Some Delaware workers will get a raise in the next few years, after the General Assembly and Gov. Jack Markell on Jan. 30 approved a $1 increase to the minimum wage. On June 1, the state’s minimum wage increases to $7.75. By June of 2015, workers will receive a minimum of $8.25 per hour.
The bill could impact up to 40,000 people, due to a domino effect. That’s because of its indirect impacts on people making close to minimum wage, said George Sharpley, chief of Delaware Department of Labor’s Market Information Office.
“Usually, if someone’s making $8.30 … those people making a little more get a little raise. Otherwise, they get disgruntled,” Sharpley explained.
Originally introduced by Wilmington’s Sen. Robert Marshall (D-3rd), the original Senate Bill 6 had loftier intentions. Minimum wage would have increased to $8.75, would always be at least $1 above the federal minimum wage and would automatically increase with cost of living adjustments.
With the legislation, Delaware joined New Jersey in surpassing the current federal minimum wage by $1. Maryland, Virginia and Pennsylvania remain at $7.25, although Maryland legislators recently introduced legislation that would raise that state’s minimum wage to $10.10 by 2016. Additionally, Prince George’s and Montgomery counties within Maryland also approved a dramatic increase, to $11.50 by 2017.
Today, the local minimum wage is above federal requirements in 21 states, plus Washington, D.C.
Delaware last approved an increase in 2008, to $7.15, which increased again, in conjunction with the national requirements, to $7.25 in 2009.
“This is a very tough decision in my district,” said Speaker of the House Pete Schwartzkopf (D-14th). “I understand both sides of the minimum-wage issue. I understand the business issues … but if you want to give back to the economy, you give it back to the lowest-paid workers, because they’re the ones buying, … paying bills.”
Although Schwartzkopf said most employers in his Rehoboth Beach/Dewey Beach-area district already pay more than minimum wage, he emphasized that he didn’t want his vote to appear anti-small-business.
“In the last three weeks before the vote, the ones that were opposing it the most was the [Delaware] Restaurant Association,” Schwartzkopf said.
But he said major local employers, including Mike Meoli and Alex Pires, were OK with minimum-wage increases.
“I had lots of business owners tell me it was OK — ‘Just go ahead and do it.’ I was fortunate enough to have good communication with the businesses and Chamber of Commerce,” Schwartzkopf said. “I was very pleased business reached out to me … because I was really struggling with it.”
Opponents argue for exceptions
State Rep. Ron Gray (R-38th) opposed the bill, but he said he would have supported it with an amendment he helped prepare: “$8.25 — that’s a lot to pay someone that’s just making salad, and a lot of those kids, they’re not living on that,” Gray said. “It’s a chance to learn a skill and know how to get to work on time and learn about work environment,”
(According to the Bureau of Labor Statistics’ 2013 report, nationally, teenagers — those 16 to 19 — made up about a quarter (24.1 percent) of hourly paid workers making $7.25 or less, or 31 percent of those right at the federal minimum wage, with those 20 to 24 making up 26.5 and 24.1 percent of those workers, respectively. Those older than 24 were 45 percent and 49 percent of federal minimum-wage workers, respectively.)
But a lower wage could encourage businesses to hire more people, according to Gray.
“If this went through, they may hire someone more experienced, like a teacher [during the summer season], and they would hire one instead of two jobs,” Gray said.
Gray said supported an amendment with three-tiers, which did not pass. It proposed an alternative wage of no less than 75 percent the regular minimum wage ($6.19 by 2015) for anyone younger than 18 for their first 180 days of a seasonal job. That would be a minimum, so businesses could still pay more if they chose to do so.
Gray said such a flexible training wage is especially good for beach areas, where 14- to 16-year-olds are just learning job skills. The six-month period with the lower wage can allow the employer and employee to see if the job is a good match, he argued.
“I really thought it was important that we provide that,” said Gray, adding that he hopes to see the bill with his recommended amendments introduced when the general assembly reconvenes in mid-March.
“I’m not sure it’s going to affect a lot of businesses,” said Gray, suggesting they hold some sort of poll, “but it would really save small business.”
None of the 20 businesses attending a recent House Small Business Caucus meeting spoke in favor of the increase, Gray noted.
“A couple were not sure if they could stay in business,” he reported.
The bill that increased the state’s minimum wage passed the Senate 13-8 and the House of Representatives 27-14, with all Democrats voting in favor and all Republicans opposed, except for Rep. John Atkins (D-41st) and Rep. Stephen Smyk (R-20th), who both crossed the aisle to vote with the other party. (Neither Atkins nor state Sen. Gerald Hocker (R-20th) responded to requests for their comments on their votes against the bill prior to the Coastal Point’s deadline this week.)
However, earlier this month, Hocker had argued that there aren’t many minimum wage jobs in the first place. Yet the increases eventually cause negative impacts to retirees and low income-families, he suggested, because businesses need to charge more to pay employment costs.
“The argument here is, ‘If I pay my lower people more, then I have to pay the other people more.’ That’s a business decision they have to make,” Schwartzkopf said. “They don’t have to do that. Each business knows their profit margin. They know what they can do to bring people in.”
“We do know that 10 percent — or 41,000 — are under $8.76 an hour,” said Sharpley, estimating that 25,000 people would be paid less than $8.25.
Tipped workers still have $2.23 minimum wage
A 2011 study revealed that about 10,000 Delaware workers, or 3 percent of the workforce, were only getting minimum wage, and no benefits, Sharpley said.
The Department of Labor doesn’t keep exact track of wages per job. Instead employers are asked to put employees in ranges, the lowest of which is less than $9.25 hourly.
Bartenders, servers and other employees who receive tips have had a minimum wage of $2.23 per hour since 1989 (when the regular minimum wage was set at $3.35). That is supposed to be offset by their tips to reach the regular minimum, Sharpley said.
“People are not aware that the majority of the workers making minimum wage” are in the food-service industry, most of whom are probably making tips, Sharpley said.
The Bethany-Fenwick Area Chamber of Commerce has kept members informed about the recent legislation, following the stance of the U.S. Chamber.
“The Chamber has always taken the stance that we don’t promote minimum-wage increases,” said Kristie Maravalli, executive director of the local Chamber. “We don’t advocate an increase … because we feel they should be able make their own decisions.”
She acknowledged, though that she had only heard minimal comments about the issue — mostly from year-round businesses operating in the quieter off-season. She said she expected she might hear more when summer business gets going.
Even more concern has been generated by Maryland legislators’ discussion of raising the minimum wage in that neighboring state to more than $10.
Some Delaware constituents, however, would have liked a higher increase. But entrepreneurs were glad the proposed increase wasn’t higher, like it is in Maryland, Schwartzkopf said. Delaware legislators found support for a compromise through both houses and the governor.
“The reason this bill ended up going through was because the governor was in the middle of it,” Schwartzkopf said. “The House, Senate and Governor’s Office all agreed on the language.”