The Wall Street Journal reports, “The nation’s battle over raising the minimum wage is set to shift largely to cities like Los Angeles and New York over the coming year, pitting business groups against local governments weighing measures to address sluggish wage growth for the lowest-paid workers.”
With the Republican control now in Congress, cities, reportedly encouraged by the Obama administration “are gearing up for new debates after Seattle, Chicago and Louisville, Ky., all approved city-specific pay floors last year. More than a dozen large cities and counties now have their own standards, and the new wave of initiatives could widen the patchwork of minimum-wage laws that already has many states and cities above the national minimum of $7.25 an hour.”
Los Angeles and New York are likely to be on the forefront as they move “to support workers in low-paying service jobs in areas of the country where the cost of living is elevated.”
Davis, with its large college population and its previously unsuccessful effort the raise the minimum wage, figures to be a centerpoint for the new battle.
Outgoing executive secretary of the Sacramento Central Labor Council Bill Camp told the Sacramento Business Journal two weeks that local labor leaders will ask voters in Sacramento and Davis to approve a minimum hourly wage of $15 in 2016.
He told the journal, “We will get $15 an hour when you get a president on the ballot.” He added that he believes that if Sacramento approves the measure, other cities and the state will follow.
The state came close in June to passing a $13 an hour minimum wage, only to have it die unexpectedly in the Assembly labor committee.
Senate Bill 935, authored by Senator Mark Leno, would have raised the minimum wage in three steps, starting at $11 an hour in 2015 and increasing an additional $1 per hour in both 2016 and 2017. Beginning in 2018, the minimum wage would be adjusted annually to the rate of inflation. SB 935 was co-sponsored by the Women’s Foundation of California and SEIU (Service Employees International Union) California State Council.
In 2015, an effort spearheaded by a group called Raise the Wage Davis fell short of putting a similar $15 per hour minimum wage on the ballot for this November’s ballot.
In April, the group conceded that they would fall short.
“It’s our hope to collect 7000 signatures by May 1. It’s looking increasingly unlikely that we’re going to make that deadline,” Bernie Goldsmith acknowledged to council in April. “Our efforts started around a kitchen table on January 11; since then, we’ve made a bit of a splash locally.”
“It is our hope to raise the minimum wage in Davis to a living wage,” he said. “I’m sure that many of you have read the Enterprise and it has had some opinions about our efforts. The Chamber of Commerce and local businesses have had some opinions about our attempts to engage the community.
“One of the goals of this campaign was to start a public debate on what it would mean in this town to say as a moral proposition that no one who works full-time here should have to live in poverty,” he continued. “To contribute to this discussion, we’ve discussed engaging several academics, economists to produce a report on what a $15 minimum wage would look like to the economy of Davis, to the everyday worker of Davis, to the businesses of Davis. What the impacts would be.”
The proposal generated immediate pushback from the Davis Enterprise as well as some in the business community.
In an editorial, the Enterprise argued that “Davis businesses should not be saddled with a $15 minimum wage,” and that “good intentions don’t fund the payroll.”
The Enterprise notes, “If it lands on the June ballot, and gets approved by Davis voters, the measure would set the minimum wage at $11 an hour in January 2015, $13 in July 2015 and $15 at the start of 2016. At that point, the minimum wage would be 50 percent higher than the state rate of $10, with further increases linked to inflation.”
Small business owners on the Vanguard are concerned that they would not be able to afford $15 rates for unskilled workers – this would either mean not hiring help, hiring fewer employees, or in some cases worse consequences.
Meanwhile, the politics of minimum wage increase could threaten to splinter governing coalitions. For example, a few weeks ago, Next City reported, “From a victory for L.A.’s hotel workers to Seattle’s groundbreaking increase to $15 an hour, municipalities are making headway in the effort to bring workers out of poverty and reduce income inequality.”
The efforts in Illinois to raise the minimum wage “have taken a divisive turn, as business interests have pitted workers in Chicago against those in Illinois’ smaller towns and suburbs.”
In mid-November, “after 64 percent of voters agreed that the baseline should be lifted in an election day referendum — state Democrats advanced legislation that would raise the hourly minimum wage in the state from $8.25 to $11 by 2017.”
Meanwhile, in Chicago, “Mayor Rahm Emanuel swayed the City Council in early December to raise the city’s minimum wage to $13 an hour by 2019.”
The state legislature, backed by business interests like the Illinois Retail Merchants Association, is pushing back against the city, “threatening to take away their home-rule authority on the issue. They claim that the city’s proposed wage increase could put Chicago at a competitive disadvantage and drive businesses out of state.”
“There’s no problem raising the state to $10 or $11 and then Chicago raising its own to $13 or $15, as we had originally pushed for,” says Aileen Kelleher of the coalition Raise Illinois. “There’s really no conflict at all, but it was a manufactured conflict by legislators when City Council and the Mayor passed the $13 ordinance. [House] Speaker Madigan got upset and refused to hold a vote on the minimum wage at all. As of right now, 64 percent of Illinois voters want a minimum wage [increase] but legislators are woefully preventing that from happening based on a tight dispute between the city and the state.”
The Vanguard has presented this issue more than once, to date, but has not really weighed in with our own view. On the one hand, wages have stagnated in recent years. Living wage, according to one calculation in Yolo County is $10.42 – that is more than the current minimum wage. That number increases to $15 per hour for two adults and $18 to $20 per hour when there is a child involved.
On the other hand, businesses are operating on low margins as it is, and pushing up the minimum wage too much, too fast, will likely lead to layoffs and perhaps threaten businesses with existence.
From that perspective, it seems like we should push to get minimum wage up to about $10.50 or $11 per hour within the next year or two. We could then seek to have an inflation inflator which would push up wages by between 2 and 3 percent each year.
Starting at $11 per hour in 2016 and then increasing it by 2% per year would push the rate up to $13.15 per hour by 2026. That would give businesses an incremental increase generally around 20 cents per year but avoid what has happened in the past – which is earnings depleted by inflation and then a quick spike of $1 or more that jolts businesses.
Would either side accept such a compromise? It remains to be seen.
—David M. Greenwald reporting