Illinois workers at private companies saw pay jump in December, report says

Illinois workers at private companies ended 2023 on a high note as the median pay in December jumped 5.4% compared to December 2022 — a shift that’s expected to stick around in Chicago thanks to the city’s impending minimum wage increase.

Pay across the nation also increased in December as well as employment, with 164,000 jobs added in the private sector, according to ADP Research Institute. The institute releases a monthly employment and pay insights report based on data from private employers. The Thursday report comes before the Labor Department’s release on Friday of its employment report for December, which is more comprehensive.

The jobs added were largely driven by the service sector, “a brighter spot in the overall data,” according to ADP Chief Economist Nela Richardson.

“It’s almost worthy of that social media game where you say ‘How we started,’ and ‘How we finished,’” Richardson said, referring to wage growth throughout 2023.

With much of the nationwide job growth powered by the leisure and hospitality sector, small business hiring trends are important to focus on, Richardson said.

Some businesses, like Sip and Savor Coffee House, which has five locations throughout Chicago, cycle through new hires often.

“We’re constantly hiring because we’re constantly getting rid of people,” Sip and Savor CEO Trez Pugh III said. “I have this saying, ‘Everybody wants a job, nobody wants to work.’”

Because of the revolving-door pattern of hiring trends in the service industry, creating a work environment where people want to stay is vital, Pugh said, adding that he provides employees bonuses when he can.

Illinois was on par with nationwide trends, where wage growth for “job-stayers” increased 5.4%. The state’s median salary is at $58,400, just short of the national median salary of $58,700, according to ADP.

While some pay bumps represent a snapshot of a moment in time, Richardson said Chicago’s upcoming minimum wage increase in July will likely spur a more consistent, sustainable wage growth in the city. Much of the increase across the state and country affected hourly workers at the lower end of the wage scale.

“We’ve seen that most of the wage growth has been at the lower end of the pay distribution,” Richardson said. “So for hourly workers, those increases at the state and metro level … did get a bump for overall pay growth.”

But the city’s minimum wage boost could strain businesses that are struggling to balance costs, Pugh said. He added that a minimum wage increase isn’t always taken at face value on the business side. For example, a $17 minimum wage could cost the business closer to $22 or $23 because of taxes and other fees associated with the increase, he said.

“I could see some businesses going out of business because of the wage increases, a lot of businesses are holding on by a thread right now, especially brick-and-mortar,” Pugh said.

This is a developing story. Check back for updates.