Minimum wage; increases to $9.50 per hour effective January 1, 2021. (SB7)

Introduced By

Sen. Dick Saslaw (D-Springfield) with support from co-patron Del. Kaye Kory (D-Falls Church)

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 is identical to HB 395. Read the Bill »

Status

03/18/2020: Passed the General Assembly

History

DateAction
11/18/2019Prefiled and ordered printed; offered 01/08/20 20100502D
11/18/2019Referred to Committee on Commerce and Labor
01/24/2020Impact statement from DPB (SB7)
01/27/2020Reported from Commerce and Labor with substitute (12-Y 3-N) (see vote tally)
01/27/2020Incorporates SB73 (Locke)
01/27/2020Incorporates SB81 (Marsden)
01/27/2020Incorporates SB816 (Morrissey)
01/27/2020Committee substitute printed 20106933D-S1
01/27/2020Rereferred to Finance and Appropriations
02/04/2020Impact statement from DPB (SB7S1)
02/05/2020Reported from Finance and Appropriations with substitute (11-Y 5-N) (see vote tally)
02/05/2020Committee substitute printed 20107341D-S2
02/06/2020Constitutional reading dispensed (40-Y 0-N) (see vote tally)
02/07/2020Passed by for the day
02/10/2020Passed by for the day
02/11/2020Floor substitute printed 20108108D-S3 (Surovell)
02/11/2020Read second time
02/11/2020Committee substitute rejected 20106933D-S1
02/11/2020Committee substitute rejected 20107341D-S2
02/11/2020Reading of substitute waived
02/11/2020Substitute by Senator Surovell agreed to 20108108D-S3
02/11/2020Amendments by Senator Newman withdrawn
02/11/2020Reading of amendments waived
02/11/2020Amendments by Senator Surovell agreed to
02/11/2020Reading of amendment waived
02/11/2020Amendment #3 by Senator Newman agreed to
02/11/2020Engrossed by Senate - floor substitute with amendments SB7ES3
02/11/2020Printed as engrossed 20108108D-ES3
02/11/2020Constitutional reading dispensed (40-Y 0-N) (see vote tally)
02/11/2020Passed Senate (21-Y 19-N) (see vote tally)
02/18/2020Placed on Calendar
02/18/2020Read first time
02/18/2020Referred to Committee on Labor and Commerce
02/24/2020Impact statement from DPB (SB7ES3)
02/25/2020Reported from Labor and Commerce with substitute (13-Y 9-N) (see vote tally)
02/25/2020Committee substitute printed 20109135D-H1
02/25/2020Referred to Committee on Appropriations
02/28/2020Impact statement from DPB (SB7H1)
02/28/2020Reported from Appropriations (13-Y 9-N) (see vote tally)
03/03/2020Read second time
03/04/2020Read third time
03/04/2020Committee substitute agreed to 20109135D-H1
03/04/2020Engrossed by House - committee substitute SB7H1
03/04/2020Passed House with substitute (54-Y 44-N)
03/04/2020VOTE: Passage (54-Y 44-N) (see vote tally)
03/05/2020Passed by temporarily
03/05/2020House substitute rejected by Senate (2-Y 38-N) (see vote tally)
03/05/2020House insisted on substitute
03/05/2020House requested conference committee
03/05/2020Senate acceded to request (21-Y 19-N) (see vote tally)
03/05/2020Conferees appointed by Senate
03/05/2020Senators: Saslaw, Surovell, Newman
03/05/2020Conferees appointed by House
03/05/2020Delegates: Ward, Krizek, Fariss
03/07/2020C Amended by conference committee
03/07/2020Conference substitute printed 20109919D-S4
03/07/2020Conference report agreed to by Senate (21-Y 18-N) (see vote tally)
03/08/2020Conference report agreed to by House (52-Y 44-N)
03/08/2020VOTE: Adoption (52-Y 44-N) (see vote tally)
03/12/2020Impact statement from DPB (SB7S4)
03/18/2020Enrolled
03/18/2020Bill text as passed Senate and House (SB7ER)
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 (SB7ER)

Comments

Fred Woehrle writes:

Increasing the minimum wage to $10 is fine, but increasing it to $15 is crazy. Way too high for Virginia. Yet this bill would eventually increase it to $15, which would result in big job losses and retail price increases.

In a recent poll, 74 percent of economists opposed a $15 minimum wage. That included not just Republican economists but also a great many independent and Democratic economists -- only 12 percent of the economists in that poll were Republicans, notes Ryan Young. In another poll, 72% of economists opposed a $15 minimum wage. Why? Doubling the minimum wage would result in a lot of unemployment and consumer price increases. Maryland is predicted to lose 99,000 jobs from the $15 minimum wage it is gradually phasing in.

Alan Krueger, former chairman of President Obama’s Council of Economic Advisers, 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.

There are entire counties in Virginia where the median wage is below $15 per hour. These areas could not possibly comply with a $15 minimum wage without large job losses, and consumer price increases, as the Jefferson Policy Journal recently noted in "Big Minimum Wage Increase Bad for Workers."

Fred Woehrle writes:

This bill is wrong to impose a "one-size fits-all" very high minimum wage of $15 on all of Virginia by 2025. $15 might be workable in northern Virginia, but it is way too high for southern Virginia, which has low living costs and low wages to match. No state has ever imposed a $15 minimum wage when it has substantial areas with low living costs, like Virginia does. $15 perhaps might make sense in Senator Saslaw's expensive district, but it makes no sense in the cheap areas of southern Virginia. Maybe this bill could be amended to have a $12 minimum wage in lower-income areas of the state.

Whether a minimum wage increase leads to substantial job losses depends partly on whether the minimum wage is raised too high related to the median hourly wage. That would be the case for a $15 minimum wage in most of southern Virginia, where the median wage is often not much above $15 per hour, and sometimes is even below it. The Bureau of Labor Statistics notes that the Roanoke region has a median hourly wage of $16.76. There are entire counties where the median wage is less than $15 per hour (such as Grayson, Mathews, Patrick, Appomattox, Floyd, and Northampton counties).

Rural counties have a lower median hourly wage, because it costs less to live there. So even experienced workers are often paid less than $15 an hour -- because employers can attract even experienced employees 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. In cheap areas, a job paying less than $15 an hour can be worth it. In southwest Virginia, many middle-class people manage to live on jobs paying less than $15 per hour. Houses cost so little in places like Grayson County (around $100,000, a tiny fraction of what it costs in Northern Virginia), that most people there own their own home and lead a middle-class lifestyle, despite the county 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 the few states like Maryland that are in the process of adopting a $15 minimum wage.

A $15 minimum wage would be costly to state coffers as well. It 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 a substantial rise in consumer prices, which will leave workers worse off. The average profit margin of a grocery store is only 1-3%, so wage hikes 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 -- banks pretty much all pay over $15 per hour already).

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. That's true, 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.

Derek S., tracking this bill in Photosynthesis, notes:

While I do think that $15/hr in the state of Virginia is perhaps too much, I'll always vote to increase it.

A living wage in VA is actually around $12 last I checked. But in 5 years things could change to where $15 could be feasible.

We'll make it work one way or another.

Kermit Zalynski writes:

As of today, 29 Jan, this bill has passed Committee by a 12-3 margin. Unfortunately Mr. Woehrle, the data supporting a no-vote has been ignored in favor of an emotionally based yes-vote.

Ronald N Quasebarth writes:

Overkill in the highest with all the bills already or nearly passed that will destroy more jobs for the lower skilled while inviting in 1000s more illegal immigrants to compete for those fewer and fewer jobs. Yes, we do all want to help those at the bottom of the ladder to rise but what's worse a low paying job or no job at all.

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.

K. Stansick writes:

I am a small business owner in Virginia Beach. I am in favor of raising the minimum wage and viewed an immediate raise to $8.50 with periodic increases to $10.50 as reasonable. Very few of my current staff earns the state minimum as I expect more than minimum performance from those on the clock. A raise from $7.25 to $15.00 over 5 years is daunting. A simple answer is that the price point my products will double over 5 years in keeping with the cost of labor. I believe those currently making a few dollars per hour above the minimum wage will suffer the most. Their rate is not going to double which means the above minimum wage earners will quickly find themselves at or slightly above the minimum standard while the costs of everything around them rises rapidly. Maybe a better answer is to get out the vote and change the demographic of the 21-19 vote tally.

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