Bar News - April 20, 2016
Labor & Employment Law: Minimum Wage: To Hike or Not to Hike
By: Kathleen Peahl
Proposals to raise the federal minimum wage have always been the subject of much debate, and the past three years have been no exception.
In 2013, President Barack Obama called on Congress to pass legislation to increase the minimum wage, which had last been increased, to $7.25, in July 2009. In November 2015, fast food workers in more than 250 cities staged protests seeking a $15 minimum wage. Yet, Congress has failed to pass any of the proposed bills, and it appears unlikely that will change under the current administration. So, what is all the fuss about?
There are two distinct camps, among both politicians and economists, in the debate over increasing the minimum wage. Proponents of a minimum wage hike argue that it will increase the spending power of those affected workers and, in turn, benefit stores and businesses where these workers will spend their increased earnings. According to a 2014 report by the Congressional Budget Office, an increase to $10.10 would bring 900,000 people out of poverty, resulting in an overall increase in real income of $2 billion.
Opponents of a wage hike, on the other hand, argue that a higher minimum wage will increase unemployment as businesses will be forced to cut jobs to maintain their bottom lines. Some even suggest that eliminating the federal minimum wage and allowing the market to dictate wages would help the economy by increasing employment. The evidence suggests that the number of workers earning at or below the federal minimum wage is actually very low. According to a Bureau of Labor Statistics report issued in 2015, there were 3 million workers earning minimum wage or less in 2014. Those 3 million workers represent a mere 3.9 percent of all hourly workers, and more than 50 percent of them are between the ages of 16 and 24. Many would not be considered primary breadwinners – they are teens or persons working part-time jobs to supplement their family income.
While the debate continues at the federal level, several states and some cities and counties have taken matters into their own hands and passed laws raising minimum wages in their jurisdictions. The result is that currently 29 states and the District of Columbia have minimum wages above the federal rate. Most recently, California passed legislation that will increase its minimum wage from $10 to $15 by 2022. New Hampshire, however, has yet to join that movement.
New Hampshire has not raised its minimum wage since Sept. 1, 2008, when it was increased to $7.25. In 2011, state law (RSA 279:21) was amended to tie the state minimum wage to the federal rate, and there it has stayed. Currently, New Hampshire is the only New England state whose minimum wage is still at the federal level. Maine is closest at $7.50, while Massachusetts is the highest, at $10.
Attempts to increase the state minimum wage failed in 2013, 2014, and 2015. Bills were proposed again in the current legislative session, in both the House and the Senate, and both have been killed (deemed “inexpedient to legislate”). House Bill 1480 would have increased the minimum wage to $8.25 in 2017, $9 in 2018 and $9.50 in 2019. Senate Bill 412 would have increased the rate to $12 effective 60 days after passage.
It is unknown how many workers in New Hampshire would be impacted by an increase in the minimum wage. A fiscal note to HB 1480 indicates that the NH Department of Labor did not have information on the number of minimum wage workers. However, a report by the New Hampshire Fiscal Policy Institute, which supports a minimum wage hike, estimates that 76,000 Granite State workers would benefit from an increase to $9.
Given the movement in other jurisdictions, and in New England particularly, it is likely that the fight to increase the minimum wage in New Hampshire will eventually succeed, regardless of whether the federal rate increases.
Kathleen Peahl is a partner at Wadleigh, Starr & Peters in Manchester and focuses her practice on employment law.