Weeks after the state’s minimum wage increased to $8 an hour, the issue of a further hike has become a hot topic on the campaign trail.
After Democratic gubernatorial candidates Providence Mayor Angel Taveras and General Treasurer Gina Raimondo on Jan. 23 called for an increase in the state’s minimum wage to $10.10, Republican hopefuls Cranston Mayor Allan Fung and Ken Block released statements critical of a further increase.
“Raising the minimum wage isn’t a solution. It’s a symptom of a larger problem,” said Fung.
“Today, our state minimum wage is already competitive in the region and increasing it now will only reinforce Rhode Island’s reputation as one of the worst states for doing business,” said Block.
Taveras, in announcing his proposal, said increasing the minimum wage further is necessary to keep pace with both the cost of living and wages in neighboring states. He called for the $10.10 hourly rate to be instituted by 2018 and said the issue is “personal for me” as the son of a single mother who for a time worked for minimum wage.
Raimondo, through her campaign’s website, subsequently called for swifter action.
“Gina strongly believes that we need to increase the minimum wage. But we can’t wait to provide a meaningful adjustment until 2018,” the post states.
“We should take action on this now and raise the minimum wage to $10.10 by 2015 and then index it to the cost of living so that politicians can’t play games with people’s lives.”
Raimondo’s statement also notes that most minimum wage earners are women and that she supports the same proposal on the federal level. Likely, Democratic hopeful Clay Pell has also spoken in favor of a new minimum wage increase.
Fung and Block say such a move would not boost economic growth and would hinder job creation. Each also framed the issue in starkly political terms.
“The real issue in Rhode Island is unemployment and getting our workforce prepared with the necessary skill set for the ever-changing workforce. It is quite evident that raising the minimum wage would not solve these problems,” said Fung.
“Democrats continue to recycle bad ideas. It’s time we consider some new ones so people have the opportunity to succeed and thrive and not rely on government coercion to dictate wages. Increasing the minimum wage will result in higher unemployment, reduced job opportunities, reduced customer spending and will reduce net job growth because of the effect on expanding companies,” the mayor continued.
“We have seen repeatedly in Rhode Island and across the country that Democrat-driven mandates, like increasing the minimum wage, raise the cost of doing business and ultimately lead to fewer jobs,” said Ken Block. “Democrats think that government intervention is the only way to fix an economy, while Republicans understand that an economy will only fix itself when government is an ally of the business community and not an adversary.”
Fung specifically referenced the work of David Neumark of the University of California at Irvine, who says a 10 percent increase in the minimum wage reduces teen employment by 1 to 3 percent. Block cites the state’s low ranking as a place to do business by both CNBC and the Small Business and Entrepreneurship Council.
The state’s minimum wage had been $7.75 prior to the recent increase. Labor unions and others have voiced support for a further increase, and local groups late last year joined a national push for a $15 hourly wage for fast food workers.
State Rep. David A. Bennett, a registered nurse who represents portions of Warwick and Cranston in District 20, took part in a December demonstration at the Wendy’s location on Warwick Avenue in Warwick. He said he favors quick action to further increase the minimum wage and has already filed legislation seeking to do so.
Bennett said his bill would increase the minimum wage to $9 an hour on Jan. 1, 2015 and again to $10 an hour starting Jan. 1, 2016. Starting Jan. 1, 2017 and at the start of every year thereafter, the wage would be adjusted in keeping with the rate of inflation.
Bennett said his proposal would help settle the issue and includes a “safety net” to avoid drastic increases that would put the state at a competitive disadvantage.
“We’ve got to get a living wage,” he said, adding that many of the companies paying workers minimum wage, including fast food restaurants, are highly profitable. “It’s no longer just 16-year-old kids doing minimum wage jobs…It’s affecting a lot of people.”
Bennett took issue with the notion that increasing the wage would be detrimental to hiring or would hurt the economy. Low-income workers, he said, would put greater wages back into the local economy through increased purchasing power. And since neighboring states have similar minimum wages, he said, companies would have little incentive to move.
“Regionally, we’re staying right up with the other states,” he said.
Bennett said he has received a positive response to his proposal thus far from fellow lawmakers. He also expressed confidence that any of the Democratic candidates for governor would be open to working on the minimum wage issue.
“Whoever the governor is, I’m sure we can sit down and revise it,” he said.
Lauren E.I. Slocum, president and CEO of the Central Rhode Island Chamber of Commerce, said her organization has not taken an official stance on the minimum wage issue. She did say that business owners are concerned about the impact of a further across-the-board increase, particularly the potential such a move could force employers to reduce the size of their workforce.
“There is concern about unilaterally raising a minimum wage not based on performance…There is concern that’s going to harm and not help,” she said. “At the same time, there is also concern that pay is commensurate with responsibility.”
Ultimately, Slocum said, the Chamber is supportive of an approach to the minimum ways that is beneficial to both workers and employers.
“There needs to be a balance,” she said. “It needs to be fair to both sides.”
In terms of the minimum wage increase that took effect on Jan. 1, Slocum said businesses had time to prepare and the relatively modest nature of the hike have resulted in a largely smooth transition.
“People knew it was coming. It seemed to be fair and reasonable,” she said. “I have not heard any major negativity.”