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State

Retailers say Illinois minimum wage increase an ‘open invitation to move’

Don Welge, president and CEO of Gilster-Mary Lee, a family and privately held food manufacturer headquartered in Chester, holds up a box of macaroni and cheese, which he said could become a money-losing product for his company if the minimum wage increase legislation becomes law.
Don Welge, president and CEO of Gilster-Mary Lee, a family and privately held food manufacturer headquartered in Chester, holds up a box of macaroni and cheese, which he said could become a money-losing product for his company if the minimum wage increase legislation becomes law.

A group of downstate business owners warned of dire consequences Monday should a $15-an-hour minimum wage increase, which passed the Senate last week, become law without changes.

Several members of the Illinois Retail Merchants Association spoke of layoffs, businesses leaving the state and cutbacks in staff benefits, while advocating for a plan that would make the minimum wage rate $4 lower an hour in downstate counties than in Chicago.

“Treating the rest of the state as if it has the same strengths as Chicago is simply illogical,” IRMA President and CEO Rob Karr said. “No one else has 55 million visitors a year.”

Karr said two-thirds of Illinois’ population is within a 40-minute drive to bordering states, which could cause shoppers to spend their money elsewhere. Don Welge, president and CEO of Gilster-Mary Lee, a family and privately held food manufacturer headquartered in Chester, said businesses will begin doing the same.

“It’s just an open invitation to move operations out of the state of Illinois,” Welge said.

Welge said Illinois already has higher workers’ compensation and unemployment insurance rates than surrounding states, costing $600 more per employee annually than in Missouri.

“Everything we’ve opened up recently has been in Missouri,” he said. “We started in Illinois. We have a lot of loyalty to the state of Illinois, but we can begin to move, and we will begin to move.”

As it is written now, Senate Bill 1 would raise the statewide minimum wage to $15 over a six-year period, starting with a $1 increase in January 2020, then a 75-cent increase in July 2020, bringing the wage up to $10. Another dollar would be added to the wage every January until 2025.

The group said it is not against raising the wage, but the current structure – particularly the increase of $2.75 in the first calendar year – is too steep and too quick.

Business leaders argued for a regional alternative – a $15 rate in Chicago within five years, a $13 rate in the suburbs within seven years, and an $11 rate for downstate communities within five years.

But Will Guzzardi, D-Chicago, who sponsored Senate Bill 1 in the House, said last week that he expects his chamber to pass the bill without further amendment.

“All of us in the House, or at least all of us on the Democratic side in the House, are working to get this done,” he said. “I anticipate us having discussions about the bill that was sent to us, and I suspect that that’s the bill we are going to vote on, and I think that’s the bill we will pass.”

Sen. Kimberly Lightford, D-Maywood, who ushered the bill’s passage in the Senate, had questions of the constitutionality of a regional rollout and said all Illinois workers deserve equal pay for equal work.

“How do you decide that someone down in Danville, who needs to make $14.60 today, how do you tell them that they should be held lower than $15 in 2025?” she asked in her floor speech during the bill’s passage last week.

But the business owners at Monday’s news conference – including Karen Conn of Conn’s Hospitality Group, which operates retail, lodging and restaurant locations across central Illinois – said these downstate workers could be adversely affected.

“I think there’s a trickle-down effect that’s going to add to the economic pain here,” Conn said. “Our products we buy from farmers, it goes to a processor, it goes to a distributor, it comes to us. There’s going to be four tiers of price increases, so I’m going to be forced to raise my prices.”

Mike Monseur, who also owns restaurants in Springfield, agreed.

“I’m scared for my company, staff and the future of my community and state,” Monseur said. “How much will people be willing to pay for a pizza? I can only raise my prices so much before people stop buying my product. Many businesses like mine will be forced to turn out the lights.”

Sandy Schoenborn, who owns the Lincoln Theatre in Belleville, said wages at her business, which employs about 20 people, would go from 26 percent to more than half of her expenses.

“My prices will have to double within five years to keep up,” she said.

The group also warned of the compounded effects of added costs from property taxes that could see a spike if schools decide to raise their levies to pay the increased rate to minimum-wage employees.

A pair of downstate hotel owners also warned of raised rates, which would affect rates paid by the state for employees who are reimbursed for travel.

Darin Dame, who owns the Residence Inn in Springfield, said his rates would have to go up from $86 to $125. Michelle McConnell, who owns a Holiday Inn and Suites in Bloomington, said some on her staff could see benefit cuts because of the added cost of business.

For Conn, the cost of the increase will manifest itself everywhere, not only on her menu prices.

“The value of the dollar as it is today isn’t going to be the same as it is in 2025,” she said.

All of this together, Karr said, could prove dire for downstate Illinois.

“This wage increase wouldn’t occur in a vacuum, as tax hikes and added regulations have forced businesses to deal with escalating costs year after year,” he said. “We’ve said all along that we are open to a compromise to lessen the burden on businesses so they can continue to serve their communities and employ workers. We implore lawmakers to heed these stories for the sake of our state’s economic future.”

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