Minimum wage; increases to $9.50 per hour effective January 1, 2021. (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 $9.50 per hour effective January 1, 2021; to $11.00 per hour effective January 1, 2022; to $12.00 per hour effective January 1, 2023; to $13.50 per hour effective January 1, 2025; and to $15.00 per hour effective January 1, 2026. For January 1, 2027, and thereafter, the annual minimum wage shall be adjusted to reflect increases in the consumer price index. The measure provides that the increases scheduled for 2025 and 2026 will not become effective unless reenacted by the General Assembly prior to July 1, 2024. If such provisions are not reenacted prior to July 1, 2024, then the annual minimum wage will be adjusted to reflect increases in the consumer price index beginning January 1, 2025. The measure creates a training wage at 75 percent of the minimum wage for employees in on-the-job training programs lasting less than 90 days. The measure also provides that the Virginia minimum wage applies to persons whose employment is covered by the Fair Labor Standards Act; persons employed in domestic service or in or about a private home; persons who normally work and are paid on the amount of work done; persons with intellectual or physical disabilities except those whose employment is covered by a special certificate issued by the U.S. Secretary of Labor; persons employed by an employer who does not employ four or more persons at any one time; and persons who are less than 18 years of age and who are under the jurisdiction of a juvenile and domestic relations district court. The measure provides that the Virginia minimum wage does not apply to persons participating in the U.S. Department of State's au pair program, persons employed as temporary foreign workers, and persons employed by certain amusement or recreational establishments, organized camps, or religious or nonprofit educational conference centers. This bill incorporates HB 433, HB 583 and HB 615 and is identical to SB 7. Read the Bill »

Outcome

Bill Has Passed

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
03/02/2020Conferees appointed by Senate
03/02/2020Senators: Saslaw, Surovell, Newman
03/07/2020C Amended by conference committee
03/07/2020Conference substitute printed 20109972D-H3
03/07/2020Pending question ordered (53-Y 45-N)
03/07/2020VOTE: Agree to (53-Y 45-N) (see vote tally)
03/07/2020Conference report agreed to by House (54-Y 45-N)
03/07/2020VOTE: Adoption (54-Y 45-N) (see vote tally)
03/08/2020Conference report agreed to by Senate (21-Y 17-N) (see vote tally)
03/12/2020Impact statement from DPB (HB395H3)
03/18/2020Enrolled
03/18/2020Bill text as passed House and Senate (HB395ER)
03/18/2020Signed by President
03/19/2020Signed by Speaker
03/20/2020Enrolled Bill communicated to Governor on March 20, 2020
03/20/2020G Governor's Action Deadline 11:59 p.m., April 11, 2020
03/23/2020Impact statement from DPB (HB395ER)
04/11/2020Governor's recommendation received by House
04/22/2020Placed on Calendar
04/22/2020Pending question ordered
04/22/2020House concurred in Governor's recommendation (49-Y 45-N)
04/22/2020Senate concurred in Governor's recommendation (20-Y 20-N) (see vote tally)
04/22/2020Chair votes Yes
04/22/2020G Governor's recommendation adopted
04/22/2020Reenrolled
04/22/2020Reenrolled bill text (HB395ER2)
04/22/2020Signed by Speaker as reenrolled
04/22/2020Signed by President as reenrolled
04/22/2020Enacted, Chapter 1204 (effective - see bill)
04/22/2020VOTE: (49-Y 45-N)
04/22/2020G Acts of Assembly Chapter text (CHAP1204)
05/01/2020VOTE: (49-Y 45-N)

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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