Businesses push to delay minimum wage hikes in US states

Washington

BUSINESS groups are pressuring Democratic officials in several states to postpone planned minimum-wage increases, arguing that embattled businesses cannot afford to give workers a raise as they face the coronavirus-related economic crisis.

Virginia, California, Illinois, Michigan and Massachusetts are among the states where small-business advocates and groups representing restaurants, hotels and other industries are urging delays in wage increases agreed to before the outbreak, and its related business shutdowns, began.

They have had some success, even in states governed by Democrats, showing how fundamentally altered political thinking has become, and how rapidly, as a result of the pandemic-driven downturn. Delaying wage increases, even temporarily, would be a pullback in a long, intensive campaign by progressives to force companies to pay the lowest-compensated workers more.

In Virginia, the General Assembly voted this month to approve a four-month delay, to May 2021 from January, in raising the state's minimum wage to US$9.50 an hour from US$7.25. "While I want to make sure we're taking care of our workers across Virginia, I also want to make sure we come out of this economic crisis in as strong a position as I can," said Democratic Governor Ralph Northam.

Many low-wage jobs, such as those in health care and food services, are also considered essential. That means people who hold the positions risk getting sick or infecting others by being unable to practice social distancing in the workplace, or to work from home. And those who lost their jobs during the lockdowns will have more debts when companies start hiring again.

Even in liberal California, local governments are listening to the chambers of commerce and business owners who have long resisted minimum-wage hikes by saying it will reduce the number of people they can hire.

Hayward, a city near San Francisco, is postponing a planned increase, and officials in nearby Fremont and Alameda are weighing similar measures. Business groups have urged California Governor Gavin Newsom to put off a statewide wage increase scheduled for January.

Four years ago, during the long economic expansion, California and New York approved gradual increases in state-mandated minimum wages. Other states followed, and now 29 states and the District of Columbia require their minimum wage to be higher than the federal minimum of US$7.25 an hour, which has been in place since July 2009. In many states, automatic increases will continue pushing the minimum wage higher in coming years.

As stay-at-home orders starve many businesses of revenue, groups representing those sectors are reviving the arguments many made opposing the schedule of required wage increases wherever they can.

"Small businesses in California and across the nation are frightened, fragile and uncertain about what tomorrow will bring, let alone the next 12 months," said John Kabateck, California director for the National Federation of Independent Business. "These types of cost increases during a time like this forces small-business owners to draw from what they don't have."

In Virginia, the minimum wage was scheduled to rise to US$9.50 in January, followed by gradual increases lifting it to US$12 an hour by 2023. The legislature's approval of a four-month delay does not affect the schedule for additional hikes in future years. The body also approved a Northam-backed four-month delay in allowing collective bargaining by public-sector employees.

In Illinois, Democratic Governor JB Pritzker, a billionaire whose family owns the Hyatt hotel chain, has resisted a delay in raising the minimum wage. The requirement rose to US$9.25 an hour in Illinois in January and is scheduled to increase to US$10 an hour on July 1, on its way to $15 by 2025.

Labour groups say the economic fallout of the Covid-19 pandemic is placing extreme pressures on people living at or below the poverty line as unemployment has swelled to almost 20 per cent. BLOOMBERG