Highland Chamber of Commerce Director says minimum wage hike will hurt small businesses
Businesses in Highland are preparing for an uncertain financial future in the wake of Illinois’ new gradual minimum wage increase.
Gov. J.B. Pritzker signed the gradual increase of the state’s minimum wage into law Feb. 19. The minimum wage will increase from $8.25 to $9.25 on Jan. 1; to $10 on July 1, 2020, and $1 each Jan. 1 until 2025.
That makes for an uncertain future for some businesses like downtown Highland’s Lory Theater, which has a staff of almost entirely hourly workers. Owners Justin and Hillary McLaughlin purchased and renovated the historical theater roughly six years ago with the help of a local entrepreneurship program.
“We can’t look five years down the road and know we’re still going to be here, before that we knew we’d be here,” Justin McLaughlin said. “There’s going to be pressure on us to try to stay open as opposed to the pressure we were already having over the past six years.”
McLaughlin said while his employees are already paid above minimum wage, when the minimum goes up in 2020 the theater will have huge changes in their wage budget. He said that means the theater, which he said is known for its reasonable prices, will have to start raising prices and possibly cutting staff.
The theater mostly employs teenagers and some older retirees. For those who work less than 650 hours a year, mainly teens and youth workers, the minimum wage would raise yearly but cap at $13.
“The kids who work for us are not looking for a living wage, they’re looking for a part time job to make some extra money,” McLaughlin said. “We’re not trying to create 20 full time jobs, we’re trying to create 20 part times jobs and maybe one or two full time jobs.”
In February, a group of downstate business owners, including the owner of the Lincoln Theater in Belleville, warned of dire consequences if the $15 per-hour minimum wage hike become law changes in Illinois.
The business owners warned of layoffs, businesses leaving the state and cutbacks in benefits for employees. The group also submitted a counter plan advocating for a minimum wage rate $4 lower per hour in downstate counties than in Chicago.
On the northwest side of town, Rural King Supply owner George Jones said, while his business pays most of its workers above the minimum, the increase will still affect his business in the long run. He said while the hike may make sense in cities like Chicago, in Highland it just makes doing business more difficult.
“I’m all for paying people what they’re worth but I don’t think it should be up to the state to make that decision,” Jones said. “We generally pay people above minimum anyway, especially guys who have been here a while, but I think its a real hindrance.”
Jones said the money that will have to cover wages will need to be made up elsewhere. Like McLaughlin, Jones said he doesn’t doubt that his business may have to cut down on seasonal and part-time workers as well.
“You’ve gotta make it up somewhere,” he said. “I think Illinois has a lot of problems and I don’t think we needed this on top of it.”
Chamber Director Nancie Zobrist said she worries how the new minimum wage hikes will impact the local economy.
“For our businesses it’s going to be a little bit of a nightmare, honestly,” Zobrist said.
Highland, which has been growing according to a recent audit of the city, may have trouble continuing that growth with more businesses having to create new funds to cover the wage hikes. She said she believes costs will go up and the amount of jobs will most likely fall.
“I can’t imagine many new jobs are going to be created over this and I’d be concerned that some companies will have to cut positions. They have and figure out how to work more efficiently with the staff they have or do with less,” Zobrist said. “As their overhead goes up I imagine their cost may have to go up as well.”
At Highland CUSD 5 School District the district is already preparing for a future with higher wages for custodians, substitute teachers and others. The city’s park director also worries what the future wage hikes will mean for his department, which 90 percent of which is made up of part-time workers who are paid below the 2020 minimum.
However, Zobrist said there are upsides to a gradual minimum wage increase. She said in the coming years local businesses can make changes that will make the wage hikes less damaging.
“It’s not doom and gloom across the board. This is going to impact businesses absolutely but preparing and being ready to weather this is what’s going to be the determining factor,” Zobrist said. “We will all just figure out how to be more efficient in our work and look at our budgets more tightly.”
For businesses like the Lory Theater, though, that means changing their core standards, McLaughlin said. He said his company has only raised its prices once in the six years it’s been open.
He said he hopes the community, which has backed the theater before through attendance and even a Kickstarter, can be patient with the Lory as it goes through some changes.
“At the end of the day I hope we can pull it off,” McLaughlin said. “But I’m not looking forward to watching the business go through this transition and we’re going to need patience as we figure things out.”
He said he wishes lawmakers in Springfield had talked to business owners like he and his wife before making their decision.
“If the people who made the law could have just spoken to me and looked at my numbers they would have said ‘if we do this to them this business will close,’” McLaughlin said. “What we have to do now to survive is change as drastically as needed to stay in the game.”