Minimum Wage Increases Face A New Challenge From Coronavirus The coronavirus pandemic has prompted business groups to fight mandated increases to the minimum wage. But they're facing resistance from unions, who say workers need a raise now more than ever.
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Minimum Wage Increases Face A New Challenge From Coronavirus

Minimum Wage Increases Face A New Challenge From Coronavirus

Velma Conrelius, left, and Zelma Kinchloe protest for higher wages outside a McDonalds restaurant in Detroit Thursday, May 15, 2014. Paul Sancya/AP Photo hide caption

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Paul Sancya/AP Photo

Advocates who fought for a $15 minimum wage couldn't have predicted a threat like the coronavirus.

Within weeks of winning Virginia's first wage increase in 11 years — a raise to $9.50 from the current $7.25 in January, then potentially to $15 in 2026 — progressive Democrats and labor unions watched their victory take a blow when the General Assembly voted to delay raises by four months to ease pressure on businesses harmed by the pandemic.

In Maryland, statewide business closures were quickly followed by calls from business groups to freeze the minimum wage increases state lawmakers approved in 2019, prompting the state's "Fight for $15" coalition to resume a battle advocates thought they'd won. Currently, Maryland's wage is $11, set to reach $15 for all employers by 2026.

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In their latest attempt to freeze wages, business groups have deployed an old argument: that higher pay leads to job losses. But that tactic has lost support in a time when low-wage employees — who work in health care, grocery stores, warehouses, restaurants and other businesses that have remained open — continue to perform essential services during the health crisis. And in D.C., where the minimum wage will reach $15 this week, base pay continues to fall short of the cost of living.

"Hero pay for hero work" has become a rallying cry for labor organizers, who swiftly pounced on efforts by the Maryland Chamber of Commerce and the state chapter of the National Federation of Independent Business to freeze the minimum wage at $11 until 2023.

"Essential workers ... are on the front lines of this pandemic, and the vast majority of them are making under $15 an hour," said Brig Dumais, a political organizer with 1199 SEIU, during a virtual rally the union hosted in June. "We cannot call them 'heroes' on one hand and freeze their wages on the other."

The president of the NAACP's Baltimore chapter, Rev. Kobi Little, pressed leaders to look for other ways to support struggling businesses.

"We have to stop using a policy lens that allows us to feel comfortable sacrificing those who are economically insecure and vulnerable for the benefit of those who are economically secure," Little said.

That message was apparently heard by Maryland's Board of Public Works, the three-person body that holds the power to delay wage increases in one-year increments. One board seat is held by Gov. Larry Hogan, who unsuccessfully vetoed the minimum-wage increase when it reached his desk last year. But the governor is outnumbered: The two other members of the board — Comptroller Peter Franchot and Treasurer Nancy Kopp — have publicly said they don't support pay freezes.

The political math looks different in Virginia, where the $15 minimum wage has tepid support even among Democrats. The pay increase that passed this year arose from a painstaking compromise between progressive Democrats in the House of Delegates and their more conservative counterparts in the Senate, who disagreed over the economic impact that higher wages could have on poorer parts of the state.

After the bill cleared both chambers, Democratic Gov. Northam hesitated to sign it, before pushing back its implementation by four months as the pandemic unfolded.

"While I want to make sure we're taking care of our workers across Virginia, I also want to make sure we come out of this economic crisis in as strong a position as I can," Northam said at the time.

That surprised some observers, who thought the Democrat's support was assured. "I would have expected him to sign the bill with pleasure," says Dave Cooper with the Economic Policy Institute, a left-leaning think tank that supports a higher minimum wage. "I was disappointed."

So were business groups in Virginia, who said the four-month pause didn't go far enough.

"We were actually hoping for a longer delay, until January of 2022," says Barry DuVal, president and CEO of the Virginia Chamber of Commerce. "Small businesses, especially, need to have an opportunity to build up their safety protections, get their personal protection equipment and have testing in place."

Virginia is the only U.S. state to pause wage increases due to the pandemic, though business groups are hoping for the same outcome in states and localities across the country. The California city of Hayward approved a freeze in March. Supporters say pressing "pause" on wages is one way to stave off mass business closures — and ensuing job loss — in the wake of the COVID-19 outbreak.

But labor-focused economists and progressive business groups say an economic downturn is the wrong time to pay workers less.

"People forget that the federal minimum wage was enacted during the incredibly hard times of the Great Depression," says Alissa Barron-Menza, vice president of Business for a Fair Minimum Wage, which supported wage hikes in Virginia and Maryland. "The goal of the minimum wage was to alleviate poverty and to boost consumer spending so that businesses would have someone to sell their products and services to. And that's exactly what it did."

Business groups cite a 2019 study by the Congressional Budget Office showing that a nationwide $15 wage in 2025 — approved by House Democrats in 2019 but rebuffed in the Senate — could cause the economy to shed 1.3 million jobs, mostly those held by teenagers, part-time employees and those without a high school diploma.

"We want the businesses that employ those people to be able to continue to make payroll," says DuVal with the Virginia Chamber.

Other nonpartisan research on the minimum wage has shown widespread benefits for workers when pay goes up, and limited impacts on job numbers.

The District of Columbia is one local jurisdiction where scheduled pay increases have gone largely unchallenged during the crisis. Minimum wage workers in D.C. will begin earning $15 on July 1, up from $14. Tipped workers will also get a raise, to $5 from $4.45.

Derek Brown, owner of high-end cocktail bar the Columbia Room, calls the increase negligible.

"I realize that margins are thin, but this is about human beings making the bare minimum to be able to live in and around the District," Brown writes in an email.

With many D.C. employers already paying the city's official "living wage" of $14.65, Brown notes, a raise to $15 adds up to an additional $14 a week for full-time workers.

Labor costs are not top of mind for D.C.-area bar and restaurant owners right now, adds Kathy Hollinger, president and CEO of the Restaurant Association of Metropolitan Washington.

"The biggest issue right now is, how the heck are we going to pay this astronomical fixed cost, which is rent?" Hollinger says.

Dozens of business owners, including Brown, recently signed an open letter in the Washington Post imploring landlords to offer rent forgiveness to bars and restaurants. The letter doesn't mention wages.

But in Virginia, the push to stall pay hikes is likely to come roaring back next year, once Virginia's General Assembly reconvenes in January. Virginia Chamber of Commerce President Barry DuVal and the National Federation of Independent Business' Virginia State Director Nicole Riley say they plan to lobby for a longer pay freeze next year if business conditions warrant it.

And while progressive groups in Maryland have declared victory in the revived battle over the $15 wage, there is still time for business interests to get their way, says Ricarra Jones with 1199 SEIU. The Board of Public Works has until November to approve a wage freeze for next year, she says. Until then, she and other labor advocates will remain on guard.

"I think there is a lot of pressure for electeds to figure out how we bring the economy back," Jones says. "So I think that while [wage freezes are] risky and very unpopular, they're still a real threat."

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