Minimum Wage At The Forefront, With Eye On Elections

Minimum Wage At The Forefront, With Eye On Elections

By Pamela M. Prah,

WASHINGTON — A wave of efforts to raise the minimum wage at the state and local level will run through November, when voters in eight states could consider ballot measures to raise hourly rates higher than the current $7.25 federal rate.

This is the second year in a row that states have picked up the pace of increasing the minimum wage, after President Barack Obama’s proposal to increase the federal rate to $10.10 an hour stalled in Congress.

Since the year began, these states have approved minimum wages that are higher than the current federal level: Connecticut ($10.10), Delaware ($8.25), Maryland ($10.10), Minnesota ($9.25) and West Virginia ($8.75).The District of Columbia raised its rate to $11.50.

When these measures go into effect next year, half the states will have minimum wage rates higher than the federal level.

The last time this many states had rates higher than the federal level was in 2007, when 23 states and the District of Columbia were higher. That year, Congress raised the minimum wage from $5.15 to $7.25 an hour, in three stages over two years.

A full-time $7.25-per-hour minimum wage employee earns $15,080 annually. A person earning $10.10 (Obama’s proposal) would earn $19,777. For comparison, the poverty line in 2013 was $11,490 for a single person and $23,550 for a family of four.

“This has not happened often, primarily because prior to the 1990s, most states just used the federal minimum,” said David Cooper, an analyst with the Economic Policy Institute, a labor-backed organization that supports a higher minimum wage. Some of the increases at the state level in 2007 spurred momentum for the federal increase, he said.

So far this year, 34 states have or are now considering increases to their minimum wage, according to the National Conference of State Legislatures’ database. Measures are still advancing in Hawaii, Illinois, Massachusetts and Vermont.

Tennessee and Idaho had the highest percentages of hourly paid workers earning at or below the federal minimum wage in 2013, according to federal figures. Washington, California and Oregon have the lowest percentages of workers paid at the federal rate, largely because these three states have the country’s highest rates.

Of all states, Washington state currently has the highest state minimum wage at $9.32, followed by Oregon at $9.10. California’s rate of $8 an hour will increase to $9 on July 1 and then jump again to $10 an hour on Jan. 1, 2016, under legislation enacted last year.

Obama has moved his campaign for a higher minimum wage beyond the halls of Congress, where he first made the pitch in his 2013 State of the Union. “States, counties, cities across the country are working to raise their minimum wage as we speak,” the president said in March at an event with four Democratic New England governors, a sentiment he repeated in remarks in Michigan this month.

The states that have passed minimum wage increases this year are dominated by Democratic governors and legislatures. The same was true last year, too, when California, New York and Rhode Island increased their minimums.

Voters in New Jersey last November approved a ballot measure raising the minimum wage, after Republican Gov. Chris Christie vetoed a legislative effort.

States controlled by Republicans could see action, too. Organizers are trying to get measures on the November’s ballot to raise the minimum wage in the GOP-dominated states of Alaska, Idaho, Michigan and South Dakota. Supporters in Nebraska are likewise weighing a ballot measure since the minimum wage effort died in the legislature, which is officially nonpartisan.

States with split political control where minimum wage ballot proposals are circulating include Arkansas and Missouri, where the governors are Democrats and the legislatures are GOP-led. Efforts also are underway in the blue state of Massachusetts to put a measure to voters if the legislature fails to raise the minimum wage.

Minimum wage hikes have been popular with voters: Since 1996, proposed increases have been on statewide ballots 15 times in 11 states — and all but two of them were successful, according to the Ballot Initiative Strategy Center, a Washington, D.C., group that supports a higher wage.

In the past, minimum wage measures on the ballot during a nonpresidential election year have increased turnout among Democrats and swing voters, said Josh Levin, the center’s vice president. That’s one reason Democrats are expected to keep the issue alive for the November midterm elections, when 36 governorships and legislative seats in 46 statehouses will be contested, along with all 435 U.S. House seats.

Mike Saltsman, a research director at the Employment Policies Institute, a conservative nonprofit think tank that opposes a minimum wage increase, said Democrats want voters to think about the minimum wage, and not the Affordable Care Act. “They are trying to change the conversation away from Obamacare,” he said.

In some states where minimum wage measures faltered, cities are responding. Portland, Maine, and Las Cruces, N.M., are considering higher hourly wages, in part, because Republican governors in those states last year vetoed measures to increase the state minimum wage.

Even if the state has recently raised its minimum wage, the cost of living is so high in some cities that the new minimum wage isn’t enough to live on, resulting in city campaigns, said Paul Sonn, general counsel at the National Employment Law Project, an advocacy group that supports higher wages. Some 120 cities have enacted “living wages” that set a minimum standard for businesses that receive city contracts. City minimums range from $9 to $16 an hour.

Cities in California have increased or are considering high wage rates. Last month in Richmond, some 15 miles northeast of San Francisco, the city council approved raising the local minimum wage to $12.30 by 2017. Other recent increases in California include San Francisco ($10.74 per hour) and San Jose ($10.15 per hour). City campaigns are underway again in San Francisco as well as San Diego, Oakland and Davis.

The high cost of living in and around the nation’s capital prompted a coordinated effort for higher rates by Washington, D.C., ($11.50 by 2016), Montgomery County, Md., ($11.50 by 2017) and Prince George’s County, Md. ($11.50 by 2017).

In Washington state, SeaTac, a suburb of Seattle, has the country’s highest minimum at $15 an hour. It specifically applies to about 1,600 workers in certain airport businesses, including rental cars and parking lots, but a judge ruled in December that the law does not cover another 4,700 airport workers.

Exactly who earns the minimum wage and who would benefit the most from an increase is widely debated. BLS data show:

Just over half of all workers paid at or below the minimum wage are in the leisure and hospitality fields.

Almost two-thirds of workers earning the minimum wage or less in 2013 were employed in service jobs, mostly in the food preparation and food service sectors.

About half of all minimum age workers are under the age of 25.

Politicians and advocates spin the data to fit their arguments. Opponents of increasing the minimum wage say that most people who would benefit from a higher minimum wage are teenagers on their first job. Advocates for a higher rate, including the president, contend the average age of folks paid the minimum wage is 35 and a majority of lower-wage jobs are held by women.

The White House’s minimum wage effort includes a state-by-state accounting of 28 million workers it says would be affected by an increase in the federal minimum wage. That estimate ranges from 2.2 million workers in California to 89,300 in Rhode Island.

Obama and other proponents of a higher federal minimum wage argue that companies are making record profits while the lowest-paid workers have seen their purchasing power plummet as the real value of the minimum wage has dropped by nearly one-third since its peak in 1968.

Opponents, including Republican House Speaker John Boehner, the restaurant industry and many business groups, argue that employers can’t afford the higher hourly wages. Most businesses that hire minimum wage workers are not big corporations, they say, but rather independently owned franchises and small businesses that operate on narrow profit margins.

Nearly 40 percent of business owners who currently pay the minimum wage said they would have to let some employees go to cover the cost of any wage increases, according to a March survey by staffing company Express Employment Professionals.

The nonpartisan Congressional Budget Office concluded that a federal $10.10 hourly rate would reduce total employment by about 500,000 workers.

Photo: pbarcas via Flickr

States Lag In Educating Students About Personal Finance

States Lag In Educating Students About Personal Finance

By Pamela M. Prah,

Students paid attention when Mark Ingram, former Alabama Crimson Tide star and current running back for the New Orleans Saints, showed up at Calera High School outside of Birmingham, Alabama.

Ingram and Alabama state Treasurer Young Boozer unveiled a free educational video game called “Financial Football,” developed by the NFL and Visa Inc. The game allows students to move their favorite team down the field and score if they answer money management questions correctly. Now in 41 states, the game and classroom curriculum aim to give high school and middle school students the fundamentals of personal finance.

“Students enjoyed the game,” said Dawn Morrison of the Alabama Department of Education. “They did learn something without realizing they were learning.”

The recent recession raised greater awareness of the importance of money management skills as many people purchased homes they could not afford by signing mortgages they did not fully understand. But the recession also cut deeply into state budgets, forcing policymakers to find new ways to get money management into school curricula and creative ways to pay for it.

Currently, only four states — Missouri, Tennessee, Utah and Virginia — require that high school students take a stand-alone personal finance course to graduate, according to Jump$tart Coalition, made up of 150 financial institutions, consumer groups and federal agencies.

The Council of Economic Education, which also gets backing from businesses and financial institutions, estimates that 17 states require high school students to take courses that include personal finance instruction. Both groups lobby for more financial literacy in schools.

Teens are big consumers — spending as much as $91 billion in 2011, by one estimate — but few are saving for college or other long-term goals or understand basic financial terms. More than 75 percent of 16- to 18-year-olds say they are financially savvy, but less than 20 percent knew what a 401(k) plan is and only 32 percent knew how credit card interest and fees work, according to a 2011 survey from the investment firm of Charles Schwab & Co. Less than a third of young adults have basic knowledge of interest rates, inflation and other financial terms, according to a federal study.

In some states, such as Alabama, personal finance is taught as part of another course. Alabama has been on the bottom of many state-by-state rankings for personal finance instruction, and a state-appointed commission had recommended better courses for high school students.

Beginning this year, students there will have to pass a course called Career Preparedness to graduate, under new state Department of Education requirements. The course includes financial literacy, but also teaches basic computer programs, such as Word and Excel, needed in the workplace.

Advocates are pressing schools to incorporate personal finance in math and language arts classes in elementary schools. “You’ve got to start early,” said Laura Levine, executive director of Jump$tart Coalition. “A one-semester course should not be the end-all.”

Nearly 20 states last year approved legislation or adopted resolutions regarding financial literacy, according to a tally by the National Conference of State Legislatures. Among them, California required the state board of education to integrate financial literacy into existing curricula.

Florida revised requirements for high school graduation to include financial literacy within a required economics course, and Maine added personal finance course work as part of social studies or history courses that are required for graduation. Utah established a task force to look at how to improve financial and economic literacy education in the public school system.

States and schools can tap into various federal grant programs, including from the Department of Education, for financial literacy, and federal websites and toolkits. But many schools also are finding help from companies with a vested interest, such as Visa and others in the financial sector.

Visa’s Practical Money Skills program, which developed “Financial Football” with the NFL, is among the most high profile privately produced financial literacy programs offered to states and schools. A YouTube video released this year, for example, stars San Francisco 49ers players Joe Staley and Colt McCoy as well as California State Controller John Chiang and California State Board of Equalization member Betty T. Yee. The games also are available as a free application for use on mobile devices.

Photo: StacyA via Flickr