25 Jun Minimum-Wage Debate Pits Cities Against States
Originally posted June 23, 2014 by David Klepper and Blake Davis on http://www.inc.com.
Dominique Mayfield makes $8.25 an hour washing dishes and busing tables at a Syracuse brewpub. Shantel Walker makes $8.50 an hour at her pizzeria in New York City, where the rent is more than double what it is in Syracuse. Two very different cities, but nearly the same wage.
The economic differences between America’s big cities and elsewhere have prompted leaders in Seattle, New York City, Chicago, San Francisco, Oklahoma City, and other cities to push to raise the minimum wage within their borders.
The efforts are running into opposition from state lawmakers from both parties and business groups who say a patchwork of minimum wages could lead to a confusing and unequal business climate in which labor costs would vary dramatically from city to city.
The minimum wage has emerged as perhaps the top issue of a newly emboldened, urban liberal movement that in many places is led not by governors or state lawmakers but by local leaders backed by organized fast-food workers. After years of grappling with state and federal budget cuts, mayors and city councils are pushing back against state and federal officials who they say don’t understand the income inequality of 21st-century American cities.
“So many people have been pushed out of this city,” said Seattle City Councilman Nick Licata, who successfully pushed to raise the city’s wage to $15, more than $5 higher than the state wage. “Local politicians don’t have the luxury of not doing something. The state and federal governments, they’ve been AWOL. They haven’t been engaged.”
The fight to raise minimum wages has lawmakers in many states on the defensive, arguing that higher wages will lead to reductions in hours and jobs for low-income workers–and retail price increases that are likely to hit them hardest. The business-backed American Legislative Exchange Council argues that local minimum wages could lead to a race to the bottom, where businesses locate in whichever city within a region has the lowest starting wage.
“This is a debate that’s happening around the country, and although it’s well intended, it’s misguided,” said Cara Sullivan, a minimum-wage policy expert at ALEC. “In Seattle, they raised it to $15, and right across the city line, it’s $5 less. It increases the cost of doing business for businesses in that city. You’re creating chaos from one business to the next.”
Members of the city council in Providence, Rhode Island, considered raising the minimum wage from $8 to $15, but only for workers in the city’s large hotels. In response, the Democratic leaders of the Rhode Island General Assembly have moved to block the proposal by taking away cities’ authority to set local minimums.
Oklahoma Gov. Mary Fallin, a Republican, signed legislation in April that prohibits cities from setting their own wage after organized labor groups suggested that Oklahoma City raise its wage from $7.25 an hour–the federal minimum–to $10.10.
B.J. Marsh, a single mother in a suburb of Oklahoma City, says the $7.25 she makes requires her to choose between eating or getting to work. Marsh said her 7-year-old son began living with her father to save on expenses and allow her to work.
“I don’t eat because I have to have gas in my car,” she said.
But supporters of Oklahoma’s new law said higher local minimum wages were likely to hurt the very low-income workers they were proposed to help by raising food prices and reducing employment.
“We have seen businesses flee from cities that have tried this in other states,” said Republican House Speaker Jeff Hickman. “Artificially inflating the minimum wage raises the price of everything from housing and rental costs to a loaf of bread, and causes the loss of jobs which means fewer opportunities for those working to feed their families.”
In 2011 and 2012, four states passed laws keeping state minimum wages from being higher than the federal wage. This year, 14 such bills have been introduced, according to the National Conference of State Legislatures.
In New York City, Mayor Bill de Blasio and members of the City Council are seeking authority to raise the local minimum wage to $15–nearly double the state’s $8 minimum. State law doesn’t currently permit cities to set their own minimums, and although Democratic Gov. Andrew Cuomo first warned the idea would lead to a “chaotic” business environment, he now supports a proposal to raise the wage to $10.10 and let cities impose a minimum up to 30 percent higher.
Restaurant owners and business groups have opposed the plan, and on Thursday, it appeared state lawmakers would adjourn without voting on the measure. The state’s minimum wage is already set to increase to $8.75 at the end of this year and to $9 at the end of 2015.
For Shantel Walker, the pizzeria worker in Brooklyn, the proposal would mean nearly $5 more per hour. Walker went to Albany last month to rally for a higher minimum wage outside a McDonald’s at the Capitol. She said it makes no sense that fast-food workers in New York City are held to the same minimum wage as those upstate.
“If we have to do this every week, that’s what we’re going to do,” she said. “We have to fight the powers that be.”