SPRINGFIELD - Starting July 1, the Illinois minimum wage will reach the $8 mark for the first time.
The automatic increase is a legacy of former Gov. Rod Blagojevich, who in 2006 approved incremental increases every year until the state's minimum wage hits $8.25 an hour in July 2010. It's $7.75 now.
But this year's change comes as the state and country are in deep financial distress, with the unemployment rate in Illinois hitting its highest point in 25 years.
Illinois now has a minimum wage higher than its neighboring states and $1.45 more than the federal rate of $6.55. Later in July, the federal rate will rise to $7.25.
State lawmakers who approved the 2006 series of increases say the extra quarter an hour comes at a good time, when workers could use the extra money.
State Rep. Pat Verschoore, D-Milan, said that while Illinois' neighbors all have lower minimum wages, $8 still seems low.
"I'd hate to try to live on $8 an hour," he said.
Business groups argue the opposite. They say the 2006 increases were approved when the national and state economy was in much more stable shape than it is now.
Kim Maisch, Illinois director of the National Federation of Independent Businesses, says lawmakers in 2006 didn't consider that the economy could suffer in the future. Now, in a tougher economy, businesses are perhaps less prepared to handle the increases.
"This is a classic example why lawmakers should not build in automatic increases to the minimum wage," she said.
The effect of the increase could be felt several ways, said Anthony Liberatore, a professor of economics at Millikin University in Decatur.
Those who get pay raises will certainly appreciate the extra money. Businesses, though, have a couple options, Liberatore said.
Profits could go down. Or businesses could raise prices to account for the extra labor costs. The other options are to lower labor costs by cutting hours or even laying off workers.
"It's like water behind a dam," he said.
The state estimates the increase will affect 400,000 workers. Illinois Department of Labor spokeswoman Anjali Julka said it's employers' responsibility to start enforcing the law July 1. That includes posting posters about the $8 rate.
"I think that employers are making a good effort to make sure they follow the law," she said.
The final minimum wage increase approved by Blagojevich will happen in 2010, bringing the rate to $8.25. A spokesman for Gov. Pat Quinn didn't respond to a question asking if Quinn was interested in raising the minimum wage further.
How states rate
On July 1, Illinois' minimum wage will rise to $8 an hour. Here's a look at other rates:
Federal: $6.55 an hour, going up to $7.25 on July 24.
Indiana: Follows federal rules.
Kentucky: $6.55 an hour, going up to $7.25 on July 1.
Missouri: $7.05, going up to follow federal rules.
Wisconsin: Follows federal rules.
Source: U.S. Department of Labor