What Raise the Wage Would (and Might) Do at State and Local Levels

As I said the other day, Senator Patty Murray and Congressman Bobby Scott have introduced an ambitious bill to at long last raise the federal minimum wage — and at longer last, do away with the sub-minimum tip credit wage.

One might wonder why we need the bill when so many states, plus some local governments have already raised their minimums. The answer lies in part in the higher and uniform wage floor the Murray-Scott Raise the Wage bill would set.

The other part — more speculative — has to do with how the bill could affect further state and local minimum wage initiatives. Assuming, as seems reasonable, that Congress won’t pass it, we’re likely to see such initiatives as we approach the sixth year since a federal minimum wage increase.

And the more we see, the more we could see the bar raised for employers’ quasi-voluntary initiatives to raise the wage floor for their lowest-paid workers. “Quasi” because they’re clearly responding to well-publicized campaigns they rightly view as threats to their brands — and bottom lines.

Direct Effects on State and Local Minimum Wage Rates

As in the past, state and local governments have grown increasingly impatient at the federal government’s failure to raise the minimum wage. Fourteen states and the District of Columbia passed their own increases last year.

None of them, however, now mandates a wage as high as $12 an hour, though minimums in a few major cities will eventually exceed it. And only four of the new state laws, plus the District’s provide for annual cost-of-living adjustments once their new rates are fully phased in.

Eyeballing the rates they’ve set and the full phase-in dates, I doubt that any, except perhaps the District’s will match $12 in 2020. More importantly, we still have 19 states that peg their minimum wage to the federal or have no minimum wage law of their own.

And only seven states require employers to pay their workers the full minimum wage, even those who often earn tips. Not that we haven’t seen efforts to eliminate tip credit wages in other states — and in the District.

All steamrollered by the National Restaurant Association’s state affiliates, allied groups purporting to represent small businesses and the restaurant industry’s hired gun, the Employment Policies Institute (not to be confused with the Economic Policy Institute).

What the Rates Tell Us

The varying minimum wage rates themselves tell us a couple of things. First — and most obviously — workers in some states will be stuck with the current federal minimum and significantly lower sub-minimum unless the federal law is changes.

Second, also obviously, many millions of workers in most, if not all other states would also get paid more under the Murray-Scott bill. As I mentioned earlier, the Economic Policy Institute estimates 37.7 million by 2020, not counting workers paid the $2.13 federal tip credit wage — or as in the District, a slightly higher sub-minimum.

How Raise the Wage Could Raise Wages Without Changing Federal Law

Much as we might wish, Congress won’t raise wages for those 37.7 million workers and the additional uncounted tip credit workers — not at least, until new elections dramatically shift the party balance. Raise the Wage could nevertheless have near-term, real-world effects.

These would arise from the way the bill may alter the framework within which policymakers and we, the voter/consumer public, assess current and reasonable minimum wages.

Essentially, the proposed minimum could become a new reference point, of sorts, for initiatives to raise state and local minimum wages. The proposed tip credit wage phase-out might become a reference point too.

We already see how the fast-food worker strikes — and more recently, some broader strikes — have made $15 an hour seem just and reasonable for more than an outlier city like Seattle.

The movers and shakers behind San Francisco’s recent ballot measure didn’t just pull their $15 an hour minimum out of a hat. Nor, I think, was the overwhelming voter support for the measure unrelated to the fact that $15 no longer seems like mere pie in the sky.

In fact, it’s made $12 an hour five years from now seem like a quite modest proposal — as indeed, it is. Recall that $12 in 2020 won’t be worth as much as it is today. If it were effective today, a full-time, year round minimum wage worker’s take-home pay would still be less than needed to lift a four-person family above the poverty line.

So Raise the Wage is by no means the be-all-and-end-all. Nor would the sponsors and many cosponsors say otherwise. But it would ease the budget crunch for poor and near-poor working families, narrow the yawning gap between them and the highest earns — and perhaps, as some who ought to know say, also prove a benefit to employers who’d have to pay it.

As I’ve suggested, it may do all of these good things in the not-distant future, even if, as expected, the Republican leaders in Congress let it die because they want to spare their members what could be a troublesome vote.

But we won’t see those good things everywhere and for everyone without changes in the federal law.

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