Nonprofit executives fret Illinois minimum wage increase bill

Posted: Apr. 4, 2013 10:15 am Updated: Apr. 25, 2013 1:15 pm

Herald-Whig Senior Writer

Quincy nonprofit executives say a plan to boost minimum wages to $10 an hour or higher would cripple their operations.

"I'm pretty certain it would just about put us out of business for state contracts," said Mike Rein, executive director of Transitions of Western Illinois.

Debbie Reed, president of Chaddock, said if the minimum wage went to $10, it would cost the Quincy school and treatment program nearly $517,000 a year. Most of Chaddock's workers earn more than minimum wage, but Reed said as the minimum wage rises businesses need to adjust the wages paid to other workers as well.

"We've got 142 employees who are hourly. If we adjust all of our staff costs up ... this is going to be crippling," Reed said.

Minimum wage issues are in the news, with state Sen. Kimberly Lightford, D-Maywood, sponsoring legislation to raise the minimum to $10 an hour or higher in the next few years. In addition, Gov. Pat Quinn called for a state increase to $10 an hour during his State of the State speech during February.

The federal minimum wage is $7.25 per hour, and Illinois has an $8.25 per hour wage rate. Illinois has the fourth-highest hourly wage rate in the nation.

State Rep. Jil Tracy, R-Quincy, said there was "a lot of concern" early in the session about the minimum wage plan. Since then, the legislation has not moved quickly. Tracy said she doubts there is much support in the House for raising the wage.

"I'm very cautious. It will be debated and it's sitting in the wings," Tracy said.

Business owners have overwhelmingly said hiking the wage rate would hurt an already shaky business climate. Rein said the nonprofit organizations will be hurt even more than traditional businesses.

Transitions operates CRC vocational training center where people with disabilities learn work skills. CRC has contracts with the state, including one for laundry services for institutions such as prisons.

"They seem to think they are immune or insulated from these additional costs. That's just not true," Rein said.

Boosting the minimum wage from $8.25 to $10 would represent a hike of more than 21 percent. Rein said in addition to the hike in wages, businesses would see similar hikes in Social Security taxes and other benefits. Businesses will have to recover that money from somewhere, which will be reflected in higher costs on state contracts.

Those costs will be on top of the extra expenses imposed by Illinois running more than $8 billion behind on payments to state contractors and vendors. Transitions alone was owed more than $2.5 million last year.

"I honestly don't know how we stay open," Rein said. "Twelve agencies like Transitions closed last year, based on cash flow."

Reed said Chaddock officials want their workers to make a living wage, but also must weigh the employee costs in connection with overall operational costs.

"We have required ratios that we need to keep for the safety and security and good treatment of our kids," Reed said.

Because of those standards, Chaddock cannot simply cut employee numbers as most businesses could do.

"They don't think about nonprofits when they propose these things," Reed said.