bottom can't happen if the border states follow the lead of the high-wage leader. So now Indiana, Wisconsin, Iowa, Kentucky -- these states can follow the lead of Illinois and raise their minimum wage to match Illinois without fear of losing jobs on to Illinois. They might have to watch the other side of the state (Indiana needs to worry about Ohio's lower minimum wage; Wisconsin needs to worry about Michigan), but then of course the same argument applies. Ohio and Michigan can then raise their wages. And then everyone's better off.

Plus, with more puchasing power, the economy is better off, since low-wage people have more money to spend. I hope Illinois can continue to lead and that other Midwestern states begin to follow.

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