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Momentum gains in states for minimum wage hikes

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California,Connecticut,New York,PennAve,Joseph Lawler,Economy

Advocates of raising the minimum wage scored a major victory when California’s legislature voted to increase the state’s minimum to $10 by 2016.

The hike from $8 an hour comes amid a campaign by anti-poverty and labor groups for what they call a living wage, meaning hourly wages sufficient for a full-time worker to support a family. The push has featured low-wage workers protesting for higher pay at fast-food restaurants and retailers in big cities across America.

It also has included efforts to change minimum wage laws at the state and local levels. None will be more successful than the increase in California, the most populous state in the U.S. But Democratic governors Pat Quinn of Illinois and Martin O’Malley of Maryland also recently announced their support for increases.

New York, Connecticut and Rhode Island all passed minimum wage hikes earlier this year. Two cities, San Jose, Calif., and Albuquerque, N.M., did as well.

The movement's lone setback occurred in the District of Columbia, where Mayor Vincent Gray vetoed a 50 percent increase so that Walmart and other large retailers would proceed with plans to build stores in the city.

Liberals favor higher wages to raise the living standards of working families and boost their spending, with the idea that doing so will spur economic activity.

But it's also good politics for them: Steve Israel, chairman of the Democratic Congressional Campaign Committee, said earlier this year that he wanted to make the minimum wage a point of focus, with gun laws, in the 2014 mid-term elections. Israel told the Washington Post that the GOP’s opposition to raising the minimum wage is “a reminder to suburban independent voters that House Republicans are extreme, and out of touch."

President Obama listed a minimum wage hike among his priorities in his State of the Union address. But the effort has not amounted to much at the federal level, where the minimum wage has stood at $7.25 an hour since 2007. Obama said his goal was to raise it to $9, but that is a tough sell for the Republican-led House and hasn’t progressed toward becoming law.

Democrats have tried to seize on California’s approval to revitalize the national debate, with House Democratic Leader Nancy Pelosi calling on Congress “to follow California’s lead."

Opposition is largely driven by businesses that fear the consequences of higher labor costs. Randy Johnson, a senior vice president at the U.S. Chamber of Commerce, said the debate over raising the minimum wage “needs to recognize that small employers often have to operate under slim profit margins and will have the hardest time absorbing these higher labor costs and that they will have to find more revenues or trim costs to make up the difference. This reality is never part of the discussion.”

Critics also warn that creating a wage floor prices some low-skilled workers out of the market, and that more would be harmed by the resulting unemployment than would benefit from higher wages.

The Fair Minimum Wage Act, sponsored by Rep. George Miller, D-Calif., and Sen. Tom Harkin, D-Iowa, would test the logic of minimum wages hikes by incrementally raising the minimum wage to $10.10 by 2015 and then indexing it to inflation so it would not decline in purchasing power.

The $10.10 rate would affect a vast swath of workers that Obama's $9 floor would not. The average hourly wage for the nation's 500,000 fast-food preparers and 3.3 million cashiers is between $9 and $10, according to the Bureau of Labor Statistics. Miller and Harkin's bill would force employers to give them all raises, or lay some off.

President Obama and Democrats are not likely to find room in a crowded legislative schedule to push through an increase this year. But 2013 has already been a successful year for minimum wage advocates.

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Author:

Joseph Lawler

Economics Writer
The Washington Examiner