Minimum wage; increases to $9.50 per hour effective July 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 $10 per hour, effective July 1, 2020; to $11 per hour, effective July 1, 2021; to $12 per hour, effective July 1, 2022; to $13 per hour, effective July 1, 2023; to $14 per hour, effective July 1, 2024; and to $15 per hour, effective July 1, 2025, unless a higher minimum wage is required by the federal Fair Labor Standards Act (FLSA). For July 1, 2026, and thereafter, the annual minimum wage shall be adjusted to reflect increases in the consumer price index. The measure also provides that the Virginia minimum wage applies to persons whose employment is covered by the FLSA. Read the Bill »

Status

02/18/2020: In Committee

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02/11/2020Amendments by Senator Newman withdrawn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

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.

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