Illinois’ minimum wage will increase to $11 per hour with the start of the New Year – the third in a series of incremental steps that will bring the minimum wage to $15 per hour by 2025. The first increase to $9.25 per hour came on January 1, 2020, and the second step to $10.00 per hour came on July 1, 2020.
Opponents to the series of minimum wage increases cite the additional cost burdens on small-business owners across the state, as well as repercussions for employers across the board, including public universities, school districts, and not-for-profit organizations.
To help offset increased costs to the business community, small businesses are encouraged to take advantage of a tax credit available to businesses and nonprofits with 50 full-time equivalent employees or fewer. The Minimum Wage Credit will allow small businesses a maximum credit of 25 percent of the difference between the new minimum wage and what each employee was paid previously. The percentage allowed each proceeding year will decrease before it sunsets in 2026. Businesses can begin to claim the credit on their quarterly Illinois Withholding Income Tax Returns.
While this is not a long-term solution for small businesses, it will provide a measure of relief to employers as they face the hardships imposed by the minimum wage increase. More information on the Minimum Wage Credit is available at https://www2.illinois.gov/rev/research/taxinformation/WithholdingIncomeTax/Documents/FS-13.pdf#search=Minimum%20Wage%20Credit
In February, I co-sponsored legislation to regionalize the minimum wage. Senate Bill 3396 would provide for minimum wages based upon a percentage of the otherwise required minimum wage, depending upon the region of the State. The legislation establishes six regions for purposes of determining the minimum wage.
Senate Bill 3396 would allow specified units of local government to opt-out of the state-mandated minimum wage rates and opt-into a regionally adjusted minimum wage, which will be statutorily-authorized and statutorily-approved. It would provide a sliding scale type of rate – so areas with historically-low unemployment or higher costs of living would keep rates closer to the state-mandated hourly rate.
Co-sponsored by 18 Republican Senators, Senate Bill 3396 was not allowed a public hearing by Senate leaders in legislative committee or on the Senate Floor.