Politics seldom dictates markets

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Higher pay is a good thing, but government mandates can backfire.

AWHILE BACK THERE was an editorial cartoon that showed the outline of the financially-troubled State of Illinois. Frantically fleeing in all directions were vehicles towing U-Hauls.

So now the new governor, Democrat J.B. Pritzker, is pressing the overwhelmingly Democrat legislature to make good on a campaign promise to raise the minimum wage to $15 an hour.

The current Illinois minimum wage is $8.25, already higher than a number of states. The Pritzker plan would boost the minimum to $9.25 next January, then to $10 in July 2020, with another dollar increase each January until 2025. Advocates say the higher minimum would grow the Illinois economy $19 billion a year and pump nearly $400 million more a year into the state's tax coffers.

THAT'S ASSUMING, of course, businesses in Illinois eagerly will write the checks to employees and gladly deposit more tax money with the state's treasury.

And the cow will jump over the moon.

More likely, business operators would pull out their calculators and crunch numbers to decide just how much more they were able and willing to pay. Then, they would keep as many workers as that number would allow and let the rest go.

And, when factoring expenses, they'll keep this in mind: Raising the bottom of the pay scale doesn't stop there. Every higher-paid employee would expect similar percentage bumps as the minimum rises.

As for the state pocketing more tax money, remember that cartoon. Businesses that can get out have been getting out already. Several have come to Beloit - and we're more than glad to accommodate more.

LOOK, WE'RE ALL for people making more money. But markets, not politicians, determine how much businesses are going to pay their employees. Private enterprises will pay what they think they need and can afford, and not a penny more. If that means eliminating some jobs, that's exactly what they'll do.

Beware the law of unintended consequences.

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Politics seldom dictates markets

February 11, 2019 at 10:05 am | Higher pay is a good thing, but government mandates can backfire. AWHILE BACK THERE was an editorial cartoon that showed the outline of the financially-troubled State of Illinois. Frantically flee...

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