Minimum wage; increases to $9.75 per hour, effective July 1, 2020, etc. (SB81)

Introduced By

Sen. Dave Marsden (D-Burke) with support from co-patron Sen. John Edwards (D-Roanoke)

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 $9.75 per hour, effective July 1, 2020; to $10.75 per hour, effective July 1, 2021; to $11.75 per hour, effective July 1, 2022; to $12.75 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). 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

01/27/2020: Incorporated into Another Bill

History

DateAction
11/26/2019Prefiled and ordered printed; offered 01/08/20 20100925D
11/26/2019Referred to Committee on Commerce and Labor
01/27/2020Impact statement from DPB (SB81)
01/27/2020Incorporated by Commerce and Labor (SB7-Saslaw) (14-Y 1-N) (see vote tally)

Comments

Fred Woehrle writes:

Large job losses could result from a $15 minimum wage. This bill would raise the minimum wage first to $9.75, and later to $15. $15 is too high. I would not object to increasing the minimum wage from $7.25 to $12, as Senator Marsden advocated in the past.

But $15 exceeds what many employers can afford to pay. And it exceeds what workers need to live on in cheap 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, former chairman of 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.

Whether a minimum wage increase leads to substantial job losses depends 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 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 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. 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 (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 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). 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.

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.

Bill P writes:

Why not let employers and employees negotiate their pay?
Gov mandated wages and prices never work well.
Disagree? Let's see an example of success.

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