The Commonwealth Iconoclast

A site dedicated to covering issues relevant to the Commonwealth of Virginia, and nation at large, plus other interesting things too, as I see fit...

Saturday, January 14, 2006

Raising the minimum wage in the Commonwealth: Opponents use loopy logic

Virginia's business lobbies are gearing up this winter to defeat Delegate Vincent Callahan (R-Fairfax) and state Senator Charles Colgan (D-Prince William) attempt to increase Virginia's minimum wage requirement above that of the presently Federally mandated rate of $5.15 per hour. According to the Richmond Times-Dispatch this morning, Senate Bill 480 (sponsored by Colgan) and House Bill 539 (sponsored by Callahan) "would raise the minimum wage to $6.15 this July, $7.15 on July 1, 2007, and $8.15 a year later. In subsequent years, the minimum wage would be adjusted annually for inflation."

As to be expected pro business lobbies - such as the National Federation of Independent Business, Va. Chamber of Commerce - are getting their "ducks in a row" in order to defeat Senate Bill 480 and House Bill 539. Delagate Callahan acknowledges in RTD article that increasing Virginia's minimum wage rate above the the Federally mandate is "An uphill battle.."

Though $5.15 per hour is the Federally mandated wage (per the 1938 Fair Labor Standard Act) a few states, thanks to former President Clinton, have set minimum wage rates "above and beyond" the Federally mandated minimum rate. Presently there are 12 states that have a minimum wage higher than the Federally mandated rate. Of course those states with minimum wage rates higher than the Federally mandated rate are the "usual suspects" and Florida.

The article in the Times-Dispatch points out that of the 3.8 million workers in Virginia, roughly 43,000 earn minimum wage. If you do the math - which I hope I did correctly - minimum wage earners account for approximately 1.1 percent of the total labor force in the Commonwealth. Therefore I believe this segment of Virginia's labor force could be viewed in either one or two ways: Too insignificant in size to mandate an increse in the minimum wage above Federal standards, or too insignificant in size not to mandate an increase in the minimum wage above Federal standards.

Since the inception of of the Fair Labor Standard Act there have been 20 (I could be off by one or two) increases in the Federally mandated minimum wage. Also, the last increase - to $5.15 - was seven years ago, the second-longest stretch since the minimum wage was enacted in 1938. As expected each time an increase in the Federal minimum wage is proposed pro business lobbies flex their political mussle in order to kill an increase. Sometimes they win, sometimes they loose - though it appears these pro business lobbies have been doing a great job as of late.

Generally, pro business lobbies use the same arguments/talking points to argue against increases in the minimum wage. I really don't believe that even pro business lobbies expect the minimum wage to stay the same indefinately, but I do think that they are obligated to put up a good fight to any proposed increase in order to satify their constituency. (Ok, that's stating the obvious).

But Gordon Dixon's - a lobbyist for the National Federation of Independent Business - logic for not increasing Virginia's minimum wage probably isn't the result of research conducted by the CATO Institue. Mr. Dixon states, "If employees making the minimum wage get an automatic raise becaue the law is changed, other employees making more than minimum are going to ask where their raise is." Now had Mr. Dixon instead quoated one of the thousands of pro business funded research talking points in order to argue against the merits of increasing the minimum wage, I think we all could agree that it would be fairly debatable. But the idea that increasing salaries of one of the smallest segments of Virginia's labor force is going to be the impetuous for mass salary increases throughout the Commonwealth, and cripple Business, is fairly halarious. Let me make it clear to my employer, if the janitor in our office gets a bump from $5.15 to $8.15 (that's over a 60 percent increase) I'll be expecting the same! I don't know if this sort of logic would persuade my employer to give me an increase in salary? But according to Mr. Dixon it would be grounds for a raise! (How much does the NFIB pay Mr. Dixon to make such insightful an thought provoking comments? For their sake, hopefully not a penny over $5.15 an hour.)

Regardless, you can count on Senate Bill 480 and House Bill 539 being killed quitely in committee without too much fuss. It will be interesting to see if Virginia's "pro family" lobbies (Family Foundation, Valley Family Forum, et. al) will use their political clout to attempt to advance these Bills based upon moral grounds? Could you see a pro family lobby making the case that an increase to the Commonwealth's mimimum wage would increase earnings to some of Virginia's most economically distressed families? Oh, on second thought these pro family lobbies are probably too busy focusing their attention and resouces on issues that really matter to econonomically distressed families, such as banning gay marriage.

3 Comments:

  • At 1/14/2006 8:53 PM, Anonymous Brock Haussamen said…

    I share your outrage. A few points, though. The number of states with higher minimums is not 12, as you state, but 16, with several more probably on the way this year. And Florida is important not only because it is not just another liberal state but also because it (like Oregon and Washington) indexes its minimum so it rises each year with inflation--just as the Commonwealth bills are proposing. A good system, it seems to me. Better than a savage political fight after years of the minimum wage steadily losing its value. If Florida can do it, perhaps Virginia isn't too far behind.

    Also, figures about numbers of workers earning the minimum can be deceptive. 43,000 in Virginia earning exactly $5.15? Okay, but if you add in those earning a little above the minimum plus others paid illegally at rates below it, the number of working poor who would be helped by the increase is much, much larger.

    My Web site on "Raising the National Minimum Wage: Information, Opinion, Research" at www.raiseminwage.org includes the arguments for and against a higher wage and a discussion of indexing.

     
  • At 1/14/2006 11:05 PM, Blogger Will Vaught said…

    Brock - Thank you for your comments and insight. In case you couldn't tell I'm no labor economist, but I do agree with you that this number - 43,000 - likely underrepresents the real number of low wage workers. Thanks for your web site, I'll definately give it a look.. and yes if there's hope for Florida, Virginia should be capable of some good geniune reform in this area too.

     
  • At 1/15/2006 7:15 PM, Blogger Charlie said…

    Good post. I linked it here:

    http://southarlington.blogspot.com/2006/01/sen-colgans-minimum-wage-bill-is-it.html

     

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