States Scrutinize Wage Policies

A handful of states are debating raising their minimum wage beyond the federal rate of $5.15 an hour, but just as many states are acting to block grassroots efforts to force government contractors to pay “living wages” that typically far exceed the federal minimum wage.

Illinois is slated to boost its wage to $6.50 an hour under a measure approved by the legislature that now awaits Gov. Rod Blagojevich’s (D) signature. But Florida and Texas recently joined seven other states which expressly forbid local governments to pass living wage ordinances.

Since the first living wage plan was enacted in Baltimore in 1994, some 100 cities and counties have adopted ordinances that require employers that receive city or county contracts to pay wages higher than the federal minimum wage, according to ACORN, the Association of Community Organizations for Reform Now. A left-leaning organization with national headquarters in Brooklyn, NY, ACORN is the main organizer of living wage campaigns.

Minimum wage and living wage campaigns are building at the state level because labor and community activists — who are behind both drives — have failed in the past six years to convince Congress to raise the federal minimum wage, labor and employer groups told Stateline.org.

States disposed to set their own wage standards tend to have a heavy union influence, such as California and Michigan, while states likely to look with disfavor on living wage campaigns tend to be more conservative, such as Utah and Texas, said Schuyler Porche, an economist at the Employment Policy Foundation, a right-leaning organization that opposes living wage campaigns.

It’s not unusual for states to get involved in an issue widely regarded as more the province of Washington, D.C. “The same thing happened in the 1980s when the federal government didn’t raise [the minimum wage] for nine years,” said Jeff Chapman, policy analyst with the Economic Policy Institute, a left-leaning organization that supports higher wages.

In 1997, the last time Congress lifted the federal minimum wage, only six states had higher rates than the federal wage floor, Chapman told Stateline.org. That number will double if, as expected, Illinois raises its wage.

Increasing the minimum wage “is certainly a staple for Democrats,” said Justin Marks, a researcher with the National Conference of State Legislatures who tracks minimum and living wage proposals.

Lawmakers in at least 20 states considered minimum wage proposals this year, although some legislatures adjourned without the proposals ever seeing the light of day, NCSL’s Marks told Stateline. Among the states still mulling the issue are Delaware, Illinois, Michigan, New Jersey and Rhode Island.

“With the state fiscal crisis not getting any better any time soon … this is something states can do for workers in a time of recession that isn’t going to drastically affect their budgets,” Chapman said. Most state workers are unionized and pay rates are already above the federal rate, so a higher state minimum wage doesn’t affect state budgets.

Instead of approving a one-time wage hike, some states are considering joining Alaska, Washington and Oregon in adopting systems that automatically increase the minimum wage to keep pace with the rising cost of living. State legislatures still in session with “index” proposals include California, Illinois, Massachusetts, Michigan, New York and Rhode Island.

“There is a lot of interest in [the indexing proposal], but there’s also concern,” said Richard Nelson, a state standards adviser at the U.S. Department of Labor. Part of the concern comes from state lawmakers because they lose control over when the rates go up, Nelson explained. Washington saw a spate of proposals this year to modify its indexing system, but none were approved, he said.

Pro-business groups argue that employers cannot afford to pay higher wages, especially during the current economic downturn. “Raising the cost of employing unskilled low-wage workers makes it more difficult for employers to actually employ those people,” Porche said.

He said employers facing higher wages might move to states with lower pay rates.

Business groups have stepped up efforts to curb the burgeoning drives to boost wages, including local living wage campaigns.

Activists’ success at the local level has led states to pass legislation that put the kibosh on local living wage laws (see chart). Some states, such as Florida, Louisiana and Colorado, passed legislation to nullify successful local living wage campaigns. But other states, such as Texas and Utah, made preemptive strikes and passed laws to preempt local living wage laws even though there were no campaigns in their states, Jen Kern, ACORN’s living wage coordinator, said.

The legislation is aimed at halting a wage campaign “before it gets out of hand,” said Trevor Martin of the American Legislative Exchange Council (ALEC), a right-leaning group that opposes living wage laws. Martin heads the ALEC task force that provides states “model” legislation. Florida, for example, used ALEC’s language as the basis for its new law, Martin said.

Other states that looked at living wage preemption efforts include Connecticut, Michigan, New Mexico, Oregon and Tennessee, according to the Employment Policies Institute, a right-leaning organization that opposes living wage ordinances.

Expanding the living wage campaign to the state level is the “next era,” ACORN’s Kern told Stateline. Statewide living wage campaigns are percolating in a number of states, according to both ACORN and EFP. These states include: California, Connecticut, Hawaii, Illinois, Kansas, Kentucky, Maine, Maryland, Massachusetts, Minnesota, New York, New Hampshire, New Mexico, North Carolina, Oregon and Washington.

“I don’t see the living wage campaign going away any time soon,” Andre Neveu, research director of the Employment Policies Institute, told Stateline.org.