In Focus: States and Cities Continue to Debate Minimum-Wage Hikes

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​The federal minimum wage hasn't changed since 2009, which has led many state and city legislators and voters to take matters into their own hands. Twenty-nine states currently have a higher minimum wage than the federal $7.25 per hour—ranging from $7.50 in New Mexico to $11 in Massachusetts and Washington (and $11.50 in Washington, D.C.).

Some states have approved incremental increases to the minimum wage that will be phased in over the next few years. In California and Washington, D.C., for example, those rates are scheduled to ultimately reach $15 an hour.

This patchwork of new minimum-wage rates makes it critically important for HR professionals to closely watch developments in the locations where they operate. Here are a few recent updates to note as worker advocates push for a $15 minimum wage and business groups raise concerns about the impact of wage hikes on small businesses.

[SHRM members-only toolkit: Complying With U.S. Wage and Hour Laws and Wage Payment Laws]

Nevada Minimum-Wage Increase Disputed

A proposed increase in Nevada would raise the $7.25 minimum hourly wage by 75 cents an hour starting in 2022 and ending when it reaches $12 an hour. The proposal would have to be approved in this legislative session and in the next one. If passed, it would also have to be approved by voters in 2020. Ruben Murillo, president of the Nevada State Education Association, supports the bill. He said if parents don't earn a living wage, it affects their children's academic performance. However, Randi Thompson, state director of the National Federation of Independent Business, said the move would hurt small businesses, which make up 98 percent of employers in the state. (Las Vegas Review-Journal)

Illinois Lawmakers Consider Statewide Hike

An Illinois bill introduced by Rep. Will Guzzardi, D-Chicago, would raise the statewide minimum wage from $8.25 to $15 by 2022. Under the proposal, small businesses would be eligible for a tax credit to offset the expense. Chicago has already approved an incremental increase to $13 an hour by 2019. Business groups say overregulation has made Chicago a less attractive place for companies and raising the Illinois minimum wage to a level that's higher than in neighboring states will create more economic challenges for Illinois businesses. (Chicago Tribune)

St. Louis Increase Takes Effect After Court Battle Ends

On the city level, St. Louis's $10 minimum wage took effect on May 5 after the Missouri Supreme Court approved the measure. The increase was fiercely debated, especially since the rest of the state has a $7.70 minimum wage and employers in neighboring Illinois can pay workers $8.25 an hour (at least for now). The St. Louis ordinance calls for another increase to $11 on Jan. 1, 2018. The city's wage hike doesn't apply to businesses that gross under $500,000 a year or to employers with fewer than 15 workers. It also doesn't apply to employees who work less than 20 hours per calendar year. (St. Louis Post-Dispatch) Legislation to pre-empt local laws with a higher minimum wage than the state's $7.70 per hour passed the Missouri legislature May 12 and is on the way to the governor for his signature. (St. Louis Business Journal)

Maine Legislators Attempt to Roll Back Wage Law

Some Maine lawmakers want to make a change to a voter-approved measure, which will raise the minimum wage from $7.50 an hour to $12 an hour by 2020. The measure also calls for tipped employees' pay to reach the minimum wage by 2024 (tipped employees in Maine currently can be paid $5 an hour). A state legislative committee, however, voted 11-2 on May 10 to recommend that employers retain the right to pay less than the standard minimum wage to employees who make up the difference in tips. The effort was led by Republicans but also had Democratic support. Democratic Rep. Ryan Fecteau said "hundreds of servers" testified that they were concerned about the economic impact this portion of the wage law would have on restaurants. (U.S. News & World Report)

Wage Hikes May Weed Out Low-Quality Restaurants

Researchers at Mathematica Policy Research and the Harvard Business School found that increases to the minimum wage may impact poor performing restaurants more than the ones that customers prefer. A study that was sponsored by user review website Yelp analyzed data from more than 30,000 restaurants in the San Francisco Bay area. The results showed that higher wage mandates may speed up an unsuccessful restaurant's demise but may not hurt a successful business. "If anything, the study shows that a higher minimum wage might make the market more competitive and reduce the number of poor performers," said Paul Sonn, general counsel and program director at the National Employment Law Project. "Some firms are better at adjusting to competitive pressure than others." (The Washington Post)

 

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