Nov. 18--Illinois voters elected a successful businessman who has promised to do everything he can to improve the climate for economic prosperity and job growth. They also approved a nonbinding measure to increase the statewide minimum wage to $10 from the current $8.25.
The latter change would hinder rather than help job creation by making it more expensive for employers to hire entry-level workers. But the effect can be partly offset if, as Gov.-elect Bruce Rauner has proposed, the wage hike is part of a bigger package that includes reforms in the state's workers' compensation program and its tort liability system. This is no time for the General Assembly to ignore the need to make Illinois a better place to do business.
We remain convinced that raising the minimum wage is well-intentioned but economically self-defeating. Everyone would like to see low-paid workers earn more. But it's the nature of supply and demand that the higher the price of something, the less people will purchase.
Force businesses to pay more to their bottom-tier workers, and some will find ways to get by with fewer employees -- by automating tasks, outsourcing functions or closing marginal operations. With a higher minimum, it's true, some workers will bring home bigger paychecks -- but some will find themselves unemployed.
In a booming economy, the change might be harmless. But that's not what Illinois has. It has chronically lagged its neighbors and the rest of the country in creating jobs. Moody's Analytics recently projected the state to have the nation's slowest employment expansion over the next five years. A combination of relatively high taxes, burdensome regulations and fiscal uncertainty is a big inducement to corporations to look elsewhere, where they will not feel like sheep waiting to be shorn and shorn again.
Rauner understands all this. Judging from their willingness to give a first-time candidate the most powerful post in the state, so do Illinois voters. Right now, the most valuable thing the state government can do is foster economic progress. And that means changing the things that are holding us back.
The incoming governor is no ideological zealot, and he's made it clear he's willing to work with the Democratic-controlled House and Senate. During the campaign, he said he'd accept a minimum wage boost if it were coupled to changes in workers' compensation and the tort system. The General Assembly would be wise to meet him halfway.
The need for change is obvious. Illinois has the fourth-highest workers' compensation premiums among the 50 states. As Rauner's economic blueprint noted, "An employer with a $10 million wage bill can cut his or her workers' compensation costs by $167,000, or about the salary of five employees, just by crossing the border from Illinois to Indiana."
The U.S. Chamber Institute for Legal Reform, an arm of the Chamber of Commerce, grades Illinois near the bottom, which means employers face a higher risk of unwarranted lawsuits here than in the vast majority of states. It says Cook County ranks worst in the entire country for "least fair and reasonable litigation environment."
It won't help the business environment to tell companies they have to pay more in wages. If the General Assembly feels compelled to do that, the least it can do is to make some significant changes for their benefit.
One step backward and two steps forward is not the most obvious way to forge ahead. But it would move Illinois closer to where it needs to be.
