Legislators Should Carefully Vet Minimum Wage Legislation

Business groups have understandably cried foul about legislation in the Illinois Senate that would incrementally increase the minimum wage to $11 per hour. Raising the minimum wage would obviously increase the cost of doing business, particularly for retailers. And much of this cost would be passed onto consumers through higher prices for goods and services. Probably not a great policy at a time when Illinois' economy is already sluggish and slow to rebound. 

But now it seems that the state could potentially burden human service providers if it follows through with a minimum wage increase:

As Democratic lawmakers renew their push to raise the state's minimum wage, there's a key sector of employers that finds itself stuck in the middle — nonprofit groups that care for some of the state's most vulnerable, including the elderly and disabled. 

That's because while they'd like to pay their workers more, many of those agencies receive the bulk of their funding from the state. Given Illinois' dire financial situation — which will only grow worse if portions of a temporary income tax increase expire as scheduled Jan. 1 — it means they could be on the hook for higher salaries without getting more money from the state to cover the additional costs.

I suppose that the state could always increase payments to these providers to offset the additional costs, but anyone with any knowledge of the depth of Illinois' fiscal problems would find that to be an unlikely option. If anything, it wouldn't be surprising to see the state reducing payments to human service providers over the next few budget cycles. Governor-elect Rauner has reportedly requested that state agencies draft-up FY2016 budgets to reflect 20 percent cost reductions. Those would be some pretty significant cuts if they come to fruition. 

In any event, the impact to service providers is probably another reason for the General Assembly to exercise considerable discretion and slow things down a bit on the drive to increase the minimum wage. 

SB 68 is expected to be further amended, with one of the amendments possibly restricting Chicago's home rule authority to increase the minimum wage above the level established by the state. And there might be a disagreement brewing between the House and Senate over how many votes this would require: 

Lawmakers would need a three-fifths vote margin in each chamber to pre-empt home rule. Lightford says she has enough votes to do that in the Senate. The fate of a minimum wage hike is less certain in the House, where Democrats have a large but narrower margin and lawmakers tend to be more conservative. Legislators are scheduled to return to the Capitol for action in early December.

This is generally correct. Per the Illinois Constitution, home rule preemptions require a supermajority vote of both chambers. This is apparently how the Senate intends to proceed. But the House may see things differently. From Capitol Fax (no link):

And such a preemption bill would not necessarily require a three-fifths majority to pass, says the top House Democratic attorney.

"If the state is saying we're not going to regulate it and you can't regulate it either, that requires (a super-majority)," Heather Weir Vaught explained. However, when the state decides to regulate something and tells municipalities they can't, then that only requires a simple majority, she said.

Could each chamber require a different vote threshold based upon two different "interpretations" of the Illinois Constitution? And could this introduce the possibility of litigation over "process" questions should a minimum wage cap be enacted without a supermajority vote? Anyway, both chambers should figure this out and get on the same page if they're intent to move forward on some kind of minimum wage cap. 

Here's what Article 7, Section 6 says about preempting home rule power:

(g) The General Assembly by a law approved by the vote of three-fifths of the members elected to each house may deny or limit the power to tax and any other power or function of a home rule unit not exercised or performed by the State other than a power or function specified in subsection (l) of this section.

But there's no guarantee that the House would rush to embrace the broader minimum wage bill anyway:

House Majority Leader Barbara Flynn Currie, who is a sponsor of the minimum wage bill, doesn’t anticipate much movement. 

“We didn’t have the votes to do it in the spring, and I’m not sure even though there was good support for it,” she said.

But then again...

But Mr. Madigan got big-time help from labor unions this year, including some unions (such as the American Federation of State, County and Municipal Employees) that haven't contributed to him in many a year. He told the Chicago Tribune Nov. 13 that he's “encouraging” his members to vote for the minimum wage hike.

Illinois politics always keeps you guessing.

Update (December 1):

I spoke with Heather Weir Vaught and she said that both chambers are on the same page in the view that a home rule preemption to cap the minimum wage would only require a simple majority.