Well, it has started and is taking place quicker than even I imagined. Last week the Senate introduced and passed legislation increasing the state minimum wage to $15 from its current $8.25. The bill now sits in the House of Representatives, where it will be called by Speaker Madigan and inevitably passed by the Democrat super majority. The goal is to have it done before Governor Prtizker gives his budget address later this month so he has something to tout as an accomplishment.
And what an accomplishment!
Through this one piece of legislation Pritzker and the Democrat super majority will wipe out a number of small businesses in Illinois and keep businesses from wanting to locate in Illinois. I can tell you that I have been running the numbers as it relates to the O’Fallon Weekly and its not been pretty.
Currently, I have two employees and the following math is based on just those two employees. Neither are paid the minimum wage, but they’re not making much above it.
Beginning in January 2020, minimum wage increases $1 to $9.25. Then on July 1, 2020, it increases to $10. This is a $1.75 increase in one year.
From there, the rate increases $1 per year until 2025 when it finally maxes out at $15 per hour.
The first year doesn’t kill the Weekly. Under this structure, it will cost me an additional $1,300 in wages.
NOTE: None of this math takes into account increased payroll taxes. That’s something I need to speak with my accountant about.
Year two, when the rate goes to $11 per hour is when things get fun. That’s when I now need to find an additional $3,494 to cover my two employees versus today. Mind you, this means I can have no staff growth or find a way to pay myself anything yet.
By year three, my payroll expenses for two employees has jumped by $6,874.
Year four adds $10,254 to my bottom line expenses.
Year five will bring me an increase of $13,634.
Finally, by year six, 2025, my payroll will have increased by $17,014. I essentially need to find the cash in my current, meager budget to pay for another part time employee. Mind you, I can’t actually go and HIRE another part time employee. I just have to find money that I would have used to do so and give it to my current employees.
This doesn’t account for any other extra increased costs for goods that can be attributed to the need for my vendors to make more money so they can pay higher wages as well. This math is strictly payroll, and to think there won’t be other increases to be dealt with is utter ignorance.
The simple fact is that my budget cannot withstand this cash grab. Cash grab? Yup. This is a tax increase in disguise.
Think about it… who wins when wages go up? The worker? NO! Prices of goods will increase accordingly to accommodate the inflated salaries and wages.
The only people who win when the minimum wage increases are the unions and the state government. Many unions base their wages or cost of living increases in contracts as a percentage above minimum wage.
And the state government? Oh, they’re going to rake in so many more payroll tax dollars. And don’t think for a second you won’t see a corresponding income tax increase to go along with this wage increase. Pritzker already has been setting the table for that announcing that the budget deficit is higher than former-Governor Rauner reported. They’re itching to take hold of those newly increased wages they’ve so generously given you.
So what can be done? At this point, I fear very little. It’s pretty obvious this is going to pass and we’ll have to deal with it. I now have to figure out how to squeeze more blood out of a rock in order to keep what I’ve got and maybe someday expand. And maybe even one day pay myself what will probably amount to less than minimum wage, but I’m just a big greedy business owner.