I oppose raising the state’s hourly minimum wage to $15.
Since I am a farmer and owner of a small business, many people will attribute my opposition to self-interest. While I have a small personal stake in the outcome of this debate, it would be a mistake to presume my position is based on this.
For the record, all the people employed by my family’s farm operations make well in excess of minimum wage. While some of the people hired to work in our retail ice-cream businesses are initially paid the minimum, they do not stay at that rate very long. Like many other business owners, I treat the minimum wage as introductory, increasing it as soon as employees demonstrate their ability to perform.
Delaware’s minimum wage was last raised just 18 months ago to $9.25 per hour. That rate is 28% more than the federal minimum and higher than the mandated minimums paid in 27 other states.
The debate over the minimum wage has been intentionally mislabeled as a discussion over an appropriate living wage. The former was never intended to be the latter. When the minimum wage was established in 1938 under the Fair Labor Standards Act, it was set at 25 cents. That is an equivalent 2021 value of approximately $4.60 — less than half of Delaware’s current minimum wage.
The “Fight for $15” reportedly began in 2012, when 200 fast-food workers walked off the job in New York City to demand $15 per hour. The $15-per-hour figure was not only selected arbitrarily, but the cost of living in New York is obviously much higher than it is in most other parts of the nation.
As a small-business operator, I have come to recognize a few simple truths. First, business owners are going to reasonably spend what is needed to secure quality labor. Even in our present COVID-19 partial-shutdown reality, businesses are hiring. In a recent issue of a local weekly shopper, I counted 15 pages of “help wanted” ads. Good people are a limited resource for which business must compete and offer attractive starting wages.
The first truth is moderated by the second, which is that successful business operators must manage costs. The simple math — expenses minus total revenue equals the potential for profit — is inescapable. While business owners will spend to get and retain quality employees, they are compelled to keep those costs within certain limitations to maintain viability. This means possibly paying higher wages at the expense of reductions in other aspects of the compensation package, employing fewer people, making investments in automation or increasing prices.
If enacted, Senate Bill 15 will increase Delaware’s minimum wage by more than 62% in less than four years. This will most impact employers with workers on the lower end of the pay scale. Not only will entry-level workers be paid more, but the new minimum will escalate the entire wage structure of these enterprises, as they will be forced to increase the pay of valued employees holding more tenured positions.
In concert with the money released by the federal government in two massive COVID-19-relief bills, a dramatically higher minimum wage will place inflationary pressures on our local economy — leading to higher costs and prices that will quickly erode the short-term benefit some workers may experience from the wage hike.
I am not opposed to further increases in the minimum wage. However, I believe aggressively raising it by as much as is proposed in Delaware, over such a short period of time, will be counterproductive for the people it is intended to help and harmful to employers still wrestling to recover in an unsettled environment.
Rep. Jesse Vanderwende is a Bridgeville Republican who represents the 35th District.
