6.0% Unemployment in Illinois
According to Illinois Department of Employment Security the unemployment rate is 6.0% in Illinois while the national unemployment rate is at 5.4%. To see the national statistics go to the Bureau of Labor Statistics.
Why is Illinois lagging behind in the job growth that produced more than 2 million jobs in 2004? There are several reasons, but the most obvious lead to Blago. His way of solving the budget crisis is not to truly cut spending, so he has to raise revenues. He has done this on the backs of businesses instead of the tax payers because he wants to be re-elected Governor in 2006. Here are some examples:
These are just a sample. Go to the Committee for Legislative Action to see all 300 for Fiscal Year 2005. These increases in fees, which are mostly on business, will continue this negative affect on our economy. Fees on business make it harder for them to hire more employees and grow their business. Truckers are getting hit very hard with the doubling of their tolls and tripling during rush hour. Those costs get passed on to other businesses and eventually on to us comsumers. The real effect though is it stunts the growth of jobs.
The minimum wage in Illinois was also increased to $6.50 an hour. To most people this sounds like a good thing. To businesses, it is not. It increases their labor costs for those making minimun wage. It also increases their cost for other workers that were above minimum wage, but now are not. They must also get a raise. That raise will most likely be only up to minimum wage and not to the amount above that they were making. This reduces their incentive to work harder. Also, those above the new minimum wage will also want an increase as well. If not, they also lose incentive or will leave for a better prospect. This leaves the business owner having to train someone new. Replacing workers is an expense for business owners. Now that the current employees are better compensated, how is the employer going to create more jobs? He most likely can’t at this point. An option also used by some businesses at this point is to fire all the higher paid employees and hire new minimum wage workers offsetting some of the new costs. This does happen. My wife saw this happen in a major retailer the last time minimum wages were increased.
The property tax bill was mainly for Cook County, but other counties could opt in as well. It capped the increase of property values for home owners. What is not said is that it moved those costs to seniors and businesses.
The last point is the passing of bill SB3186. Having a new protected right for homosexuals will cause more lawsuits. This also increases the cost of business. They will be more reluctant to hire because of these costs.
Why are lawmakers and Blago doing this? They are looking at the short term and their political careers. They are trying to sqeeze as much money out of businesses as possibile so they can do what they want to make themselves look good to the majority of voters. They are not looking at the long run. They forget, that creating more jobs is better for all of us in the long run. It makes more productive citizens and will increase tax revenues.
6 Comments
RSS feed for comments on this post.
Leave a comment
Sorry, the comment form is closed at this time.
“The minimum wage in Illinois was also increased to $6.50 an hour. To most people this sounds like a good thing. To businesses, it is not.”
And neither are minimum safety standards, 40 hour work weeks, child labor laws, etc.
“It increases their labor costs for those making minimum wage. It also increases their cost for other workers that were above minimum wage, but now are not. They must also get a raise. That raise will most likely be only up to minimum wage and not to the amount above that they were making. This reduces their incentive to work harder.”
So we should pay workers less so that they will work harder.
“Also, those above the new minimum wage will also want an increase as well. If not, they also lose incentive or will leave for a better prospect. This leaves the business owner having to train someone new.”
So we should keep the minimum wage suppressed so that employees won’t leave their jobs… because the owner would have to spend money to train new employees. That must be a substantial expense if it is being used to justify keeping down wages.
“Now that the current employees are better compensated, how is the employer going to create more jobs? He most likely canÂ’t at this point. An option also used by some businesses at this point is to fire all the higher paid employees and hire new minimum wage workers offsetting some of the new costs. This does happen.”
So let me understand — the cost of training new employees is so high that an employer cannot bear it when an employee leaves a job for greener pastures. But the cost is also so low that an employer would fire employees who make more than the new minimum wage and train a new ones rather in order to offset the increase in the minimum wage.
Which is it? Is the cost of training minimum wage workers so intolerably high that it must be minimized or is it low enough that employers will do it at the drop of a hat?
Or is it just that the minimum wage must be suppressed at all costs?
Comment by So-Called "Austin Mayor" — 1/15/2005 @ 8:15 pm
“And neither are minimum safety standards, 40 hour work weeks, child labor laws, etc.”
I’m not advocating removing all standards. I’m just saying that when you are trying to recover from a recession, it is not wise to do things to slow the growth of new jobs that is needed.
“So we should pay workers less so that they will work harder.”
Miniumum wage is for entry level employees. It is not a place they or the employer should want them to stay. As they become more productive, they get salary increases. The company benefits and the employee benefits. The point I was making is that for the employess that have started to increase their salaries may be relegated back to minimum wage workers again. This is a disincentive.
Training new employees is dependent on the type of job they have. Training for garbage collection is lower than training for McDonald’s. Training for a Wal-Mart greeter is lower than for a cashier or secretary. The time to train a new employee is not just the new employee salary, but the salary of the trainer. The trainer in all liklihood makes more than minimum wage. If the trainer however, is now relegated back to minimum wage they will consider leaving.
“So let me understand – the cost of training new employees is so high that an employer cannot bear it when an employee leaves a job for greener pastures. But the cost is also so low that an employer would fire employees who make more than the new minimum wage and train a new ones rather in order to offset the increase in the minimum wage.
Which is it? Is the cost of training minimum wage workers so intolerably high that it must be minimized or is it low enough that employers will do it at the drop of a hat?”
It is both. If the employer employs many workers, a $1 per hour increase adds up quickly. The increase is more than a $1 once you consider taxes and health insurance. Let’s say it cost him $1.15 per hour for each minimum wage employee with benefits working 40 hours per week. Take a look at the example below:
Current Salaries
Employees —– Hourly Wage —– With Benefits —– Total Costs
100 —– $5.50 —– $6.33 —– $25300.00
10 —– $10.00 —– $11.50 —– $4600.00 —–
Total —– $29900.00
New Salaries
Employees —– Hourly Wage —– With Benefits —– Total Costs
100 —– $6.50 —– $7.48 —– $29900.00
10 —– $10.00 —– $11.50 —– $4600.00
Total —– $34500.00
Fire Higher Paid and Hire Minimum Wage Salaries
Employees —– Hourly Wage —– With Benefits —– Total Costs
105 —– $6.50 —– $7.48 —– $31395.00
5 —– $10.00 —– $11.50 —– $2300.00
Total —– $33695.00
By replacing 5 higher salaried workers with minimum wage workers, the employer just saved $805.00 per week. That would be plenty for the new training.
Comment by Lennie — 1/15/2005 @ 9:44 pm
I was in too much of a hurry to get my kids to bed. I just realized I forgot the rest of the argument. Here it is now.
Employees —– Hourly Wage —– With Benefits —– Total Costs
20 —– $6.50 —– $7.48 —– $5980 (week total)
Training (1 new employee + 1 current employee for 1 day)
1 —– $6.50 —– $7.48 —– $59.80 (day total)
1 —– $10.00 —– $11.50 —– $92.00 (day total)
Total $151.80 to train 1 new employee.
The employer has 2 options at this point with the workers who were already making $6.50 per hour before the minimum wage increase.
Option 2 would be cheaper for the employer since it is a 1 time cost. Again though, you now have 15 new minimum wage workers. The business owners ss you can see from the previous example and choosing option 2 here, increases expenses by $805 per week after the one time training costs. By using the same formula as above using the old minimun wage the employer could create 3 additional jobs at a cost to him of $759 per week.
So, which is better for the economy, 100 workers with an extra $40, each minus taxes of course, or 3 new workers with $220 a week minus taxes?
Comment by Lennie — 1/15/2005 @ 10:59 pm
I used the wrong number. If the minimum wage was not increased, the employer would have $4600 per week still. WIth that he could create up tp 18 new jobs instead of 3. The new 3 new jobs would be the scenario if minimum wage was increased and the employer replaces 5 of the higher paid workers with new minimum wage workers. Each minimum wage worker costs the empoloyer $253.20 per week per new employee.
Comment by Lennie — 1/16/2005 @ 3:43 pm
[…] of the nation due to all the fees the State has imposed. See some of these fees listed at Cross Blogging and a chart showing the job gap at Extreme Wisdom. More analysis of HB570 is at t […]
Pingback by Stop The Blackmail » Text of HB 750 — 4/10/2005 @ 7:08 pm
[…] of the nation due to all the fees the State has imposed. See some of these fees listed at Cross Blogging and a chart showing the job gap at Extreme Wisdom. More analysis of HB570 is at t […]
Pingback by Stop The Blackmail » Text of HB 750 — 4/10/2005 @ 7:09 pm