Big cities debating states on pay floor

Local minimums divide politicians

ALBANY, N.Y. -- The economic differences between America's big cities and elsewhere have prompted leaders in Seattle, New York City, Chicago, San Francisco, Oklahoma City and elsewhere to push to raise the minimum wage within their borders.

The efforts are running into opposition from state lawmakers from both parties and business groups that say a patchwork of minimum wages could lead to a confusing and unequal business climate in which labor costs would vary dramatically from city to city.

The minimum wage has emerged as a top issue of a liberal movement that in many places is led not by governors or state lawmakers but by local leaders backed by organized fast-food workers. After years of grappling with state and federal budget cuts, mayors and city councils are pushing back against state and federal officials who they say don't understand the income inequality of 21st century American cities.

"So many people have been pushed out of this city," said Seattle City Councilman Nick Licata, who successfully pushed to raise the city's wage to $15, more than $5 higher than the state wage. "Local politicians don't have the luxury of not doing something. The state and federal governments, they've been AWOL. They haven't been engaged."

The fight to raise minimum wages has lawmakers in many states on the defensive, arguing that higher wages will lead to reductions in hours and jobs for low-income workers -- and retail price increases that are likely to hit them hardest. The business-backed American Legislative Exchange Council argues that local minimum wages could lead to a race to the bottom, where businesses locate in whatever city within a region has the lowest starting wage.

"This is a debate that's happening around the country, and although it's well-intended, it's misguided," said Cara Sullivan, a minimum wage policy expert at American Legislative Exchange Council. "In Seattle they raised it to $15, and right across the city line it's $5 less. It increases the cost of doing business for businesses in that city. You're creating chaos from one business to the next."

The Providence, R.I., City Council considered raising the minimum wage from $8 to $15 but only for workers in the city's large hotels. In response, the Democratic leaders of the Rhode Island General Assembly have moved to block the proposal by taking away cities' authority to set local minimum wages.

Oklahoma Gov. Mary Fallin, a Republican, signed legislation in April that prohibits cities from setting their own wage after organized labor groups suggested that Oklahoma City raise its wage from $7.25 an hour -- the federal minimum -- to $10.10.

But supporters of Oklahoma's new law said higher local minimum wages were likely to hurt the very low-income workers they were proposed to help by raising food prices and reducing employment.

"We have seen businesses flee from cities that have tried this in other states," Republican House Speaker Jeff Hickman said. "Artificially inflating the minimum wage raises the price of everything from housing and rental costs to a loaf of bread and causes the loss of jobs, which means fewer opportunities for those working to feed their families."

In 2011 and 2012, four states passed laws keeping state minimum wages from being higher than the federal wage. This year, 14 such bills have been introduced, according to the National Conference of State Legislatures.

In New York City, Mayor Bill de Blasio and members of the City Council are seeking to raise the local minimum wage to $15 -- nearly double the state's $8 minimum. State law doesn't permit cities to set their own minimum wages, and while Democratic Gov. Andrew Cuomo first warned the idea would lead to a "chaotic" business environment, he now supports a proposal to raise the wage to $10.10 and let cities impose a minimum wage up to 30 percent higher.

Restaurant owners and business groups have opposed the plan, and on Thursday it appeared state lawmakers would adjourn without voting on the measure. The state's minimum wage is already set to increase to $8.75 at the end of this year and to $9 at the end of 2015.

The minimum wage in Arkansas is $6.25 per hour.

Business on 06/20/2014

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