Layoffs, higher prices for consumers probable

Business Owners Detail Impact of Statewide Minimum Wage Hike

Businesses call on lawmakers to negotiate changes in SB1 to mitigate cost burden and protect jobs

SPRINGFIELD — Business owners and operators from across Illinois warned of layoffs, higher prices for consumers and the possibility of moving jobs out of state if legislation is enacted to raise the statewide minimum wage to $15 an hour.
"I'm scared," said Mike Monseur, who owns restaurants in Springfield including Godfathers Pizza and Dew Chilli Parlor. "I'm scared for my company, staff and the future of my community and state. 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."
Monseur and other business owners called on House lawmakers to consider compromise proposals that would make it easier to absorb additional wage costs, such as a regional minimum wage based on the cost of living in different parts of the state. They noted suburban and downstate companies don't enjoy the same economic benefits as those in Chicago, which can rely on millions of tourists and commuters to spend money in the city every day.
"Any changes to the current wage should be tiered, recognizing the cost of living differences between Michigan Avenue in Chicago and State Street in Chester," said Don Welge, president and CEO of Gilster-Mary Lee, a family and privately held food manufacturer headquartered in Chester.
"Our business is extremely competitive. We can lose large amounts of business based upon a 2 cent difference in a box of macaroni and cheese, which we currently make in Illinois. Labor makes up a high percentage of our costs, and it is extremely difficult to pass those costs on to customers," Welge said. "If this wage increase is enacted as-is, we will be forced to move jobs out of Illinois to states such as Missouri and Arkansas where we already have plants, eliminate jobs through automation as well as cutting product lines, and we certainly will not invest in Illinois as expansion opportunities arise."
Michelle McConnell, general manager of the Holiday Inn & Suites Bloomington Airport, said communities downstate are already suffering from years of job losses and would face additional layoffs if a $15 statewide minimum wage is signed into law.
"Our average daily rate is currently $105, but would have to increase to as much as $150 to absorb this minimum wage increase," said McConnell. "Bloomington is not Chicago, we can't get away with charging that much for a hotel room. Visitors, especially our meetings and conference business, will choose to go elsewhere as a result. My greatest fear is that jobs will be lost, especially when you consider that many roles in hotels can easily be replaced with technology like online check-in and using your cell phone as a room key."
Karen Conn, owner of Conn's Hospitality Group, which operates retail, lodging and restaurant locations across central Illinois, said without changes SB1 would mean fewer opportunities and career growth for the 150 workers her family employs.
"Being faced with an increase of labor costs in all our operations leaves us no options but to restructure how we do business, including evaluating each position, examining service levels and hours worked and whether medical, retirement, training benefits and goal incentives are affordable for our small business to continue offering," Conn said. "The result will be a reduction in job positions, hours, benefits, and the overall quality of life for our employees."
The Illinois Retail Merchants Association (IRMA) is committed to further negotiations ahead of a potential vote on SB1 in the House later this week.
"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," said IRMA President & CEO Rob Karr. "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."