As newly-sworn in President Joe Biden has signed executive orders promoting a $15 minimum wage — and has it as part of his legislative agenda — five Kansas lawmakers are making a similar proposal.
HB2033, introduced by five northeastern Democrats, would create a $15 minimum wage over six years.
The minimum wage in Kansas is currently $7.25, the federal minimum, which comes to about $15,000 a year at 40 hours per week.
“We wanted to be out front on that issue in making sure that we were addressing that while also ensuring that people that live in Kansas can earn a liveable wage,” Rep. Brandon Woodard, a Lenexa Democrat said in a Kansas City Star article.
However, only about 434,000 of the nearly 81 million hourly workers in the U.S. made minimum wage in 2018, the last year for which figures are available, and only about 5% of part-time workers and about 1% of full-time workers make the minimum wage.
Moreover, most people do not make minimum wage for an extended period.
And, as the Wall Street Journal reports, incoming Treasury Secretary and former Fed Chair Janet Yellen, has flip-flopped on the effects of raising the minimum wage.
In 2014, Yellen replied to a question about former President Barack Obama’s proposal to raise the minimum wage to $10.10 an hour.
The Journal reported Yellen as saying, “I think almost all economists think that the minimum wage has two main effects.” One is increasing pay for some low-paid workers, and the second is “there would be some amount of negative impact on employment.” How much is a matter of “considerable debate,” she said, adding that she “wouldn’t argue” with the Congressional Budget Office estimate that Mr. Obama’s hike would cost 500,000 jobs.
That was 2014; now, while auditioning for her new role with the Biden administration, Yellen said something quite different according to the Journal.
“‘Very minimal,’ Ms. Yellen said in reply to a question by South Carolina Sen. Tim Scott about the employment impact of Mr. Biden’s proposal to raise the federal minimum to $15 from $7.25. As evidence, she cited studies comparing employment in states that raised their minimum wage with neighboring ones that didn’t.”
However, the vast majority of minimum wage or below-minimum tipped employees are restaurant and food service workers, already hard hit by the pandemic.
“A minimum wage increase on the back-end of what has been a devastating year to our member businesses is not only a ridiculous proposition, it would be a killer to Kansas small businesses,” said Adam Mills, president of the Kansas Restaurant and Hospitality Association said. “Many of our member restaurants and hotels are barely hanging on due to governmental closures and restrictions from Covid-19. Job loss would be an absolute certainty for the state’s largest private-sector employer.
“I really hope our elected officials see that now is not the time.”
The preliminary December report shows 66,500 fewer people employed in Kansas than at the beginning of March.
Seattle has been something of an experiment in a higher minimum wage and the results have been, well, mostly predictable.
The Seattle Times reported in 2017 when the minimum wage had climbed to $13 per hour there, researchers at the University of Washington found “… a 9.4 percent drop in hours worked by low-wage workers both in and out of the restaurant industry — resulting in the equivalent of a whopping 6,317 full-time jobs eliminated. Even with a higher wage floor, the average low-wage worker’s monthly pay dropped by $124 — a 6.6 percent pay cut — because of lost hours.”
So minimum wage hikes, while they may improve overall wages for some employees, tend to result in an effective pay cut for many.
As the Journal further reports, “restaurants shed some six million jobs in the first two months of the pandemic. As a consequence of continued Covid-related closures and a decline in customer traffic, the industry ended 2020 with 2.5 million fewer jobs than before the pandemic. They received a temporary lifeline through the Paycheck Protection Program, but have advocated without success for more-substantial relief. Mr. Biden’s recovery plan acknowledges restaurants were ‘disproportionately’ harmed by Covid.”
Biden’s plan would also increase the federal minimum wage for tipped workers to $15 per hour as well. The Kansas plan does at least make provision for tipped workers, who — by federal law — must make at least minimum wage once tips are included, and most make far more.
Moreover, as the Journal reports:
“A recent study from economists at Miami and Trinity universities finds a plan like Mr. Biden’s would cost the hospitality industry more than one million jobs—including nearly 700,000 held by tipped workers. A Census Bureau study shows that restaurant workers see lower tips in states with a higher minimum wage, a likely consequence of restaurants’ transition towards self-service models. Unsurprisingly, tipped workers oppose Mr. Biden’s plan.
“These national studies are supported by local data from left-leaning cities and states that have already raised the tipped minimum to $15 or nearly that. After years of robust full-service restaurant growth, both New York City and San Francisco saw back-to-back years of declining employment in 2018 and 2019, according to data from the Quarterly Census of Employment and Wages. In Seattle, a research team linked to the University of Washington found a 13% increase in the rate of businesses closing or leaving the city associated with a rising minimum wage.
“Mr. Biden has dismissed the point. ‘There’s no evidence that when you raise the minimum wage, businesses go out of business,’ he said in his second debate with President Trump. But the nonpartisan Congressional Budget Office reviewed decades of research on the subject and reaffirmed the consensus view that wage hikes cost jobs.”
A competing proposal in HB2018, to hike the minimum wage to $17.25 over 10 years, sponsored by Rep. Aaron Coleman (I-Kansas City), was introduced on Dec. 31. Coleman’s bill is not likely to get a hearing, however. He resigned from the Democratic party to become an independent and has been stripped of all committee assignments after allegations of sexual misconduct, abuse, and stalking.
Both bills have been referred to the Committee on Commerce, Labor and Economic Development.