With Utah’s Economy Recovering, Now Is The Time For The State To Raise The Minimum Wage
Senator Mitt Romney has unveiled a surprisingly bold approach to helping low-income families, offering a monthly payment of up to $ 350 per child.
It is a reasonable alternative to annual lump sum tax payments and social assistance programs, a solution worth considering in the future.
Romney’s proposal came the same day the Senate approved a budget plan that paved the way for President Joe Biden’s $ 1.9 trillion COVID relief bill to pass. One priority of the new president will likely be left out, a gradual increase in the minimum wage, from $ 7.25 an hour now to $ 15 an hour by 2025.
With businesses struggling during the pandemic, even Vermont Senator Bernie Sanders agreed this year was not the time to dramatically increase the minimum wage.
That doesn’t mean the fight is going, however. The federal minimum wage has stagnated since 2009 and most Americans earn much more than this paltry rate. It needs to be increased to help lower-income American workers, but there are legitimate downsides to leaving it to Congress.
For example, a national minimum wage does not take into account differences in the cost of living. Set it too high, it could be incredibly disruptive for places with very low cost of living like Mississippi and Arkansas. Set it too low and it doesn’t make sense in high cost states like Hawaii and California.
One size does not fit all, which is why states are in a better position to create their own wage floors. Twenty-nine states and the District of Columbia have done just that. Utah is not one of them and, according to the Ministry of Labor, never had a minimum wage above the federal floor.
This year, two first-year Democratic representatives are proposing bills that would change that.
Representative Clare Collard, D-Magna, is sponsoring HB284, which would set a minimum wage of $ 12 starting in July, then gradually increase it to $ 15 by 2026.
Representative Ashlee Matthews, D-West Jordan, takes a different approach. His bill (which has yet to be released) would gradually increase wages to $ 10.75 for workers in urban counties by 2028 and to $ 9.25 for those in rural areas.
âIt’s long overdue,â Matthews said. âMany Utahns cannot pay their bills, pay their rent, even though they have multiple jobs. Having a job should lift you out of poverty, not keep you there. “
Collard’s bill is probably too much for the Republicans-dominated Utah legislature to swallow. Matthews’ bill, however, has two characteristics that might make it a bit more palatable.
First, there is the $ 1.50 difference between urban and rural counties, which takes into account differences in the cost of living.
Second, and more importantly, once the state meets the minimum wage target set in the bill, the rate would be indexed to inflation – as 18 states currently do – meaning that it would increase with the cost of living.
The slow and gradual approach taken by Matthews, while perhaps more politically acceptable, seems overly cautious. In 2019, the average wage of the poorest 10% of Utah’s earners was $ 10 an hour, which means that a gradual increase over 7 years will help very little.
It would be better to increase it more quickly – perhaps $ 9.75 from July 2022, giving businesses some time to recover from the pandemic, then adding increments of 75 cents per year up to until it hits $ 11, then indexing it to inflation.
Business groups probably wouldn’t like this. They have already voiced their opposition to Collard’s bill and probably won’t be big fans of Matthews either.
The Salt Lake House argues that minimum wage laws stifle growth, force employers to downsize and scare off businesses and would be particularly bad in the aftermath of a pandemic.
âNow is just not a good time to do it,â David Davis, president of the Utah Retailers Association, told me. “I think that with the best intentions to help workers at the bottom of the ladder, it tends to hurt them in the end.”
However, putting money in the pockets of working poor people can boost consumer spending, which in turn boosts the economy, according to Matthew Weinstein, an economist with anti-poverty group Voices for Utah Children.
And, he said, that does not hold back job growth. After New York City raised its minimum wage, a US Federal Reserve study looked at counties adjacent to the border of New York and Pennsylvania, which did not increase its wages. He found that recreation and hospitality employment was growing faster in New York counties, as was employee income.
âEmployers have so much power that we have underestimated the price of labor,â he said. “Workers produce so much more than they get paid, there is room to raise the floor” and not force employers to downsize.
Another bill that could reduce poverty among the working poor is HB309 by Representative Robert Spendlove, creating a Utah Earned Income Tax Credit. The idea is to give working families a refundable credit equal to 10% of the federal version of the same credit. This would add up to $ 640 for working families, depending on their income and the number of children.
Spendlove’s proposal was included in a tax package that the Legislature passed in late 2019, but the law was repealed in the face of widespread opposition and a voter referendum to repeal the bill.
Spendlove’s bill, I guess, will pass. When it comes to the state’s minimum wage, if the legislature does not respond, hopefully voters will take matters into their own hands. Eight states have enacted minimum wage laws through election measures, the most recent being Florida, where 61% voted to amend the state constitution to raise the minimum wage to $ 10, then d ‘one dollar a year until it hits $ 15 an hour in 2026.
Hopefully Utah lawmakers are meeting the needs of their low income constituents and this is not about it. But if they don’t, we’ve seen election initiatives succeed in the past, and the 2022 election cycle is not far off.