When most people take their first steps into the workforce, they do it in a minimum wage job. These positions are often entry-level. Meaning, they require few if any professional skills to begin in the field.
They are particularly prevalent in specific sectors, including retail and food service, though they may also make their way into other industries. Understanding the minimum wage is crucial. It allows you to plan your career and manage your finances more effectively. As well as, determine if the compensation for a role feels fair. If you want to find out about the minimum wage in Illinois, as well as how the minimum wage works. Here’s what you need to know.
What Is a Minimum Wage?
Before we dig into the minimum wage in Illinois, it’s important to get a grip on what a minimum wage is and how it impacts the workforce. In the absolute simplest sense, a minimum wage is a dollar amount that aligns with the lowest pay rate a company can provide to a covered nonexempt employee for a single hour of work.
The vast majority of jobs you find in the United States are nonexempt. However, there are some notable exceptions.
For example, during their first 90 days of employment with a business, young workers do not have to earn minimum wage. Along the same lines, full-time students employed by particular types of organizations, as well as student learners, can legally be paid less than minimum wage.
Under certain circumstances, disabled workers with specific kinds of work contracts may be classified as exempt from the minimum wage. Additionally, any worker in what’s deemed a “tipped” job may be covered by modified minimum wage rules.
Pay Rate Standard
Overall, the minimum wage acts as a pay rate standard, marking the lowest amount most employees can earn. The last update to the minimum wage occurred in July 2009. At that time, it was increased to $7.25 per hour for nonexempt employees. However, for tipped workers, it was set at $2.13 an hour, suggesting that they secured enough in tips to make up the difference, bringing them up to at least the equivalent of $7.25 an hour.
Recently, there has been interest at the federal level in raising the minimum wage. Certain legislators believe that $15 per hour should be the target. However, there isn’t any legislation that has been approved to increase the minimum wage, so it will stay at $7.25 per hour until a new law is passed.
How the Federal Minimum Wage Impacts States
In most cases, the federal minimum wage can be considered a baseline for states. While a state does have the ability to require local employers to pay more per hour, they don’t have the right to make the minimum wage lower than it is at the federal level.
For example, there are laws on the books in both Georgia and Wyoming that list the minimum wage as $5.15 per hour within their state. However, due to the Fair Labor Standards Act (FLSA), those laws cannot apply. Instead, the states are required to meet the federal minimum, causing them to default to $7.25 per hour.
It is important to note that cities and municipalities may be able to enact their own minimum wage laws. Like states, the minimum has to meet or exceed the federal baseline. If the city or municipalities are above the federal threshold, employees in their area have to pay the higher amount. For example, in Seattle, WA, the minimum wage is $16.69 per hour.
What Is the Minimum Wage in Illinois?
Currently, the Illinois minimum wage is higher than the federal one. As of January 1, 2021, it was increased to $11.00 per hour, with the minimum for tipped workers coming in at $6.60 per hour.
Additionally, the minimum wage will keep rising by $1 each year for non-tipped workers, and $0.60 per year for tipped workers, until 2025. As of January 2025, the minimum wage for non-tipped and tipped employees will be $15.00 and $9.00, respectively.
Do Any Illinois Cities Have Higher Minimum Wages?
Yes, there are some cities in Illinois with higher minimum wages. For example, in Chicago, the minimum wage in 2021 is either $13.50 or $14.00 per hour for non-tipped workers, depending on the number of employees the company has on its payroll. For tipped workers, the minimum is either $8.10 or $8.40 per hour.
Cook County, Illinois, also has a separate minimum wage law. There, the minimum in 2021 is $13.00 per hour for many non-tipped workers and $5.30 an hour for many tipped employees.
Is the Illinois Minimum Wage a Living Wage?
Generally speaking, a living wage is a particular income level that is usually considered required to support a household. Most living wage estimates are based on the employee working full-time, which is classically considered to be 40 hours of work every week, or a total of 2080 hours each year.
What it takes to support a household typically involves covering specific expenses that are viewed as necessities. Rent or a mortgage, groceries, transportation, and healthcare usually fall into that category. However, debt repayment, entertainment, dining out, and setting money aside in savings – including for retirement, education, emergencies, or any other purpose – does not, as those aren’t considered fundamental for living.
Living Wage
In Illinois, the living wage for one adult living without children is listed as $15.37 per hour, suggesting they have a full-time job. For a family of four with two adults, the living wage if one adult is working is $32.53 per hour. If both adults work, each would need a full-time job that pays $21.34 per hour.
With the current Illinois minimum wage, it falls below the mark. Even once it hits $15.00 per hour, it would still be a bit short for a single adult without children and would be far below a living wage for any household size above that. That means many minimum wage earners in Illinois would likely struggle to make ends meet.
Do you think that the minimum wage in Illinois is reasonable? If not, do you think a higher or lower number would be better? If so, why do you think it’s in the right spot? Share your thoughts in the comments below.
Read More:
If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started. Check out these helpful tools to help you save more. For investing advice, visit The Motley Fool.
Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.
Comments