Striking a balance: Which minimum wage works for businesses, employees?
The debate over a senator’s proposal to raise the state minimum wage to $15 an hour by 2024 was reignited recently with a demonstration at Legislative Hall.
In June, a bill sponsored by Sen. Darius Brown of Wilmington sought to raise the standard minimum wage by 2024. The legislation passed the Senate Labor Committee, but has not yet received support in the Senate Finance Committee to make it to the full senate.
As of Oct. 1, Delaware’s minimum wage is $9.25 an hour, or $19,240 a year for someone working 40 hours per week.
With the legislature back in session, cleaning workers from the 32BJ Service Employees International Union rallied on the steps of the capitol Jan. 14 to encourage legislators to vote for the $15 minimum wage. The union members had negotiated the increase for themselves.
Living wage arguments are at the forefront with business owners concerned about how it will affect them, while legislators want to find a balance that works for everyone.
Gov. John Carney will present his proposed fiscal year 2021 budget Jan. 30. It will show if he left room for higher minimum wage for state workers. Some are paid minimum wage.
Before a large wage increase can be considered, the Senate Finance Committee needs to see how this will affect the budget, said Sen. Trey Paradee of Dover, a committee member. The committee consists of Senators Harris B. McDowell, Bruce C. Ennis, Paradee, Laura Sturgeon, Dave G. Lawson and Bryant L. Richardson.
The state would have to budget for raises for its minimum wage employees, and other employees would expect raises, too, Paradee said.
Sen. Stephanie Hansen of Middletown said raising it to $15 an hour would cost the state about $3 million during the five years covered in Brown’s bill.
Hansen said the average two-bedroom apartment costs about $1,150 per month, leaving a family of three $105 each week for groceries, medicine, car insurance and other necessities.
Paradee said consistently adjusting minimum wage based on inflation would be a better approach.
“We fight this battle every year in the legislature,” he said, “It would make more sense if it steadily increased each year to match inflation.”
A living wage
Coby Owens, who attended the union rally, said $15 an hour isn’t enough. He thinks Delaware needs to give people a living wage.
“It’s not about politics, it’s about the people,” he said. “Fifteen dollars is a good first step but we need a livable wage.”
Paradee said a living wage is subjective.
“People have different definitions of what constitutes a living wage,” he said.
According to the Massachusetts Institute of Technology, a living wage is $26.99 an hour for one adult supporting one child in New Castle County, or three times the state minimum. It is $24.80 in Kent and $24.58 in Sussex.
Delaware’s minimum wage keeps an individual above the federal poverty level — $12,490 a year — but falls below for a family of three,$21,330, according to the Patient Protection and Affordable Care Act website.
Hansen said she supports setting a minimum wage that allows people to meet their basic needs, but understands a rapid wage increase could threaten small business owners’ livelihood and ability to provide jobs.
She wants to find a balance.
“I support setting a fair minimum wage that allows workers to put food on the table and a roof over their heads,” she said. “At the same time, I am sensitive to the realities faced by business owners, particularly the small, family-owned businesses that employ most of our workforce here in Delaware.”
Hansen said the Senate can consider the increase more seriously if Carney leaves room in the budget.
Daisy Cruz, director for the Mid-Atlantic District of 32BJ SEIU, said she recognizes the state has made strides, but it’s time to do more.
“People cannot survive off what the minimum wage is right now,” she said. “People literally need 2 or three jobs to make ends meet.”
Sen. David Wilson of Milford, who owns Wilson’s Auction, said businesses like his will struggle to make payroll if their lowest paid employees are receiving $15 an hour, making their top-paid workers expect a pay raise, too.
“I know firsthand that $15 an hour will put a lot of small businesses out of business as minimum wage was never meant to sustain a living or raise a family on,” he said.
But was it?
President Franklin D. Roosevelt passed the Fair Labor Standards Act of 1938 as part of New Deal legislation, setting the federal minimum wage at 25 cents. In an address about the legislation, he said this was “more than a bare subsistence level” and intended for workers to “earn a decent living” off those wages.
Based on the Consumer Price Index inflation calculator of the Bureau of Labor Statistics, $1 in 1938 is the same as $18.10 today.
Courtney Sunborn, owner of Ecolistic Cleaning in Lewes, said she has had success paying a living wage. Her employees, who she said are paid well above minimum wage, are more invested in their work.
“I wish I could share with other small business owners the success I have with a higher wage because the satisfaction is higher and turnover is lower,” she said. “[Other businesses] are unaware of the benefits that offset the increase.”
Paradee said he has always been a supporter of raising the minimum wage but is concerned about the effect on small businesses if it were to increase by more than 60% in four years.
“Fifteen an hour might not be a big effect on a business in urban areas like Philadelphia or New York, but that kind of a jump could be detrimental to small businesses [in Delaware],” he said.
Carney created the Division of Small Business to make Delaware the No. 1 state for small businesses, and Wilson said raising the minimum wage to what is proposed would go against this initiative.
Michael J. Quaranta, Delaware State Chamber of Commerce president, said in a statement a $15 an hour minimum could cause businesses to replace low-skill jobs with technology or artificial intelligence, which would increase youth unemployment.
?The proposal does nothing to train or retrain low-skilled workers and only hastens the day when the most vulnerable of us go from underemployed to unemployable,” he said.
Delaware’s minimum wage law allows paying $8.75 for adult workers on the first 90 days of a new job and for workers 14 to 17 years old.
At the moment, Paradee said the Senate needs to collect more information before considering a major wage increase.
“I believe in paying people fairly, but it’s a hard balance we have to strike,” he said.
Senate Bill 105
Sen. Darius Brown’s proposed minimum hourly wage increases:
- $11 effective Jan. 1, 2020 (Bill was introduced June 2019)
- $12 effective Jan. 1, 2021
- $13 effective Jan. 1, 2022
- $14 effective Jan. 1, 2023
- $15 effective Jan. 1, 2024
The timetable is the same as a law in place in New Jersey. Maryland’s wage will be $15 in 2025. Pennsylvania’s minimum wage is $7.25 with no planned increase.
Cosponsors: Sens. Bryan Townsend, S. Elizabeth Lockman and John Walsh, and Reps. Gerald Brady, Sherry Dorsey Walker, John Kowalko, and Edward Osienski