The economic boom of the 1990s is rightly noted for lifting the wages of the vast
majority of Illinois workers. But for all its force, the boom failed to reverse the long-term
decline in the spending power of low-income households, particularly those reliant on
minimum and near-minimum wage earners. Although the nominal value of the federal
minimum wage is at an all-time high of $5.15 per hour, failure to adjust it for inflation
has led real hourly wages of minimum and near-minimum wage workers to erode to a
level near their all- time low.

The UIC Center for Urban Economic Development has undertaken a comprehensive
assessment of the need for and the economic impact of the proposed Illinois minimum
wage. Our research was designed to answer three specific questions:
-Is the minimum wage an effective policy for improving the earnings of lowincome
households?

-Does raising the minimum wage weaken the competitive position of Illinois
industries or impose excessive increases in labor costs?

-Does a higher minimum wage result in lower employment levels?

To answer these questions, we analyzed the wage and employment characteristics of
Illinois households with workers earning at or near the minimum wage, conducted an indepth
statistical study of the relationship between state minimum wages and employment
levels, and examined the changing characteristics of the low-wage workforce over a fiveyear
period surrounding the 1997 federal minimum wage increase.

The evidence from this research suggests that an inflation-indexed Illinois minimum
wage of $6.50 per hour will improve the earnings of a significant share of low-income
workers and households while imposing minimal costs to businesses and resulting in a
negligible impact on overall employment.