Election could drive minimum-wage hike

The first raise in the U.S. minimum wage in a decade has become a very likely possibility following Tuesday’s Democratic election victories and passage of minimum-wage ballot measures in six states.

President Bush suggested Wednesday that he would agree to a hike in the federal minimum, set at $5.15 an hour since 1997. This could restore a bit of California’s competitive edge by making its recently passed minimum-wage hike less out of line with other states.

But California lawmakers also might be pressured to enact legislation that links minimum-wage increases to inflation, following inclusion of cost-of-living indexing provisions in all six state ballot measures. Republican legislators and Gov. Arnold Schwarzenegger have fought such provisions.

“If they won’t do it, we’ll go to the ballot,” said Jen Kern, director of the Washington-based Living Wage Resource Center, which helped organize many of the initiative campaigns. “Because when we go to the ballot, you see what happens.”

The success of the minimum-wage measures illustrates how organized labor and its allies are achieving workplace gains at the ballot box that they couldn’t get at the bargaining table. Another example came in San Francisco on Tuesday, when voters passed an unprecedented measure guaranteeing paid sick days to city workers.

Labor activists said their victories Tuesday had emboldened them to seek similar measures in other states.

But critics saw the measures as misguided attempts to put complex economic issues before voters when legislators really should have been deciding them.

California moved before the midterm elections to raise minimum-wage rates. In a deal with Democratic lawmakers, the governor signed a bill in September that raises the state’s minimum-wage to $8 an hour from $6.75 in two steps culminating on Jan. 1, 2008.

But California’s compromise does not include inflation indexing, which was one of the most significant labor victories of Tuesday’s elections. The addition of the six states now means there are 10 states with inflation indexing attached to their minimum-wage rules. Twenty-eight states now have minimum wages above the federal level.

Small-business owners and other opponents of the measures said voters might not have realized that in approving minimum-wage hikes they also were authorizing ongoing inflation adjustments.

“Our ballot initiative was four pages long,” said Michelle Bolton, the Arizona director of the National Federation of Independent Businesses. “Proponents of the measure weren’t even talking about the indexing provision.”

Several of the newly adopted minimum-wage measures also included other provisions. Nevada’s allows employers to opt out of the $1 hike, to $6.15 an hour, by providing sufficient health coverage for workers. And in Arizona and Ohio, the measures create more record-keeping for employers.

Most of the measures, which also were adopted in Montana, Colorado and Missouri, are set to take effect Jan. 1.

“We’re absolutely elated,” said the Rev. W. Audrey Hollis, an organizer for Jobs with Justice in St. Louis, who campaigned for a measure that will boost Missouri’s minimum wage from $5.15 to $6.50, or the federal rate, whichever is higher.

“No one can live on $5.15 an hour,” she said. “These are people who can’t afford rent.”

The extra pay will mean a lot to Eli Washington, 19, a high school senior in St. Louis trying to save money for college.

“It’s sort of embarrassing to say you earn minimum wage,” said Washington, who has worked at a burger restaurant since he was 17. “But it’s going to get me to being on my own even faster.”

Economists said higher wages drove up employer costs, prompting them to raise prices, lay off workers -- or both. Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University in Orange, said the last wave of minimum-wage hikes by states had put a damper on job growth by pushing employers to move low- and unskilled production work overseas.

“Obviously it’s going to help people who are employed at minimum wage,” Adibi said. “However, I would argue that over the long run it’s going to reduce employment opportunities for some people.”

Additional costs were not a concern for all employers. In Nevada, for example, the labor market is so tight that most employers already pay more than minimum wage to attract workers -- even dishwashers and pizza delivery drivers, said Jim Denton, a spokesman for an employer coalition. One study found that only about 5,000 workers in Nevada were making minimum wage.

But the employer coalition opposed the measure’s requirement that Nevada’s minimum stay $1 higher than the federal rate because it would tie state lawmakers’ hands.

The National Restaurant Assn. condemned the initiative process as flawed.

“A new minimum wage is going to have consequences throughout the economy,” said Tom Foulkes, vice president of state relations for the organization. “We think it’s dangerous to put economic policies on an already crowded ballot.”

Foulkes said economic policies ought to be the province of legislators who were in a better position to consider their consequences.

“I don’t think your average voter is going to sit down and read an economic impact study on anything before he goes to the polls,” he said. “That’s a lot to ask, especially when you have a very crowded ballot.”

If the Democrats headed for the leadership of the House have their way, lawmakers will be considering a hike in the federal rate as soon as the new Congress is seated in January.

Bush said he expected Democrats and Republicans to find “common ground” in federal minimum wage legislation. Bush and Republicans previously had resisted hiking the wage.

“There are parts of the country that are not seeing as rapid economic growth, so you have to take that into consideration also,” White House Deputy Press Secretary Tony Fratto said. “The bottom line is that the president has said if Congress presents him an appropriate minimum wage increase, he would support it. Let’s just see what emerges from Congress.”

House Minority Leader Nancy Pelosi (D-San Francisco), set to become speaker, said a minimum-wage hike is one of the goals the new Democratic-controlled Congress hopes to accomplish when it convenes in January.

Sen. Edward M. Kennedy (D-Mass.) proposed legislation earlier this year to raise the federal minimum wage to $7.25, but Republicans prevented him from bringing it to a vote. On Wednesday, Kennedy said his party’s leaders had promised to put his bill to an immediate vote. Kennedy’s staff said a vote could even come during this month’s lame duck session.

Because of inflation, workers on the bottom rung of the pay scale are able to buy less today than a decade ago. But Kennedy’s proposal would more than make up for lost ground, economists said.

“A hike to $7.25 would put its real [inflation-adjusted] value higher than in the 1980s and 1990s but lower than in the 1960s and 1970s,” noted Nigel Gault, chief U.S. economist for research firm Global Insight. “Part of the federal increase will merely catch up with higher minimums already in place in roughly half of the states.”

Rep. George Miller (D-Martinez), who is expected to lead the House Education and Workforce Committee, said the minimum wage would be among his top three priorities.

“Democrats will work in a bipartisan way with Republicans so that, together, we can take our country in a new direction,” Miller said in a statement. “We will work to ensure not only that the economy grows but that all families benefit from it.”

The Rev. Paul Sherry, national coordinator for the Let Justice Roll campaign that helped build support for this year’s ballot initiatives, said the faith-based group plans to focus on raising the minimum wage in Kansas, Oklahoma, Tennessee, New Hampshire and Georgia.

Sherry, a retired former president of the United Church of Christ, said the fact that minimum wage initiatives passed while those banning gay marriage and abortion failed showed that supporters made it the “values issue” of this election.

The Assn. of Community Organizations for Reform Now, in cooperation with the AFL-CIO, is sponsoring minimum wage organizing events next week in 103 cities, including Los Angeles and Long Beach.

“If Congress doesn’t move quickly to raise the minimum wage, we’re moving forward in every single state we’re in,” said Kern of the Living Wage Resource Center, which is part of the association.

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