Minimum wage bill advances through Delaware House committee

Posted

DOVER — A $15 minimum wage is closer to reality now after a House panel approved legislation that would lift Delaware’s wage floor from $9.25 to $15 in a series of steps.

Following a three-hour hearing, the House Economic Development/Banking/Insurance & Commerce Committee voted along party lines to send the bill to the full chamber for a debate on raising the state minimum wage by $5.75 by 2025. The measure could be voted on as soon as next week.

The bill, which passed the Senate on party lines last month, would start by increasing the wage to $10.50 in 2022, followed by $11.75 in 2023 and $13.25 in 2024 before hitting $15 in 2025.

Last altered in 2019, Delaware’s minimum wage is currently $2 more than the federal mark. Twenty-two states have a minimum wage higher than $9.25, including seven that are in the process of raising it to $15. Maryland and New Jersey are among those phasing in a $15 wage, while Washington D.C., has already done so.

According to the Delaware Department of Labor, close to 150,000 residents would be impacted by Senate Bill 15, including 35,000 currently earning the state minimum wage.

Supporters fervently believe the bill will make a difference in reducing poverty, especially among traditionally disadvantaged communities. Sen. Jack Walsh, a Stanton Democrat who led the bill through the Senate, described it as “economically immoral” not to pass the proposal, touting the benefits it will bring.

Noting the load shouldered since the start of the pandemic by essential workers like grocery store employees, many of whom make minimum wage or close to it, the chief House sponsor urged legislators to show support for those individuals.

“As much as this may appear to be an economic feature, which indeed it is, I also point out that it is a matter of pride, and that this legislation is a major step toward restoring the promise that a job brings with the fundamental level of dignity and the peace of mind that every Delawarean would like to enjoy,” said Rep. Gerald Brady, a Wilmington Democrat.

About four dozen people spoke during public testimony, with a majority expressing support. Roughly a third of the speakers voiced opposition.

Michael Pillsbury called on lawmakers to do something to help struggling Delawareans, noting most people are worse off because of the pandemic. “The rich keep getting richer, the poor continue to struggle, the working class continue to struggle, the middle class is shrinking,” he said.

Others agreed, with some taking particular note of how a higher minimum wage could help people of color and women. Several participants said businesses should pay their fair share instead of essentially offloading costs to the federal and state governments.

“We are allowing our industries and our small businesses to use social services as a way to fill in the gaps in the substandard pay and wages they are providing,” Melissa Froemming said, referencing how many people earning around minimum wage are on welfare.

But for opponents, all the passion for helping combat poverty can’t cover up the flaws with the bill.

“There’s a math problem here ... and the math problem is we are incentivizing going to robotics,” said Rep. Jeff Spiegelman, a Clayton Republican.

Though businesses are already automating, policies like this simply speed up the process, thus hurting the people the legislation aims to help, he told colleagues.

Other speakers argued the measure is unfair to those on fixed incomes, including both retirees and nonprofits that get most of their funding through state contracts.

Several business owners warned the bill would cause them to raise prices, lay off workers or go out of business (or some combination of the three).

Nathan Millman, administrator of Courtland Manor nursing home, said a $15 minimum wage impacts even people currently earning more than that amount. As a result, the bill would result in an extra $500,000 to $1 million in payroll costs for his business, he told the committee.

“Any increased minimum wage would result in looking at 100 percent of our workforce. We have worked very hard to pay people (fairly) ... We would have to look at anybody that is loyal to us, that has been here a while, because we can’t pay somebody $15 an hour coming off the street for the first day of the job” and compensate longtime employees at the same level, he said.

Carrie Leishman, president and CEO of the Delaware Restaurant Association, noted businesses, particularly those in the restaurant industry, are struggling as a result of coronavirus. Employers remain under restrictions, she said, citing capacity limits as stifling economic growth.

“This bill is asking the state’s most crushed industry to compress an increase in three years, and that’s too much for us,” Ms. Leishman said. “We cannot afford it at a time when we’re not even fully operational.”

Central Delaware Chamber of Commerce President Judy Diogo argued the state is set for economic growth if it can just hold off on increasing labor costs. With President Joe Biden in the White House, Delaware is in the spotlight, giving it a natural advantage in attracting businesses, she said.

Tyler Micik, a representative of the Delaware State Chamber of Commerce, urged legislators to support workforce training programs instead of passing higher costs on to businesses.

Rep. Bryan Shupe, a Republican from Milford, called on committee members to hold off on the bill for now. Instead, lawmakers should pass legislation instructing the General Assembly’s fiscal office to perform a comprehensive study of the impacts of an increase, he recommended.

“While debates on the merits of an increased minimum wage have centered around talking points, political agendas and emotional appeals, the aim of (the bill) is to provide empirical evidence and financial projections of how the minimum wage increase will impact Delaware taxpayers on the public side, along with families and small businesses on the private side,” he wrote in an email newsletter distributed over the weekend.

Much of the disagreement centers on who is paid minimum wage now — younger people working their first jobs to get experience and some spending money, or adults, many of them single parents, trying to stay afloat — as well as whether the wage floor should be a livable wage.

According to the U.S. Bureau of Labor Statistics, 82.3 million Americans 16 and older were paid by the hour in 2019. Of those, 1.6 million made the federal minimum wage of $7.25 (or less). Forty-three percent of minimum-wage earners were no older than 24, and 55% worked fewer than 35 hours per week.

The Economic Policy Institute, a pro-labor think tank, reports that 51% of workers who would benefit from a $15 minimum wage nationally are adults between the ages of 25 and 54, with only 10% being teenagers. Fifty-four percent work full time, and 28% have children, per the institute, which also says a wage hike would particularly benefit people of color.

The Congressional Budget Office released a report earlier this year concluding a $15 federal minimum wage would result in 1.4 million people losing their jobs (a 0.9% increase in unemployment) but would also lift 900,000 people out of poverty. At least 17 million individuals across the country would see higher pay, per the findings.

Predictably, neither side succeeded in swaying the other Wednesday — something noted by Sen. Walsh during the hearing, as he pointed out most people already have their minds made up on the issue.

Democrats sought to counter arguments against the bill, with several representatives taking aim at the idea that now is a bad time for an increase.

“There were excuses when we had prosperity, when we had economic growth,” said Rep. Larry Lambert, a Democrat from the Claymont area, in reference to opposition prior minimum wage bills received from the business community.

Rep. John Kowalko agreed.

“It is the right time and it is about time to rectify the inequities that we have forced on our working families,” the fiery Newark Democrat said. “It is about time and is the right time to move forward in the interest of hard-working people and their families.

“It is about time and it’s the right time to correct the indignities we have forced upon our lower-wage earners. It is about time and it’s the right time to allow hard-working people, who are the backbone of American society and the backbone of Delaware, to have a chance at surviving, at providing a roof over their families’ heads, at providing food on their families’ tables.”