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SPRINGFIELD, Ill. - Illinois' minimum wage increases Sunday by a dollar, to $7.50 an hour, making it the fifth-highest in the nation.

Emboldened by his election to a second term and Democratic gains in the Senate and House, Gov. Rod Blagojevich pushed the Legislature last fall to boost the wage floor even higher above the federal level than it already is.

In each of the coming three years, it will rise 25 cents, settling at $8.25 in July 2010.

"It will help my family," said Brenda Vences, 18, who works at Dunkin' Donuts in downtown Chicago, one of her two jobs. "As much as I need it, everybody does."

Blagojevich has made such increases a centerpiece of his agenda, bucking the business community after election in 2003 to phase in a bump in the minimum by $1.35 over the federal level of $5.15.

Another dollar increase is vital, Blagojevich said.

"It will be a little easier for thousands of Illinois families to pay their bills, put food on the table or buy clothes for their kids," Blagojevich said in a prepared statement.

Last fall, Blagojevich wanted to tie the wage to the cost of living, but dropped it in a concession to business. The law also allows employers to continue paying 50 cents less than the minimum to workers younger than 18.

Business representatives fear the impact of increased costs on employers.

"In most cases it's likely to result in some reduction in benefits for existing employees, or a price increase, or a layoff or fewer hires," said Doug Whitley, president of the Illinois State Chamber.

Maria Luna, 29, who works 80 hours a week as a cook at two Chicago restaurants, sees that logic. She makes more than the minimum at both jobs but said a minimum wage increase should help all workers such as she.

"On the other side, I guess it's going to increase the prices of a lot of stuff you buy," Luna said.

Illinois joins 30 other states and the District of Columbia with pay floors higher than the federal rate, according to the U.S. Labor Department. Every Midwestern state except Indiana and Kentucky has wage levels above the federal line.

The Illinois increase will affect 647,000 workers, including those who already make more than the minimum but less than $7.50, according to a study last fall by Voices for Illinois Children. Of those, 144,000 are working parents caring for 269,000 children.

But it won't keep everyone out of poverty. Even at $8.25 in 2010, a 27 percent increase over the former rate, an employee would earn $17,680 a year, slightly above the current federal poverty rate of $17,170 for a family of three.

When Democrats took over Congress in January, they promised a hike at the federal level - unchanged since 1997, the longest period without an increase since a minimum was established in 1938.

President Bush signed the increase in May and it takes effect July 25. It will rise in phases to $7.25 by July 2009.

Business advocates say the issue should be settled on a national, standardized basis, but Congress didn't act soon enough, Illinois AFL-CIO president Michael Carrigan said.

"We're not going to stand by and wait," Carrigan said. "These workers legitimately need a raise."

Associated Press Writer Dan Strumpf in Chicago contributed to this report.

Facts minimum wage

-Illinois joins 30 other states and the District of Columbia with rates that exceed the federal level.

-Only Washington (tops at $7.93), Oregon, Connecticut, Vermont, California, Illinois and Massachusetts now have minimums of at least $7.50 per hour. California's increases 50 cents to $8 Jan. 1.

-Illinois' minimum wage will increase 25 cents a year for three years, settling at $8.25 in 2010.

-The rate supersedes the federal level, which goes to $5.85 July 25 after holding at $5.15 for ten years.

-An employee making $7.50 an hour would earn $15,600 annually, 15.4 percent more than at the former rate.

-One person cannot keep a spouse and children out of poverty on the wage. The federal poverty level for a family of three is $17,170.

Sources: U.S. Departments of Labor and Health and Human Services.

Compiled by Associated Press


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