September 2, 2014

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Article

The Great Wage Debate

Should Utah Raise its Minimum Wage?

By Spencer Sutherland

September 2, 2014


During his State of the Union address earlier this year, President Barack Obama encouraged Congress to raise the federal minimum wage to $10.10 per hour. Such a wage hike, up from the current rate of $7.25 per hour, would represent the first increase to the federal minimum wage since 2009.

So far, members of Congress have been unwilling to step into the heated debate between proponents of the wage increase, who argue that wages have not kept up with inflation, and opponents, who worry that higher wages will equal higher costs and more layoffs.

Washington’s trepidation, however, hasn’t stopped individual states from taking matters into their own hands. This year alone, 34 states considered increases to the minimum wage. As of June 1, 22 states have minimum wages above the national standard—but Utah is not one of them.

WAGE WARS

During this year’s legislative session, Utah was one of 34 states considering whether to make a change to its wage laws. Now retired Rep. Lynn Hemingway, D-Salt Lake City, introduced House Bill 73, legislation that would increase the state’s minimum wage to $10.25 and raise the hourly pay of restaurant servers (those receiving tips) from $2.13 to $3.13.

Hemingway says his motivation for drafting the bill was simple. “I just don’t believe that anyone who works full-time should live in poverty. I didn’t call my bill a ‘minimum wage’ bill, I called it a ‘living wage’ bill. There was a reason for that. The bill was about trying to help people get out of poverty and help give them the ability to raise a family without the aura of ‘Where’s my next meal coming from?’ hanging over their head.”

Despite the fact that nearly 5 percent of Utah workers earn the federal minimum wage, the idea of raising the minimum wage in Utah was just as unpopular among Utah lawmakers as it has been in Washington, D.C. Hemingway was able to get the bill in front of the Utah  Department of Human Services, but then it essentially crashed and burned. “It kind of went down in flames,” he says.

Hemingway believes this is because House Bill 73 had an enormous hill to climb. One of the largest employers in the state is the state itself, employing more minimum wage workers than any other organization in Utah. As a result, the bill came with a fiscal note of $20 million, which represented the cost of bringing the lowest-paid state employees up to the proposed wage. Hemingway knew he wasn’t likely to win that fight. “A $20 million note is not a hurdle, it’s an 80-foot fence,” he says. “There was no way to get over or around it at that point.”

Another insurmountable obstacle the bill faced was the $3.3 billion Utah restaurant industry, which provides often low-paying jobs to more than 90,000 Utahns. Though he recognizes that raising wages for restaurant workers could be a short-term setback for restaurant owners, Hemingway feels all businesses would benefit over time.

“People who get a wage adjustment are going to spend that money. They’re going to spend it in small businesses and restaurants and grocery stores,” he says. “Initially, there could be some blow back and people who will cut back on the number of employees. But sooner rather than later, I think they’ll realize they are going to need those people back because their business will increase.”

FIGHTING GENERATIONAL POVERTY

Hemingway says generational poverty is a common topic in Utah, specifically among legislators.

“A lot of times on the floor [of the Legislature], I’ve seen people scratch their head and say, ‘How do we end generational poverty?’ Well, you pay people. You don’t let employers pay full-time people $7.25 per hour. You have to pay them a living wage.”

Hemingway does not believe $7.25 an hour is a living wage. Viewed in aggregate, a full-time minimum wage worker earns around $1,200 a month and $15,000 a year before taxes. “Try raising a family of four—or even a family of two—on $15,200. You can’t do it,” Hemingway says. He believes if workers earn a higher wage, they are in a better position to spend time with their children, help with school work, volunteer at schools and be an active part of the community—all of which play a part in ending generational poverty.

Hemingway is not alone in the assertion that minimum wage impacts generational poverty. The Hamilton Project, the economic policy arm of the Brookings Institution, recently proposed that lawmakers set state minimum wages at half the median full-time wage for the state. According to the organization, doing so would lift 2.2 million people out of poverty. To meet this standard, Utah would need to raise its hourly minimum wage to $9.96. The project also encourages states to index the minimum wage to inflation, an idea that was also included in Hemingway’s bill. 

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