When the city council in Washington, D.C., voted unanimously for an increase to the local minimum wage on Dec. 4, it performed an unusual hat trick in local government: Two neighboring jurisdictions agreed to simultaneously raise their minimum wage requirements to prevent any one place from losing a competitive edge by going it alone.
The trio of minimum wage bills around the nation’s capitol come at a time when local public officials across the country are looking for government solutions to a high poverty rate and increased income inequality. The governors of New York and California signed legislation this year to raise the minimum wage in their states. Voters in New Jersey approved a ballot measure to do the same.
Montgomery County Councilman Marc Elrich first discussed the idea of teaming up on parallel minimum wage bills with Andrea Harrison, a councilwoman for nearby Prince George’s County, at a conference in August. Encouraged by the conversation, he talked with D.C. Council Chairman Phil Mendelson, who also expressed interest. “Everybody understood the appeal of doing this as a regional approach,” Elrich said.
A joint effort was particularly important in Montgomery County, where Elrich wasn’t sure he had the votes to pass legislation. He wanted to introduce a bill that would at least move the local minimum wage from $7.25 to $12, though even that was a political calculation. “If I had my way,” he says, “I would have landed between $14 or $15, which I think is a more realistic number for what it takes to live here.” Without assurances that the councils in Prince George’s County and the District of Columbia planned to raise the minimum wage at same level and at the same time, Elrich concedes that his bill would likely have died in committee.
“I didn’t jump on it right away,” says George Leventhal, another councilman for Montgomery County. “You don’t want to be the only jurisdiction to have a higher minimum wage in the region.” The fact that Elrich was coordinating an effort, “that sweetened it a lot,” he says.
The situation was different in the district, where Mayor Vincent Gray recently vetoed a bill that would have set a minimum wage of $12.50 for workers at very large retailers, particularly Wal-Mart. One frequent criticism of the Wal-Mart bill was that it singled out a particular segment of the business community. A broader minimum wage hike, then, stood a better chance of passing. Regional variation might not have been as big a concern in the district, given that the city already had a minimum wage of $8.25, one dollar higher than in the neighboring Maryland counties. Several D.C. council members introduced bills this year to raise the minimum wage. “We probably would have increased the minimum wage even without the regional cooperation,” says Mendelson, a D.C. councilman, “but I think it made it much easier.”
Elrich, Harrison and Mendelson discussed what level of wage increase would have the political support to pass in all three councils. They arrived at $11.50 over three years. That’s higher than any minimum wage currently enacted at the state level, but below the $15 minimum wage recently approved by voters in the city of Sea-Tac, Wash. “There is no correct number,” Leventhal says. “It was all negotiation among politicians. It’s all heavily fraught with ideology and philosophy.”
In Prince George’s County, all nine council members had sponsored the minimum wage legislation, but they delayed taking a vote to see if Elrich had won enough support in Montgomery County. (Two-thirds of the council in Montgomery County did not co-sponsor Elrich’s initial bill.) Waiting was critical, says Harrison, the councilwoman in Prince George’s County, because a failed vote in Montgomery County could have put her jurisdiction at a competitive disadvantage.
Ultimately, the Montgomery County council passed the proposal 8-1 on Nov. 26, but not before watering it down. The council struck a provision that would have tied future wage increases automatically with the local rate of inflation. The council also spread the wage hike over four years instead of three. The time period matters because the value of the wage increase erodes as inflation rises.
Prince George’s County mimicked the revised version of the Montgomery County law and approved it unanimously Nov. 30. Only the D.C. Council decided to stick with the stricter standard of $11.50 by 2016, with future increases tied to inflation. While Montgomery County Executive Ike Leggett signed minimum wage legislation Dec. 5, his counterparts in Prince George’s County and in the district have not taken action. Whether they sign is somewhat moot: In both cases, the bills enjoy veto-proof majorities.
The localities’ decision to raise their wage floors comes amid a national discussion about the federal minimum wage, which is currently set at $7.25 an hour. In his February State of the Union speech , President Barack Obama called for increasing the minimum wage to $9. Obama has since embraced a separate proposal by Senate Democrat to set the wage floor at $10.10 by 2015.
A September report about the federal minimum wage, published by the Congressional Research Service, shows that even though the national minimum wage has been raised by statute repeatedly from its original amount (25 cents in 1938), its real value -- relative to rising consumer prices -- has steadily declined since 1968. That's because legislative raises haven't been high enough or haven't happened consistently enough to keep up with the rate of inflation.
The U.S. Chamber of Commerce argues that increasing the minimum wage would deter new hiring, reduce job training opportunities for current employees and increase the incentive for replacing jobs with automation. A recent report by the American Action Forum, a center-right think tank, suggests that the minimum wage is an ineffective policy tool for combating poverty, and government officials should instead emphasize tax credits for low-income workers and their families.
The following table shows economic data for the three D.C. area jurisdictions implementing minimum wage hikes:
|Jurisdiction||Average Weekly Wage||Total Employment||Number of Establishments|
|District of Columbia||$1,592||714,930||35,958|
|Prince George's County||$992||299,516||15,672|
Source: BLS Quarterly Census of Employment and Wages, 2012 annual averages