By Glenn Rolfe

GEORGETOWN — Like a coin, there are two sides to minimum wage.

Supporters maintain that increasing minimum wage can stimulate consumer spending and boost the economy by putting more money in the hands of low-wage workers.

Critics, however, warn that higher labor costs for wages could lead to job cuts, automation, and increased prices for goods and services.

On Jan. 1, 2024, the hourly minimum wage in Delaware increased from $11.75 to $13.25. It previously increased from $10.50 in 2022 and $9.25 in 2021, through state legislation. In 2025, minimum wage jumps to $15 an hour.

Lt. Gov. Bethany Hall Long strongly supports the increases, notably the $1.50 boost this year.

“Right now, whether we are a single parent or a family, putting food on the table, paying our utility bills, paying rent, paying our mortgage, it really matters. To me it is very important that we have a strong economy. Having a strong economy is having workers in the work force that are actively able to participate, provide for their family,” Lt. Gov. Hall Long said. “So, a minimum wage is truly an opportunity to expand and uplift our families in Delaware.”

The lieutenant governor said the hope is these workers “certainly invest in the economy and our community, and again, providing whether it be additional food in the refrigerator, the clothing that is needed for our children, to make sure that their kids go to school with a full stomach, that they have the supplies and the resources that need to be successful.”

On the opposing side is state Sen. Gerald Hocker, who says minimum wage simply does not work.

“It hurts the people that our state legislators think they are helping. And I say it’s only a feel-good thing because they know in the long run when everything levels out, the people that they think they are helping can buy less with their dollars today and have a bigger struggle,” said Sen. Hocker. “We see it every time. I see it in my own business. There are more people coming up to the counter that can’t afford their groceries, putting them back. Inflation isn’t helping, but this helps steer inflation.”

Living wage

Community Bank Delaware is one business entity that tries to stay far ahead of the minimum wage curve. For several years it implemented an initiative to adjust entry pay scales well above minimum wage.

“Approximately five years ago our board adopted a ‘living wage initiative’ which moved our entry level pay to currently $21.63 per hour, which is significantly above the current and proposed minimum wage. We adjust that annually,” said Community Bank Delaware President Jack Riddle. “We are working hard to provide pay scales and benefits that allow our staff to handle the needs of basic living. We believe that that is good for our employees, our bank, and the community.”

A starting point

Department of Labor Sec. Karryl Hubbard views minimum wage in part as a starting point to move up the pay scale ladder.

“I always want people to know that the Department of Labor is not only in the business of finding people employment, but we’re in the business of also helping people upskill, so they can expand their skill set and increase their wages over time through seeking new jobs,” said Sec. Hubbard. “So that is something that sometimes gets lost in the conversation, that folks who are currently minimum wage don’t necessarily have to stay there.”

There are resources, supports and services at the Department of Labor’s four offices across the state “where individuals can obviously apply for new jobs, search jobs that are available, as well as get classes on computers, help people get their GED, help with interviewing skills,” the labor secretary said.

Minimum wage hikes do have the labor department’s support.

“Some folks will remain at minimum wage and that’s why we sort of support increases in minimum wage over time. Overall higher earnings improve the standard of living for minimum wage workers by providing them with more appropriate income levels to address cost of living increases that normally happen overall,” Sec. Hubbard said.

Lt. Gov. Hall Long says the Department of Labor anticipates about 56,000 workers are or will be impacted by minimum wage.

“We think about the broader implications of these 56,000, it affects all of us. Having that breathing room really matters,” Lt. Gov. Hall Long said. “It has an implication for employers, because you have employees come to the work force with less stress. Stress and anxiety are the number one contributor to absenteeism in the work force. It is reciprocal win. It is a reciprocal win for the business having an employee that is incentivized, showing up to work, and keeps us competitive with Maryland and New Jersey. So, investing in work force through a livable wage, through minimum wage, it is kind of a tool in the tool kit to really advance Delaware’s economy and to help our families.”

Tracking the impact

The Department of Labor tracks the impact of these changes in employment through the Office of Occupational & Labor Market Information.

The office’s monthly labor report for March 2024 showed weekly earnings at $1,014.30, down a fraction from February 2024’s $1,014.74, but slightly up from $988.52 in March 2023. Those figures were based on an approximate 32-hour work week.

The hourly earning rate was $31.50 for March 2024, down from February’s $31.81 hourly rate.

The state’s seasonally adjusted unemployment rate in March 2024 was 3.9%, down from 4.0% in February 2024. In March 2024, there were 20,000 unemployed Delawareans compared to 19,500 in March 2023. The nation’s unemployment rate was 3.8% in March 2024, down from 3.9% in February 2024.

In March 2024, seasonally adjusted nonfarm employment was 488,500, up from 487,900 in February 2024.

Sec. Hubbard says it may take some time to truly analyze the minimum wage impact.

“It might take us many months to know if there is any detectable change in jobs for minimum wage workers. While the hourly wage will increase there may be reduction in hours, or even layoffs for some minimum wage workers as businesses look to keep costs down,” Sec. Hubbard said. “Obviously, labor is a major cost of doing business. So, some argue that businesses will be forced to cut jobs to maintain profitability. The impact might be more on smaller employers who might struggle to absorb additional labor costs, where others may adapt by finding operational efficiencies to lessen those impacts.”

The labor secretary notes that Delaware is driven by small businesses.

“I think it probably runs the gamut where you have some who will increase prices, and others depending on the competition of business might choose to do operational efficiencies to absorb those costs,” Sec. Hubbard said. “Most employers have had to increase even beyond the minimum wage. It is sort of a competitive piece as well.”