Bacon's Rebellion

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Legislative Updates: Minimum Wage

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by

James A. Bacon
in ,

by Hans Bader

On January 28, a subcommittee in Virginia’s House of Delegates apparently voted 5-to-3 to raise the state’s minimum wage to $15, and to eliminate some longstanding exemptions to the minimum wage. The vote was along party lines.

The House’s bill is harsher on employers than the companion bill in the state Senate. On Jan. 27, the Senate’s Commerce and Labor Committee voted to gradually raise Virginia’s minimum wage from $7.25 to $15, or to $11.75 for employers that provide health insurance.

Blue Virginia makes clear that the House subcommittee voted for a uniform $15 minimum wage, unlike the Senate. But the Legislative Information System doesn’t contain the text of the bill at the time of this writing.

Here is what the legislative website gives me when I click on the link for the amended bill:

I discussed earlier how a $15 minimum wage would put added pressure on the state budget, and would likely eliminate large numbers of jobs.

Here is how the legislative website describes the House bill as introduced:

Minimum wage. Increases the minimum wage from its current federally mandated level of $7.25 per hour to $9 per hour effective July 1, 2020; to $11 per hour effective July 1, 2021; to $13 per hour effective July 1, 2022; and to $15 per hour effective July 1, 2023, unless a higher minimum wage is required by the federal Fair Labor Standards Act. The measure also provides that the Virginia minimum wage applies to persons whose employment is covered by the FLSA and to public employees.

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17 responses to “Legislative Updates: Minimum Wage”

  1. LarrytheG Avatar
    LarrytheG

    Is there an FIS that shows how many jobs are affected when the first phase goes into effect in July 2020?

    what happened to the idea of regional variation?

    I personally do not buy the job loss claims, but if I did and I wanted to convince others – why not have some think tank like TJI set up an active study to measure actual job loss and show what kinds of jobs “lost” and geographic distribution, etc AND then use it against the Dems come elections?

    A REAL study, not some Conservative guy in Pound, Virginia saying he had to lay off his housekeeper or some such. A REAL state-wide study?

    Otherwise, many will remain as “skeptics”.

    1. Steve Haner Avatar
      Steve Haner

      Nothing has passed yet, and with the two versions in conflict there will have to be some compromise. Stay tuned. I do think the Senate will insist on the language that calls on the Virginia Economic Development Partnership to study and suggest regional variations. I do buy the job loss claim, because this just tilts the field in favor of technology. More ordering kiosks, for example. But that trend is there anyway….and staying stalled at $7.25 was an untenable position, making the whole idea of a minimum wage somewhat moot. It was going up…but to more than double it does send a strong signal to employers about where to place their stores, etc. If you play the tape on the Senate hearing you will hear plenty of testimony from the non-urban areas.

      I will send you the address for your grant check, Larry, and start the study as the higher wages kick in. 🙂

  2. LarrytheG Avatar
    LarrytheG

    re: ” I do buy the job loss claim, because this just tilts the field in favor of technology. More ordering kiosks, for example. But that trend is there anyway”

    What KILLS businesses is other businesses being more competitive. If a kiosk saves labor costs and increases profits – then the better competitors will do it and benefit.

    We’re talking about some jobs at least that are already on the cusp of being automated or replaced by technology in some way. All the minimum wage does is accelerate it.

    re: the “study”. Since I’m a skeptic, I want the folks who are “believers” to convince me with honest data and studies.

    I’ve read several “studies” and they are painfully biased. The most interesting studies by the way are the ones that study an MSA that straddles a jurisdictional border where one side has minimum wage laws different from the other side.

    The honest studies I have seen on this are either inconclusive or show minor variation – not systemic region-wide job loss.

    The problem with Conservatives thinking on these things is that the “theory” assumes all factors but the one are held constant – and the resulting analysis is a simple demand/supply or equivalent dynamic.

    In the real world there is no such environment. There are many moving parts that influence and are influenced. You can still do the honest study and look at the actual data and metrics – but you have to do that, you can’t cherry-pick or pollute with anecdotal evidence.

    A straight-up, before and after study… financed by those who swear it’s true. How about it? TJI should be salivating all over themselves at this prospect.

    1. Steve Haner Avatar
      Steve Haner

      Studies exist now to support whatever position you wish. We’re about to have a real life experiment…but here is the wrinkle even Bader is missing. The minimum wage is not in isolation. It is one of several measures passing that will add to the cost of employees, giving managers increased incentives to reduce labor, especially unskilled and low skilled labor. Mandating 12 weeks of family or medical leave (every year?), creating a half dozen new protected classes and causes of action, possibly repealing right to work or at least forcing dues on non-members, discouraging independent contractor classifications.

      It is the cumulative impact of so many changes in so little time which will make the big impact. Points south will benefit. There will be some jobs lost, but the real hit will be jobs simply not created or that end up in TX, NC, SC, Fla.

      1. Steve Haner Avatar
        Steve Haner

        And Bader made this excellent point in a longer piece on this he posted elsewhere, and in his earlier post on this topic, points that a tax wonk like me would make (if I weren’t writing on other issues):

        “Federal benefits like earned income tax credits get phased out as a minimum wage increase raises the pay of a low-wage worker. As Henry Schmid noted in the Wall Street Journal, “the tax implications of going from a $10- to a $15-an-hour minimum wage” are fiscally “very significant. For a family of four with both spouses making the minimum wage, their federal tax will increase from $4,106 to $7,219, payroll tax will increase from $2,579 to $3,869, their earned-income tax credit (EITC) will be reduced from $596 to zero … and the $2,400 food-stamp credit will be lost. Of the $20,800 increase in income in going from $10 to $15 an hour, $7,778 will be diverted to the government, which doesn’t include loss of other income-dependent government welfare programs and added costs due to the resulting inflation. Over one third of the wage increase will flow to the [federal] government.”

        Now, to me, it makes more sense to pay people better than to give them benefits….but no question the Taxman will be first in line for a healthy cut, especially since Virginia is notorious for heavy taxes on the lower incomes….have we talked about the standard deduction?

        1. LarrytheG Avatar
          LarrytheG

          And I had asked the question – if an increased minimum wages results in lower entitlements, doesn’t that save taxpayer money?

          Oh wait – you’re arguing that Virginia will LOSE that money, right?

          Now THAT’s a cogent and compelling Fiscally Conservative argument if I ever heard one!

          How about entitlement costs in Virginia itself? TANF, Medicaid, etc?

          Oh wait – THAT would make it much harder to make the first argument!

      2. LarrytheG Avatar
        LarrytheG

        All the more reason for TJI and others to “instrument” and collect data to demonstrate the harm – not just natter and blather about it.

        1. LarrytheG Avatar
          LarrytheG

          Here’s even MORE reason for TJI to get in this game:

          ” What the Card-Krueger Study Tells Us about the Minimum Wage
          The minimum wage kills more future jobs than existing ones”

          I put this in the realm of “put up or admit you’re wrong”….

          All we get is the theory – the mantra repeated over and over and
          that studies that show otherwise are “flawed”.

          What is it with these folks? Ideology trumps the reality?

    2. WayneS Avatar
      WayneS

      I also believe the job loss claims, but for the sake of argument let’s assume that more than doubling the minimum wage to $15 per hour will not cause any job loss.

      I’ll go ahead and assume that every business and every employer is willing to pay this new wage to every unskilled laborer in their employ, even though they know that in the current economy the work produced by those employees is not worth $15 per hour. In the short-term this may seem like a great way to assure that more people make a “living wage”.

      However, there are other ramifications associated with this artificial setting of the value of unskilled labor. If unskilled laborers are suddenly making $15 an hour, what affect do you think it will have on semi-skilled and skilled labor? I can tell you. It will cause these workers to justifiably demand pay raises. After all, they have skills – why should some unskilled worker be paid at the same rate, or even nearly the same rate, as they are being compensated for their efforts.

      The real effect of this increase in the minimum wage is an overall increase in wages across the entire spectrum of workers – from the lowest-paid to the highest. Agriculture workers, industrial workers, miners, skilled tradesmen, truck drivers, construction workers, etc., etc. Everyone benefits because they are all making more money.

      However, the other side of that equation is increased prices for the things they need: food, manufactured goods, raw materials, furniture, transportation, houses, etc. etc. Everything costs more because everyone is being paid more for their labor, and increased labor costs mean higher prices – for everything.

      The end result is that $15 per hour becomes the “new” $7.25 per hour (plus or minus a few cents).

      I think the main problem is that far too many people “feel” that unskilled, minimum wage, employment should pay enough money for someone to earn a living from it. The primary purpose of entry-level jobs is to provide people with that “first job” experience, during which most of them realize they don’t want to be working for minimum wage their entire lives, which leads them to seek training and/or education so that they can earn a true living wage, or even more.

      If you’re trying to make a career working for minimum wage then you need to reevaluate your life choices.

      1. spencer Avatar
        spencer

        1) There is no such thing as unskilled labor. Every job requires gaining a skill.

        2) Everyone understands that an increase in the minimum wage will ultimately push all wages higher (that’s part of the appeal). The middle class isn’t earning enough to make ends (childcare + eldercare, housing, healthcare, college, $30k basic pickup trucks) meet either. Inflation happens without a raise in the minimum wage (which is how we got here).

        3) If you believe the hype, the economy has never been better. Unemployment is at a record low. Why is it that wages don’t reflect this? Where is the windfall of good paying jobs? If everyone is working, how can a low wage earner move up (those jobs are already held by other people). If low skill, low wage jobs are all that are being created, how do you move up the employment ladder? Can the millions of low wage workers all ascend with hard work and an education (and how do they pay for that on $7.50 an hour?) if there is no room for them? If they can’t, isn’t it cruel to keep them in poverty? Can we really demand that millions of people work their entire lives only to struggle every day (healthcare and childcare costs, unreliable transportation, gas, food, dental care..) so that the rest of us can enjoy their labor at no personal cost?

        4)Can we stop pretending that only teenagers work minimum wage jobs? They are held by adults (and seniors).

        **bleeding heart alert**
        I’d personally rather live in a country where everyone was poor than in one where rich people whine about poor people getting a raise.

        Do you honestly believe that this is as good as it gets (best economy ever!)? If not, what can be done to make it better? Turning low wage jobs (the only ones being created, the lion’s share of jobs that are actually necessary In the future) into living wage jobs seems like a start. Of course inflation will follow and 10 years from now $15 and hour won’t be enough to live in Bedford (indexing future increases to inflation will help). In the meantime, people who have been struggling for years (a lifetime) can get a reprieve. They have deferred maintenance on themselves, their cars, their belongings… that money will go right back into the economy.

        1. WayneS Avatar
          WayneS

          “I’d personally rather live in a country where everyone was poor than in one where rich people whine about poor people getting a raise.“

          Perhaps you should consider moving to Venezuela. Their government is working hard to make sure everyone is poor.

          And how dare you accuse me of being rich. You don’t know me at all.

          1. LarrytheG Avatar
            LarrytheG

            @Wayne.

            Nope. This should not be about your political or ideological beliefs but whether the claim is true is not.

            I’m actually someone who does belief the govt should NOT set prices.

            but I’m also someone who thinks we should actually understand what happens in the real world where people get entitlements and minimum wage.

            Minimum wage and other laws in all civilized countries do not make them like Venezuela. If that were actually true, big changes would be made overnight!

            So a good question is – for every dollar of increased minimum wage – does it result in a dollar saved for entitlements or other programs – like “affordable housing” to ?

            If it does – what is the better path – minimum wage or entitlements?

            We ought to be making decisions like this on pragmatic realities not ideology and personal beliefs.

            What I expect from the anti-minimum-wage folks on entitlements is that we probably should get rid of them also.

            That’s not a winning argument politically or otherwise.

  3. sherlockj Avatar
    sherlockj

    The reality is coming, Larry. Do you own a small business?

    1. LarrytheG Avatar
      LarrytheG

      Got a question for you Sherlockj.

      If you travel the interstate and you get off at an exit for gas and food, do you look at the price of the food and decide not to buy it if it is too expensive? Do you actually KNOW if it is more costly than normal?

      what say you?

    2. sherlockj Avatar
      sherlockj

      You answered my question with a question. Simple one – do you own or have you ever owned a small business? In answer to your question, I take the train whenever feasible.

      1. LarrytheG Avatar
        LarrytheG

        I answered up thread. I have not owned a small business but I do not live in a cave either and am aware of lots of states with minimum wage laws and I’m asking – is there data to show that those states have less small businesses, lower small business economic activity, or more unemployed , etc? Metrics to demonstrate the actual impact of minimum wages.

        So you take the train. Do you refuse to buy food or drink on the train or near their stations that is higher than food further away with more competition?

        I’m just a skeptic about this. I’ve not seen convincing data and mosty what I hear is what people “believe” based on “theory”. Theory basically means to measure an effect, you have to keep everything else in the equation – a constant – it cannot change so that you can see for each change in one thing the impact. But the real world is not like that. There are a lot of moving parts and the example I gave of an interstate exit – or a train station food place where food is sometimes significantly higher in cost but people still buy it because they are captive.

        Further, most folks cannot honestly tell you how much a soda or a burger actually costs – it varies – sometimes a lot. Sometimes the soda or burger or small in size for the same price as bigger versions. All of this plays into “markets” to the point where the actual impact of a higher minimum wage on a burger – might be 3 cents or a nickle – not something that will cause people to not buy.

        What drives me nuts beyond the “believers” is the so-called “Think Tanks” that cook up bogus studies to support their beliefs which are primarily rooted in pure theory – not real world markets.

        Higher prices – not only labor but products and services tend to do two things:

        1. – the better competitors get more efficient, squeeze out more waste – not only labor – but use of consumables, and services like pest control.

        2.- the less better competitors suffer economically and some leave the market and their share goes to better competitors who actually hire more.

        Don’t believe it? Look at Walmart or Dollar General and “small mom/pop businesses.

        what killed those businesses – minimum wage or stronger competitors?

  4. LarrytheG Avatar
    LarrytheG

    @sherlockj

    Are there small businesses in places that already have minimum wage laws? Can you show with real data that places that have minimum wage laws have less small businesses?

    I’m not advocating any particular minimum wage or even the concept but I do question the supposed “logic” behind it and consider it to be more ideology that real impacts.

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