Minimum wage, median wage: some data and thoughts

So, readers, I would love to pound out an article about Illinois’ recent minimum wage hike and its future effect on the state economy.  For reference, here’s the Chicago Tribune’s summary:

Under the law, on Jan. 1 the statewide minimum wage increases from $8.25 to $9.25 per hour. The minimum wage again will increase to $10 per hour on July 1, 2020, and will then go up $1 per hour each year on Jan. 1 until hitting $15 per hour in 2025.

That’s a big jump.

Minimum wage supporters cite all manner of beneficial effects — a New York Times article floating around twitter today claimed that

A $15 minimum wage is an antidepressant. It is a sleep aid. A diet. A stress reliever. It is a contraceptive, preventing teenage pregnancy. It prevents premature death. It shields children from neglect. But why? Poverty can be unrelenting, shame-inducing and exhausting.

Its supporters also marshall studies to claim that it will have only beneficial effects on the economy — but skeptics point to the fact that studies finding this are unsatisfactory for a variety of reasons, for instance, a boost in the minimum wage in one locality in a region where wider economic effects might be offset by lower minimum wages in surrounding areas.  And I’m not going to try to produce an analysis of the literature, nor to make any particular claims of expertise as an (armchair) economist.

But I do want to use my platform, however small it is, to point to the magnitude of the increase.  To be sure, in the event that there is significant inflation, some of that increase will be moderated, but at today’s low inflation rates, $15 per hour in 2025 dollars won’t be that much different than $15 per hour in 2019 dollars.

So consider this:

The median wage in the Chicago metro area is $19.67.

In Springfield, Illinois:  $18.35.

In Peoria:  $18.14.

Decatur:  $16.80

Rockford:  $16.55

Carbondale:  $15.77

West Central Illinois nonmetropolitan area:  $15.41

(You can use the main BLS link to view all all metro area median wage data.)

In other words, once you leave metro Chicago and the midsized cities of Illinois, median wages drop to very nearly the level of the future minimum wage.

The BLS link also provides median wages for particular occupations — and the occupations with median wages below the new minimum extend far beyond fast food and retail workers.

In the West Central Illinois nonmetropolitan area:

Ushers, Lobby Attendants, and Ticket Takers earn a median wage of $9.10.

Childcare workers, $9.38.

Hairdressers, hairstylists, and cosmetologists:  $9.74.

Court, Municipal, and License Clerks:  $10.43.

Tax preparers:  $11.12

Nursing assistants:  $11.54.

Pharmacy aides:  $11.77.

Tellers:  $12.72.

Butchers and Meat Cutters:  $13.50.

Emergency Medical Technicians and Paramedics, $14.30.

Phlebotomists, $14.91.

and so forth.

What happens when the state mandates a minimum wage in excess of the wages that each of these occupations, at median, actually pay in this part of the state?  I simply lack the imagination to forsee the impact, but it’s surely not as simple as each of these occupations in fact paying $15.00.   These are in many cases jobs requiring specialized training; I find it difficult to imagine that EMTs would accept a wage that’s equal to what a McDonald’s worker gets the first day on the job, without specialized training.  And I likewise can’t fathom a situation in which every wage-earner’s wages are simply boosted by $6.75, across the board, and prices similarly simply reset at the level necessary for businesses to cover their costs.

Now, looking at this list of occupations, I seem to have selected service occupations which are connected up with the local economy, rather than the sorts of jobs associated with manufacturing or other industries which stretch beyond the local area.  And I am limited in my understanding of the nature of the economy in these sorts of small towns and rural areas, but — well, to the extent that it depends on the sorts of small manufacturing facilities scattered throughout middle America, those manufacturers will have to cope with a changed dynamic that could well lead to them leaving or automating, and to the extent that they provide a support structure that ultimately works its way down to the family farm, well, farmers are self-employed, aren’t they?  And their earnings won’t increase as a result of a minimum wage law, only their costs.

And, yes, I have selected the lowest-wage region from which to list by-occupation median wages.  Of course those numbers are higher in Springfield and Peoria, for example.   Childcare workers in Springfield, for example, earn $10.75 at median, pharmacy technicians, $13.77, and phlebotomists, $16.66.

So I don’t have an answer.  I’m not going to and I’m not able to build out a model of precisely which bad things will happen.  But I do think that looking at these sorts of BLS listings is a useful way of, even as a non-expert, getting a sense of the magnitude of the increase, and the potential for far-reaching unintended effects.

 

Image:  Marseilles, Illinois, population 5,094.  https://commons.wikimedia.org/wiki/File:Marseilles_IL_downtown1.jpg; IvoShandor [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)].