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NC remains on sideline in raising minimum wage debate

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For the 13th consecutive year, about 41,000 minimum-wage workers in North Carolina did not receive a pay raise with the arrival of the new year Saturday.

Those North Carolinians remain stuck at the federally mandated $7.25 an hour set in 2009, along with minimum wage workers in 19 other states that include four of the 10 largest states in Georgia, North Carolina, Pennsylvania and Texas.

An additional 52,000 North Carolinians make less than $7.25 because they work in the restaurant sector, where their compensation is often based more on customer tips.

If the federal minimum wage was tied to inflation — as is mandated in several states with recent hikes — it would have climbed to $9.54 by 2021.

Once again, the majority of N.C. Republican legislators expressed little, if any, interest during the 2021 session in a wage hike for private-sector workers even though businesses small to large are struggling to hire qualified workers.

None of the six Democratic-sponsored minimum wage bills were allowed to be heard in committee by Republican chairpersons.

Constricting minimum-wage increases is that the state Constitution does not allow for voter-initiated referendums, which gives legislative leaders the power to shelve minimum-wage bills.

A full-time N.C. minimum-wage worker earns $15,080 per year.

That’s $2,340 less than the $17,420 federal poverty level for 2021 for a family of one adult and one child. The federal poverty level is $26,500 for a four-member household.

The expiration of federal COVID-19 pandemic jobless benefits on Sept. 4 has yet to result in a wave of unemployed North Carolinians returning to the state’s workforce — as projected for months by federal and state Republican lawmakers.

The $300 per week payments kept some potential employees on the sidelines since they made more from not working than in a minimum- to low-wage job.

However, worker advocates have said the lack of a surge in the state’s labor force indicates leisure, hospitality, retail and trade sector workers signals they are opting not to return to those jobs because of low pay, along with demanding and sometimes dangerous work environments during the pandemic.

“Total statewide jobs are still 72,000 less than their pre-pandemic level,” said Michael Walden, an economics professor at N.C. State University.

Walden said that even though the state jobless rate was at 3.9% in November — the same as March 2020 — “a smaller percentage of individuals who are of working age either have jobs or are looking for jobs than two years ago.”

“If labor force participation was the same as two years ago, 85,000 more people would be in the labor force,” Walden said.

GOP points to markets

It was not unexpected that the five Democratic-sponsored minimum-wage bills introduced during the 2021 session — House bills 612, 850 and 891 and Senate bills 447 and 673 — failed to be placed on agenda by Republican committee chairpersons.

House Bill 705, which would have set a $15 minimum wage for first responders, also did not receive a committee vote.

The same put-on-a-shelf fate held true for seven Democratic-sponsored minimum wage bills introduced during the 2019-20 sessions.

That included House Bill 832, which would have created a constitutional amendment allowing voters to decide whether to raise the state minimum wage to $12 an hour.

The lack of a minimum-wage raise for private-sector employees likely continues to sting considering the minimum pay for all full-time state government employees jumped to $15 an hour in July 2018, as approved by the Republican-controlled General Assembly.

About 8,000 state employees, or 12% of the state government workforce, received that raise, according to the office of Senate leader Phil Berger, R-Rockingham.

Key Republican legislative leaders continue to say that the free-market system should dictate wages for private-sector employers.

They also cite studies claiming the possibility of losing private-sector jobs, or reducing the incentive for their creation, as a consequence of increasing hourly pay.

However, other studies show little, if any, impact on hiring patterns in states that have raised their minimum wages, including those with a $15 minimum wage as their goal.

Legislative response

State Rep. Pricey Harrison, D-Guilford, sponsored or co-sponsored two of the Democratic hourly wage bills.

“The GOP seems to have very little appetite to raise the minimum wage. This is not limited to North Carolina,” Harrison said.

“I have also heard claims that a higher minimum wage would have a negative impact on N.C. competitiveness in attracting industry; that is debatable. It seems that the industries we have attracted to N.C. recently are not minimum wage payers, so I’m not sure those (business climate) ratings are applicable.”

Lee Zachary

Zachary

Rep. Lee Zachary, R-Yadkin, who has western Forsyth County in his district, said, “I don’t feel the legislature is ready to address the issue right now.”

“For many industries and businesses, the need for employees and market demands will increase wages. We have already seen increased wages and signing bonuses in many segments. These are driven by market demands.”

Zachary said creating a higher state minimum wage could adversely affect two of North Carolina’s largest employment sectors in agriculture and tourism.

“To require an increase in wages could adversely effect those enterprises, increasing the cost and driving inflation, which could adversely impact these businesses,” Zachary said.

“The need for employees to work in the agriculture and tourism industry will be controlled by the market demands, just like in the food service industry.”

Zachary cautioned that “the best course of action is unclear right now.”

“Possibly, once the market demands have settled down and leveled off, the legislature might be in a better position to determine what a better minimum wage would be.”

Joyce Krawiec

Krawiec

Sen. Joyce Krawiec, R-Forsyth, has said that “many companies are raising wages to attract the best talent.”

Companies with a Triad presence that have raised their minimum wage to or toward $15 an hour include Amazon, Bank of America Corp., Cone Health, First Horizon National Corp., F.N.B. Corp., Hugh Chatham Hospital, Novant Health Inc., Truist Financial Corp., Wake Forest Baptist Medical Center and Wells Fargo & Co.

In July, the Winston-Salem City Council fulfilled its pledge to establish a $15 minimum wage for city employees.

“This all adds credence to the fact that a minimum-wage increase is unnecessary,” Krawiec said.

DONNY LAMBETH

Lambeth

Rep. Donny Lambeth, R-Forsyth, has said the minimum wage remains a subject “of great debate in Raleigh,” in part out of concern for the ever-widening economic gap between urban and rural North Carolina.

Raising the minimum wage for state employees to $15 an hour “could very well signal to other employers it is time for them to reassess their salary for the low-wage earners and adjust accordingly,” Lambeth said.

“But the market should determine that, not government.”

Walden said that despite the state having a year-over-year net gain of 119,000 jobs through November, “there are lingering issues.”

“The average hourly wage rate increased 6.8%,” Walden said. “However, after subtracting inflation, the gain was only 0.5%.”

Nonetheless, Walden said “I don’t see a raise in the minimum wage coming in North Carolina in 2022.”

States’ trends

Meanwhile, the minimum wage in 10 blue, seven purple and four red states did rise Saturday.

An additional two blue, one purple and one red state have minimum-wage increases set to go into effect by either July 1 or Sept. 30.

For those states boosting their minimum wage, the increases ranged from 22 cents an hour (to $9.87) in Michigan to $1.50 an hour (to $11) in Virginia.

In 2021, minimum wages increased in 11 blue, three purple and six red states.

John Dinan

Dinan

States that have increased their minimum wage above the federal minimum typically fall into one of two categories, said John Dinan, a political science professor at Wake Forest University who is a national expert on state legislatures.

“State minimum-wage increases have been passed either by Democratic-controlled legislatures or through citizen-initiated ballot measures in states that allow the public to bypass legislative opposition and place measures directly on the ballot.”

According to the National Employment Law Project, it’s a national single-year record to have 25 states boost their minimum wage.

“These record increases are the result of underpaid workers organizing, demanding and winning higher wages,” according to a report by the project first published by USA Today.

The project said that since the “Fight for $15” an hour was launched in 2012, “it has resulted in $150 billion in higher pay for 26 million workers.”

“This movement has not only led to the adoption of higher state and local minimum wages, but has helped seed new worker activism and mobilization across our economy.”

Altogether, 30 states — mostly outside the Southeast — have a minimum wage above the federal level.

Walden said that Republican legislative leadership “believes business recruiters for the state are aided by pointing to North Carolina’s relatively lower minimum wage.”

Setting a new normal?

The National Employment Law Project said the COVID-19 pandemic may be setting a new normal for wages in low-wage industries.

“The pandemic has exposed for the public the depth of the precarity experienced by underpaid workers,” according to the project’s report.

“Workers — fed up with low pay, lack of respect and facing workplace exposure to a deadly virus — have been emboldened to act collectively and individually to demand change.

“Some workers — in particular those in the restaurant industry — have expressed their discontent by quitting in large numbers, perhaps permanently. Others have gone on strike, engaged in slowdowns or sick-ins, or taken other action.”

Meanwhile, Greater Winston-Salem Inc. maintains on its website that among its priorities it “supports current North Carolina law in establishing our state’s minimum wage based solely on the federal Fair Labor Standards Act, and prohibiting any county, municipal or other local minimum wage law or ordinance.”

Mark Owens, president and chief executive of Greater Winston-Salem, said that “many private sector businesses are naturally offering competitive wages to help fill openings.”

“Because wages are being dictated by the labor market, we don’t believe a legislated minimum wage increase is needed right now.”

Mitch Kokai, a senior policy analyst with Libertarian think tank John Locke Foundation, said that “when government forces employers to pay a certain minimum, the ultimate losers are always the low-skilled workers who will miss a chance to step on the first rung of the economic ladder.”

“In today’s conditions, an employer can take a chance on an unproven worker at $7.25 per hour, if anyone is willing to accept that wage.

“If that employee is diligent, punctual and able to learn on the job, the employer will have to raise their pay pretty quickly to avoid losing them to a higher-paying competitor,” Kokai said. “If the initial employer does lose the employee to a better-paying opportunity, that upward move likely opens up a slot for another new worker to prove in the lower-paying job.”

Shaky wage gauge

Depending on tight labor conditions can be a dicey way to determine wage levels, said John Quinterno, principal with South by North Strategies Ltd., a Chapel Hill research company specializing in economic and social policy.

“The problem is that the higher minimums only last as long as conditions are tight,” Quinterno said. “Once conditions slacken, wages can fall without a legal wage floor in place.”

Quinterno said he is hopeful that having 25 states, including Florida and Virginia, increasing their minimum wage in 2022 will put pressure on North Carolina legislators to act.

“Now that the federal government, at least for contractors, has higher minimum wages that $7.25 an hour creates practical incentives for firms, especially those with large multi-state operations, to use higher rates across the board for purposes of efficiency and internal uniformity,” Quinterno said.

When it comes to the Biden administration and Democratic-controlled Congress, Quinterno said there was disappointment that they have failed — to date — “to make good on the campaign promise to raise the minimum wage to $15 an hour.”

“They seem fine with letting the states take the de facto lead on that issue and hoping for spillover benefits.

“That does, however, result in inequitable treatment among otherwise similarly situated workers based solely on where they happen to be located.”

Andy Challenger, senior vice president with employment firm Challenger Gray & Christmas Inc. of Chicago, said that “many small businesses are operating on a knife’s edge during this downturn.”

“Pressure on wages is going to be a very difficult pill for many businesses to swallow at the moment.”

Challenger said public opinion in favor of raising the federal minimum wage seems to be growing.

“An increase in the minimum wage seems to be more popular than at any point I can recently remember among the population,” he said.

Rural, urban flexibility

Mark Vitner, a senior economist with Wells Fargo Securities, continues to favor setting a “flexible” state minimum wage in North Carolina the way that Minnesota, New York and Oregon have established.

For example, the minimum wage of $15 an hour in New York City remained in place Saturday, while the minimum wage in Long Island and Westchester County rose from $14 to $15, and from $12.50 to $13.20 in upstate New York.

In Minnesota, large employers are required to bump up their minimum wage from $10.08 to $10.33, while small employers’ minimum wage goes from $8.21 to $8.42.

In Oregon, the minimum wage rose from $14 to $14.75 just in Portland, from $12.75 to $13.50 in other metro areas, and from $12 to $12.50 in rural areas.

Taking another approach is Nevada, which requires employers who offer no health insurance to employees to hike their minimum wage from $9.75 to $10.50, while those that offer health insurance go from $8.75 to $9.50.

“Ideally, a minimum wage would have flexibility for higher rates in large urban areas and lower minimum wages in smaller metro areas and rural areas,” Vitner said.

“What is appropriate for the minimum wage in Raleigh or Charlotte may not be appropriate for Lexington, Mount Airy or Boone.

“There should also be flexibility built into any increase in the minimum wage to allow for lower minimum wages for teenagers and a lower minimum wage during training,” Vitner said.

Richard Craver: 6 stories that defined 2021

COVID-19 and politics, whether local, state or national, spilled over from 2020 to saturate much of how 2021 has been defined.

The second impeachment trial of former President Donald Trump led to an intriguing split vote of North Carolina's two Republican U.S. senators on whether to convict.

The arrival of the one-year anniversary of the pandemic proved to stir an array of emotions as local residents tried to process everything that’s happened by mid-March 2020 ... and continues to date.

The socioeconomic spillover from COVID-19 persuaded two Winston-Salem nondenominational churches to chose transformation over construction for their new worship centers.

Politics seeped into how high school sports are overseen with a Republican-sponsored bill that threatened the existence of the N.C. High School Athletic Association. The spark behind House Bill 91 appears to have been a slow burn of nearly two years between a GOP senator and NCHSAA leaders.

An often overlooked factor in the worker-shortage discussion is that the pandemic has led more North Carolinians to retire early, or to finally follow through on delayed retirement plans dating back potentially to the Great Recession.

Finally, Truist Financial Corp. Kelly King retired as chief executive by reflecting on a career — and life — path that represented his Christian faith, a hard-driven work ethic, a belief in giving back and discovering and acting on a purpose forged during a spiritual awakening.

Those are major reasons why King, who could spend his retirement days anywhere, is coming back to Winston-Salem. There’s some unfinished business to accomplish here.

336-727-7376

@rcraverWSJ

 “I don’t feel the legislature is ready to address the issue right now."

Rep. Lee Zachary, R-Yadkin, who has western Forsyth County in his district

zachary quote

“Many companies are raising wages to attract the best talent.”

Sen. Joyce Krawiec, R-Forsyth

Krawiec quote

The minimum wage remains a subject “of great debate in Raleigh,” in part out of concern for the ever-widening economic gap between urban and rural North Carolina.

Rep. Donny Lambeth, R-Forsyth

Lambeth quote

“State minimum-wage increases have been passed either by Democratic-controlled legislatures or through citizen-initiated ballot measures in states that allow the public to bypass legislative opposition and place measures directly on the ballot.”

John Dinan, a political science professor at Wake Forest University who is a national expert on state legislatures.

Dinan quote
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