States Leading the Way on Raising Minimum Wage
By Mary Branham, CSG Managing Editor
President Barack Obama called for raising the federal minimum wage—and encouraged leaders at other levels of government to do the same—in his State of the Union address Jan. 28.
“To every mayor, governor, state legislator in America, I say, you don’t have to wait for Congress to act; Americans will support you if you take this on,” Obama said.
Several states have been far ahead of the president in addressing the issue. Jennifer Burnett, program manager for fiscal and economic development policy at The Council of State Governments, said 43 states have or are taking steps to raise the minimum wage. That includes 34 states that have had some movement—either through legislation or initiatives—on the issue this year, according to an Associated Press report.
“State legislatures aren’t waiting for the federal government to act,” said Burnett. “They are taking the initiative and tackling labor and wage issues, including a debate about increasing the minimum wage.”
Washington Gov. Jay Inslee, for instance, proposed raising what is already the highest minimum wage in the country by as much as $2.50 an hour
“There are tens of thousands of jobs that people depend on that don't provide a living wage in our state,” Inslee said in his state of the state address Jan. 14. “An increase in minimum wage means more money being spent in our economy.”
That $12 an hour wage in Washington, if it passed, would be higher than the minimum wage hike that Obama proposed. But the president maintained it would boost wages and also help businesses.
“Profitable corporations like Costco see higher wages as the smart way to boost productivity and reduce turnover. We should too,” Obama said.
“Today the federal minimum wage is worth about 20 percent less than it was when Ronald Reagan first stood here,” Obama said.
Sens. Tom Harkin and George Miller are sponsoring a bill to raise the federal minimum wage from $7.25 to $10.10 an hour.
“This will help families. It will give businesses customers with more money to spend. It does not involve any new bureaucratic program. So join the rest of the country. Say yes. Give America a raise,” the president said. “Give ’em a raise.”
State leaders in Florida, Iowa, Kentucky and Maryland also have proposed the $10.10 wage. Other proposed minimum wages range from $8.50 an hour in Arkansas to $12.50 in Vermont.
Opponents of raising the minimum wage argue the mandated hike would kill jobs, but economists differ on whether that will occur.
John Schmitt of the Center for Economic and Policy Research explores the issue in a February 2013 paper. He believes a modest hike wouldn’t affect employment levels much. Businesses, he said, could respond in a number of different ways, such as cutting back on health care benefits or hours, though he said there’s little evidence businesses do so. They also could raise prices or cut wages for other higher-paid workers.
Business owners also might add tasks to workers and workers might respond by voluntarily working harder, Schmitt said.
“Individual establishments will follow different paths that depend on a complex set of circumstances that economists ... cannot fully capture or explain,” Schmitt concludes.
Burnett expects discussion throughout the current legislative sessions, regardless of where the federal bill goes.
“Although the minimum wage won’t be raised in all of those states, the conversation is happening,” she said.