The ‘Yes’ Vote That Says No to Low-Wage Workers
Author: Michael Saltsman
Publication Date: November 2016
Newspaper: The Wall Street Journal
Voters in Maine, Arizona, Colorado and Washington state will make a decision on Election Day that is almost as consequential as their choice between Clinton or Trump: whether to raise their state’s starting pay rate to $12 an hour or higher. Red and blue voters alike need to understand that such a sizable boost in base pay would reduce job opportunities for the employees who need them most.
The story starts in 2014, after a bill to establish a $10.10 federal minimum wage failed to pass even a Democratic-controlled Senate. The Congressional Budget Office estimated the bill would cost the country a half-million jobs, dooming its passage. Labor unions responded by looking to localities, targeting friendlier states and cities where they weren’t bargaining over whether to raise the minimum wage, but how high to raise it.
Next week’s ballot proposals serve a dual purpose: In addition to normalizing the $12 wage, labor is also betting that a wage proposal will encourage lower-income voters to show up at the polls in larger numbers and pull the lever for a candidate who wants to raise their pay. The ballot approach also allows unions to slip in other wish-list items that they typically would have difficulty passing on their own merits. In Washington and Arizona, a paid sick-day mandate is included in the statewide wage initiative; in Maine, the initiative raises the minimum wage for tipped employees by more than 200%.
Ballot initiatives don’t come cheap, and campaign-finance data show that out-of-state labor groups have poured millions of dollars into these four states.
In Colorado the pro-$12 campaign committee had raised nearly $5 million as of the end of October—with 92% coming from outside the state. In Maine the misleadingly-named “Mainers for Fair Wages” has received at least 65% of its nearly $1 million in contributions from out of state. And in Arizona the ballot committee leading the fight for $12 has hidden the origin of much of its funding by routing nearly a million dollars through a 501(c)(4) social-welfare organization, Living United for Change in Arizona, that’s not required to disclose its donors.
Washington state is the one outlier. Building on their “success” raising wages in the Seattle area, and impervious to University of Washington research finding “cutbacks in employment and hours” from that city’s wage mandate, the “Raise Up Washington” effort has raised over $4 million, much of it from in-state. According to Ballotpedia, Seattle-based liberal billionaire Nick Hanauer, who’s argued that the minimum wage should be as high as $28 an hour, contributed a million dollars to the campaign committee.
The real losers from these costly campaigns are small businesses and nonprofit service providers whose customers can’t afford to pay the higher cost of a higher minimum. Steve DiMillo, who runs a local restaurant in Portland, Maine, that his father started more than 40 years ago, put it this way: “There’s a limit to how much people want to pay for a bowl of chowder and a beer.” He’s calculated that the 220% pay increase for tipped employees—who already make as much as $35 an hour in tips—will cost his company over $600,000 a year it doesn’t have.
In Arizona the president of the In-Home Care Association, Mark Young, warned that a costly pay raise for care providers would put in-home services out of reach for some seniors and the disabled. Similarly, the owner of a Visiting Angels caregiving franchise in Tacoma, Wash., Kelly Chambers, surveyed her customers and found that nearly 90% would cancel or reduce their care services if prices went up in response to the wage hike.
Not surprisingly, a number of local newspapers—from the Yakima Herald-Republic to the Denver Post to the Arizona Republic—have opposed the initiatives as harmful and counterproductive. The Republic editorial warned that “the very same people that [a $12 minimum wage] aims to help would be hurt by it.” In Colorado a campaign to educate voters on the consequences of $12 even received a celebrity boost from former Broncos quarterback John Elway.7
Small businesses with tight profit margins have an uphill climb against the big-dollar campaigns from out-of-state labor unions. If voters choose to support $12, legislators in neighboring states (and in Congress) should pay careful attention to the consequences for nonprofits, small businesses and their employees, and work to educate their constituents about them.