Minimum-Wage Hikes Sweep States

By: - September 22, 2006 12:00 am

Voters in a record number of states will decide Nov. 7 whether to hike the minimum wage, continuing an unprecedented two-year trend of state action on an issue that remains bottled up in Congress.

Democratic organizers in Arizona, Colorado, Missouri, Montana, Nevada and Ohio succeeded in certifying ballot initiatives that would require employers to pay more than the .15-an-hour floor Congress approved in 1996 – and has since refused to raise.

Already this year,lawmakers in 11 states — Arkansas, California, Delaware, Maine, Maryland, Massachusetts, Michigan, North Carolina, Pennsylvania, Rhode Island and West Virginia — have enacted new statutes boosting their minimum-wage rates. Of that number, six for the first time increased wages above the federal rate, bringing to 23 the number of states whose lowest-paid workers will make more than the federal minimum.

The number of wage initiatives on the ballot this year surpasses the high-water mark in 1996, when four states voted on wage proposals, said Jenny Bowser of the National Conference of State Legislatures . In the past 10 years, eight minimum wage measures have gone before voters, and only two failed, she said.

With 30 minimum-wage bills considered and 11 enacted this year, legislative activity also hit a 10-year high, according to NCSL data.

In the past two years, more states have raised their minimum-wage rates than in the 68-year-history of the federal minimum wage law. The watershed was the 2004 election, when voters in Florida and Nevada overwhelmingly approved wage hikes while also voting for Republican President George W. Bush. Politicians realized the issue was a “winner,” said Bernie Horn of the Center for Policy Alternatives , a progressive advocacy group focusing on state policy. 

Political analysts on both sides of the issue agree that recent fervor for the issue is as much related to politics as it is to policy.

National polls show broad bipartisan support among Americans for minimum-wage increases. But in the political arena, support for the issue is still largely split along party lines.

Traditionally, Democrats have sponsored minimum-wage hikes as a way to help poor families climb out of poverty, while Republicans have opposed them because they say government-mandated pay raises hurt the local economy and create job loss.

This year, all 30 bills introduced in state legislatures were sponsored by Democrats, according to Horn. Still, some key Republican state lawmakers broke from the pack to support minimum-wage increases.

Republican legislators in Michigan and Arkansas were so worried that minimum-wage ballot measures would drive more Democratic voters to the polls that they preemptively joined Democrats in raising the rate through legislative action.

And two Republican governors – Arnold Schwarzenegger of California and Mike Huckabee of Arkansas – broke party ranks to approve popular wage increases, after vetoing similar bills the year before.

But three other Republican governors – Robert Ehrlich of Maryland, Donald Carcieri of Rhode Island and Mitt Romney of Massachusetts – vetoed wage hikes. Ehrlich’s and Romney’s vetoes were overturned, and Carcieri ultimately signed a second wage bill under pressure of a legislative override.

With governors on the ballot in four of the six states with minimum-wage proposals — plus legislative and congressional seats at stake — Democrats are hoping the initiatives will persuade uncommitted voters to go to the polls and choose their party’s candidates. Political analysts, though, question whether the minimum wage and other so-called wedge issues really boost turnout and sway undecided voters.

“Support for the issue is a mile wide and an inch deep,” said Mike Flynn of the Employment Policies Institute , a group that opposes increases in minimum wage. “A lot of uncommitted voters say they support wage hikes, but not passionately enough to make them vote on that basis,” he argued.

An April 2006 survey by the Pew Research Center for the People & the Press found that 88 percent of the general public approves of minimum-wage hikes, including 72 percent of Republicans. Fifty-nine percent of Democrats and 31 percent of Republicans strongly favored increases. (The Pew Research Center and both are supported by The Pew Charitable Trusts.)

So far, Congress has refused to raise the wage level even though Republican lawmakers worry they may pay a price at the polls. In June, the U.S. Senate rejected 52-46 a proposal to raise the rate to .25. Later, the U.S. House of Representatives narrowly approved an increase to .25 an hour over three years, but tied the wage hike to an estate-tax reduction that killed the bill’s chances in the upper chamber.

Since the minimum wage was established in 1938, Congress up to now has adjusted the rate every few years to help keep pace with inflation.

There is a small chance Congress may take up the issue again before Election Day, but its hopes of passage are dim if it remains tied to an estate-tax cut.

On state ballots, all six wage measures would raise the minimum above the federal rate starting Jan. 1, 2007, and adjust it indefinitely. In five states, wages would be adjusted annually based on inflation, and in Nevada, wages would move up with the federal rate, staying above it.

Currently only four states – Florida, Oregon, Vermont and Washington – have laws that tie minimum-wage adjustments to inflation.

Wage-hike opponents are particularly critical of laws that automatically adjust the minimum based on inflation, because they say wages could be forced up during a time of economic downturn, hurting businesses and depressing the job market.

“It sets a dangerous precedent,” says Tom Foulkes, vice president of state relations with the National Restaurant Association . “It’s one thing to raise the minimum when the economy can handle it, but will it be able to handle it three, four, five years from now?”

But proponents of wage hikes say workers’ wages must be adjusted to keep pace with inflation. “A full day’s wages won’t buy a tank of gas today,” says Oliver Griswold of the liberal research group, Ballot Initiative Strategy Center (BISC). The annual income of a minimum-wage worker is ,712, well below the federal poverty line of ,200 for a family of two.

If approved by voters, minimum-wage workers in Ohio and Colorado would receive .85 per hour; Arizona workers would receive .75; Missouri .50; and Nevada and Montana .15.

Nevada’s measure would allow businesses that provide health-care benefits to pay workers at the federal level of .15 but would raise all others to .15. (Nevada voters approved the measure in the 2004 election, and according to state law, must approve it a second time before the law takes effect.)

Starting Jan. 1, 2007, Vermont will have one of the highest hourly rates in the nation at .80, followed by Connecticut at .65, California and Massachusetts at .50, Rhode Island at .40, and New York and New Jersey at .15. Washington, currently at .63, and Oregon, at .50, are expected to move to the top of the list when their labor departments this month set their new inflation-adjusted wage rates for 2007.

According to the U.S. Department of Labor , about half of minimum-wage workers are under age 25, a statistic that wage-hike opponents cite in arguing that teenagers, not poor parents, are the primary beneficiaries of increases in the minimum rate.  

The percentage of the workforce receiving the minimum varies from state to state, with the highest proportion in Oklahoma and West Virginia at about 4 percent and the lowest in Alaska, California, and Washington at 1 percent or less, according to the labor department.

The proportion of minimum-wage earners in the work force has declined over the past 25 years. Government statistics show the nationwide percentage of workers earning the minimum wage was 15.1 percent in 1980, declining to 2.5 percent in 2005.

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Christine Vestal

Christine Vestal covers mental health and drug addiction for Stateline. Previously, she covered health care for McGraw-Hill and the Financial Times.