Minimum wage; increases to $10 per hour effective July 1, 2020. (HB395)

Introduced By

Del. Jeion Ward (D-Hampton) with support from 11 copatrons, whose average partisan position is:

Those copatrons are Del. Lashrecse D. Aird (D-Petersburg), Del. Lamont Bagby (D-Richmond), Del. Josh Cole (D-Stafford), Del. Karrie Delaney (D-Centreville), Del. Eileen Filler-Corn (D-Fairfax Station), Del. Elizabeth Guzman (D-Dale City), Del. Charniele Herring (D-Alexandria), Del. Mark Keam (D-Vienna), Del. Kaye Kory (D-Falls Church), Del. Sam Rasoul (D-Roanoke), Del. Ibraheem Samirah (D-Herndon)

Progress

Introduced
Passed Committee
Passed House
Passed Senate
Signed by Governor
Became Law

Description

Minimum wage. Increases the minimum wage from its current federally mandated level of $7.25 per hour to $9 per hour effective July 1, 2020; to $11 per hour effective July 1, 2021; to $13 per hour effective July 1, 2022; and to $15 per hour effective July 1, 2023, unless a higher minimum wage is required by the federal Fair Labor Standards Act. The measure also provides that the Virginia minimum wage applies to persons whose employment is covered by the FLSA and to public employees. Read the Bill »

Status

01/02/2020: Awaiting a Vote in the Appropriations Committee

History

DateAction
01/02/2020Committee
01/02/2020Prefiled and ordered printed; offered 01/08/20 20103121D
01/02/2020Referred to Committee on Labor and Commerce
01/26/2020Assigned L & C sub: Subcommittee #1
01/28/2020Subcommittee recommends reporting with substitute (5-Y 3-N)
02/04/2020House committee, floor amendments and substitutes offered
02/04/2020Reported from Labor and Commerce with substitute (12-Y 9-N) (see vote tally)
02/04/2020Referred to Committee on Appropriations
02/04/2020Committee substitute printed 20107652D-H1
02/04/2020Incorporates HB433 (Carroll Foy)
02/04/2020Incorporates HB583 (Guzman)
02/04/2020Incorporates HB615 (Plum)
02/07/2020Assigned App. sub: Compensation & General Government
02/07/2020House subcommittee amendments and substitutes offered
02/07/2020Subcommittee recommends reporting with substitute (5-Y 3-N)
02/07/2020Committee substitute printed 20107949D-H2
02/07/2020Incorporates HB433 (Carroll Foy)
02/07/2020Incorporates HB583 (Guzman)
02/07/2020Incorporates HB615 (Plum)
02/07/2020Reported from Appropriations with substitute (13-Y 9-N) (see vote tally)
02/09/2020Read first time
02/10/2020Read second time
02/10/2020Committee on Labor and Commerce substitute rejected 20107652D-H1
02/10/2020Committee on Appropriations substitute agreed to 20107949D-H2
02/10/2020Pending question ordered
02/10/2020Engrossed by House - committee substitute HB395H2
02/11/2020Impact statement from DPB (HB395H2)
02/11/2020Pending question ordered
02/11/2020Read third time and passed House (55-Y 45-N)
02/11/2020VOTE: Passage (55-Y 45-N) (see vote tally)
02/12/2020Constitutional reading dispensed
02/12/2020Referred to Committee on Commerce and Labor
02/17/2020Reported from Commerce and Labor with substitute (12-Y 2-N) (see vote tally)
02/17/2020Committee substitute printed 20108493D-S1
02/19/2020Constitutional reading dispensed (39-Y 0-N) (see vote tally)
02/20/2020Read third time
02/20/2020Reading of substitute waived
02/20/2020Committee substitute agreed to 20108493D-S1
02/20/2020Reading of amendments waived
02/20/2020Amendments #'s 1-9 by Senator Newman rejected (20-Y 20-N) (see vote tally)
02/20/2020Chair votes No
02/20/2020Reading of amendment waived
02/20/2020Amendment #10 by Senator Newman agreed to
02/20/2020Engrossed by Senate - committee substitute with amendment HB395S1
02/20/2020Passed Senate with substitute with amendment (21-Y 19-N) (see vote tally)
02/24/2020Placed on Calendar
02/24/2020Senate substitute with amendment rejected by House 20108493D-S1 (1-Y 97-N)
02/24/2020VOTE: REJECTED (1-Y 97-N) (see vote tally)
02/24/2020Impact statement from DPB (HB395S1)
02/26/2020Senate insisted on substitute with amendment (39-Y 1-N) (see vote tally)
02/26/2020Senate requested conference committee
02/27/2020House acceded to request
02/27/2020Conferees appointed by House
02/27/2020Delegates: Ward, Krizek, Fariss

Comments

Fred Woehrle writes:

I am concerned about the major job losses that would result from a $15 minimum wage. I don't object to an increase in the minimum wage to $10 or $12.

But $15 is too high for Virginia. That's because it exceeds what some employers can afford to pay, and what employees need to live on in parts of Virginia that have very low living costs. A $15 minimum wage would also result in Virginia losing hundreds of millions of dollars in earned-income tax credits and other federal funds that currently flow to low-income workers.

Economists say a $15 minimum wage would lead to substantial increases in unemployment and job losses, and also higher prices for shoppers. In one recent survey, 74 percent of economists oppose a $15 minimum wage. These economists who oppose a $15 minimum wage include many Democratic economists. Only 12% of the economists polled were Republicans; most were Democrats or independents.

The survey results are consistent with other polls, such as an earlier one that found that 72 percent of economists oppose a $15 minimum wage.

Alan Krueger, chairman of the White House Council of Economic Advisers under Obama, called a $15 minimum wage "a risk not worth taking," one that would "put us in uncharted waters, and risk undesirable and unintended consequences." Clinton administration economist Harry Holzer said a $15 minimum wage would be "extremely risky," particularly for young and less-educated workers who need to gain work experience.

Whether a minimum wage increase leads to substantial job losses depends on whether the minimum wage is raised too high compared to the median hourly wage. That would be the case for a $15 minimum wage in Virginia. There are Virginia counties, especially in its southwest, where the median wage is less than $15 per hour (such as Grayson, Mathews, Patrick, Appomattox, Floyd, and Northampton counties). The Bureau of Labor Statistics notes that the Roanoke region has a median hourly wage of $16.76. But rural counties often have a lower median hourly wage than that, because it costs less to live there. Some of them have median hourly wages below $15, meaning that even experienced workers are paid less than $15 an hour -- because employers can attract even experienced workers for such wages due to how little it costs to live there.

Obviously, employers in those counties cannot pay everyone a minimum wage that is higher than the current typical wage without many such employers going bankrupt (most of them have very small profit margins). But that is what a $15 minimum wage would do in Virginia. And it is not as if a job paying less than $15 an hour is worthless. In southwest Virginia, many middle-class people can easily live on less than $15 per hour. Houses cost so little in places like Grayson County (assessed home values average not much above $100,000, a tiny fraction of home values in Northern Virginia), that most people there own their own home and lead a middle-class lifestyle, despite having a median wage of less than $15 per hour.

Economists say Maryland will lose up to 99,000 jobs due to its gradual increase in the minimum wage to $15. Virginia could lose far more jobs, because it has many more areas with low living costs and low wages to match, than states like Maryland that have previously adopted a $15 minimum wage.

Also, a $15 minimum wage would result in Virginia losing hundreds of millions of dollars in federal funds, such as earned-income tax credits that now flow to low-wage workers, but would be either phased out as their wages rise, or stop flowing to those workers as they lose their jobs, because only people who keep their job can qualify for earned-income tax credits. When workers' wages rise, their earned-income tax credits and other federal benefits gradually get phased out. A $15 minimum wage would also lead to some employers moving to lower-cost states like North Carolina and Tennessee.

If the minimum wage is raised high enough, there will also be substantial increases in consumer prices, which will negatively effect workers. The average profit margin of a grocery store is only 1-3%, so wage increases will be passed along to consumers in the form of higher prices. Manufacturers won't be able to absorb a large increase, because they compete with businesses operating out of state, that will have lower wage levels (like North Carolina and Tennessee, which are not going to adopt a $15 minimum wage). The average corporate profit margin is only 7.9% (6.9% if banks are excluded), notes AEI's Mark Perry.

An economist at Moody's estimated that up to 160,000 jobs will be lost in California’s manufacturing sector alone from its gradual increase of the minimum wage to $15. And that's the case, even though California is far better situated than Virginia to handle a $15 minimum wage, because it has higher living costs, and fewer areas with lower median wages.

M. Pitney writes:

Simply put, this bill will absolutely crush small businesses, resulting in job losses and shuttered store fronts across the state.

Most small businesses - mine included - do not make enough margin to double or even triple their current payroll. This bill will require just that. With each proceeding year as the minimum wage is ratcheted up by another 10% to 25% there will be a corresponding number of businesses that will need to lay-off employees or close their doors.

The bill is a solution in search of a problem and will substantially disrupt the equilibrium in the state's labor market. At the moment businesses like mine pay more than minimum wage. We simply can't attract employees who will work for only $7.25 an hour - even unskilled labor. In my location the pay the market will support (the cost point where supply meets demand) is already above the federal minimum wage. However, artificially increasing the cost point with substantial minimum wage hikes will throw the market out of equilibrium. Ultimately there will be less demand for labor and more supply of labor, i.e. higher unemployment.

In order to cover the higher costs of labor mandated by this bill businesses will need to (1) increase sales, (2) increase prices, and/or (3) reduce expenses. Anyone who operates a business will tell you how difficult it is to do any one of these successfully. In order to survive businesses will need to aggressively do all three. Many will not succeed. What will remain will be those businesses that are run by large corporations who can mitigate the added labor cost through off-shore production and high-level corporate financing. The mom-and-pop businesses will die in the state.

This bill will result in higher consumer prices, higher unemployment, fewer businesses, lower taxes to the state, and fewer choices for the consumer. Those who it is intended to benefit, the low-skilled laborer, will be hurt the most

If this bill passes business owners like myself will use the implementation timeline as a countdown metric to when we will close our doors and lay-off our employees. It will be like watching sand run through an hour glass

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