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National Restaurant Association - Not so fast: State wage hikes fall short of Senate bill

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Not so fast: State wage hikes fall short of Senate bill

With legislation to increase the federal minimum wage facing a doubtful future in Congress, state lawmakers have taken the lead in pushing minimum wage increases.

Legislators in several states have initially aimed to raise their state minimum wages to $10.10 figure in a symbolic show of support for U.S. Sen. Tom Harkin’s (D-Iowa) legislation that would bring the federal minimum wage to the same level over three years. But while two of the five states to pass minimum wage increases so far this year approved increases to $10.10, none of the increases have included all of Harkin’s aggressive objectives: a minimum wage increase to $10.10 over three years, an increase in the minimum cash wage for tipped employees to $7.07, and automatic increases based on inflation going forward. The Congressional Budget Office recently estimated that Harkin’s proposal could result in 500,000 fewer jobs by 2016.

Here’s a snapshot of what’s in the minimum wage bills states have passed in 2014 this year:

Connecticut:  In March, the Nutmeg State became the first in the country to raise its minimum wage to $10.10, with the increase scheduled for phase-in over the next three years.  The minimum cash wage for tipped employees will increase from $5.69 to $6.38 over three years. Neither will be indexed for inflation. The current state minimum wage is $8.70.

Delaware:  The minimum wage was increased by a dollar to $8.25 over two years, while the minimum cash wage for tipped employees remains at $2.23. The initial proposal called for permanently setting Delaware’s minimum wage at $1 over the federal minimum wage and indexing future increases to inflation, but neither of those were included in the final bill.

Maryland:  Lawmakers voted to increase the minimum wage from $7.25 to $10.10 by 2018. Future increases won’t be tied to inflation and the minimum cash wage for tipped employees remains at $3.63.

Minnesota:  Gov. Mark Dayton (D) signed legislation to increase the state’s minimum wage from $6.53 to $9.50 by 2016. The state is one of nine that prohibits employers from counting tips toward the minimum wage. Increases will be tied to inflation starting in 2018.       

West Virginia: Gov. Earl Ray Tomblin (D) recently signed legislation to increase the state’s minimum wage from $7.25 to $8.75 over the next three years. The state’s tip credit will increase to 70 percent of the minimum wage, meaning the minimum cash wage for tipped employees, currently $2.13, will ultimately increase to $2.63 when the minimum wage reaches $8.75.

The unwillingness of states to match the U.S. Senate’s aggressive approach raises the question of whether U.S. senators representing those states would vote to impose another increase on businesses after the state has already mandated wage increases.

The efforts of state restaurant associations have been central in getting state legislators to take a more balanced approach that considers the impact wage increases will have on businesses, said Carrie Leishman, CEO of the Delaware Restaurant Association.

“We’re coming off a fragile recovery, and we still have not seen the full effects of the Affordable Care Act on our industry,” Leishman said. “Legislators want to see something because they see the federal push, but they also have to answer to their constituents.  In Delaware, we were able to work with our legislators at crafting something more palatable for industry.”

The U.S. Senate could vote by the end of April on its proposal to increase the federal minimum wage to $10.10 and the minimum cash wage for tipped employees to $7.07 over three years. Send a letter to your senators and tell them to oppose the mandatory minimum wage increase.

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