TESTIMONY INTRODUCING HB 115
“Establishing a state minimum wage and providing for adjustments to the minimum wage”
Douglas Ley
NH House: Cheshire 9 (Dublin, Harrisville, Jaffrey, Roxbury)
The legislation presented today would re-establish a NH minimum wage exceeding that set by the Federal Government, which has remained at $7.25/hour since 2009.
The basic provisions of the bill as currently drawn would provide the following:
a. increase the minimum hourly wage in NH to $9.50/hour on 1/1/2018
b. increase the minimum hourly wage in NH to $12.00/hour on 1/1/2019
c. annually adjust the minimum wage to match corresponding increases in Northeast CPI as determined by the Bureau of Labor Statistics, beginning on 1/1/2020.
d. raise the sub-minimum or tipped wage to 60% of the minimum wage.
e. create a training wage of $1.00/hour less than minimum for those aged 16-17 years for three calendar months or upon reaching age 18, whichever comes first.
Thus, the proposed legislation aims to increase wages for those at the bottom of the NH wage scale, create a mechanism for systematic readjustment of the minimum wage, raise the tipped sub-minimum to better provide for those in the hospitality industry, and create a training wage to cover seasonal teen labor.
Having said all this, I want to make clear this is a platform, a starting place. While I believe the proposals being set forth today are both fair and beneficial to wage-earners, employers, and the State of NH, I am always willing to listen to and consider adjustments and amendments, in the conviction that any increase is a positive step for NH.
What is the context for this proposed legislation?
National: 20 states besides NH adhere to the Federal minimum wage of $7.25/hour.
29 states now exceed the Federal minimum wage.
3 of the 20 joining NH in adhering to the Federal minimum will be breaking ranks over the next year:
LA: $10.00/hour (1/1/2018)
OK: $10.25/hour (7/1/17) & $10.75 (7/1/2018)
VA: $11.00/hour (1/1/2018).
Thus, if NH remains unchanged, as of 1/1/2018, we will be one of 18 states still maintaining a minimum wage of $7.25, while 32 states will have higher minimums.
Regional:
NH is the only New England state still adhering to the Federal minimum of $7.25/hour.
CT: $10.10 per hour
RI: $9.60 per hour
MA: $11.00 per hour
VT: $10.00 per hour ($10.50 per hour on 1/1/2018)
ME: $9.00 per hour ($11.00 per hour on 1/1/2018)
In addition, ME, VT and MA all tie future increases to the Northeast CPI as proposed in the legislation now before you.
New Hampshire:
According to data provided by DES, in 2015 there were 389,000 resident hourly wage-earners in New Hampshire. Of those 389,000:
16,000 earned at or below the minimum (4.1%)
11,000 earned below the minimum (tipped wage)
5,000 earned at the minimum
Even more interesting is the gender breakdown:
Sub-minimum: 2000 male 9000 female
Minimum: 2000 male 3000 female
Sticking with DES data just a little further, if we look at those earning below $10.00/hour in 2015 (approx. 20% of the hourly wage earners): Male: 26,000 Female: 50,000
Age: According to BusinessNH Magazine (6/2016): 72% of minimum wage earners are over age 20 (meaning approximately 4500 are age 19 or less); more than 1/3 are over age 30; 14% have children; approximately 33% are working full-time at minimum or sub-minimum.
Finally, the same issue of BusinessNH Magazine referenced a study of my county (Cheshire) using 2014 data which indicated some 15% of the county workforce were at or below $12.00 per hour, the wage proposed in this legislation for 1/1/2018.
Meaning: It is clear that adhering to the $7.25 minimum wage provides no competitive advantage to NH. To begin, some 2/3s of those at or below minimum are working in hospitality/restaurant industries, which are heavily locally-owned. We will not and have not seen a massive influx of restaurants and hotels into NH to take advantage of our low minimum wage; conversely, we will not see restaurants and hotels fleeing the State to avoid higher wages. Claims that such enterprises cannot afford wage increases is simply belied by the ability of comparable businesses to survive and thrive in our neighboring states, all of which feature higher minimums.
It is also quite obvious that very few employers are even able to hire any longer at the minimum wage rate. Wal-Mart and Whole Foods, two examples cited in the aforementioned BuinessNH Magazine article, have average hourly wages now averaging between $13.38 and $15.81. My own son got his first job at MarketBasket a few years ago and started above the minimum wage. In other words, the minimum is increasingly confined to certain industries and certain regions of the State, likely where there are few alternatives, especially for those who lack transportation or the time and wherewithal to travel to better-paying jobs.
With the wage gap widening between NH and neighboring states, it is not unlikely that we are seeing some NH workers seeking employment out-of-state. For someone living in Nashua or Salem, the difference between $7.25/hour and $11.00/hour is substantial, and their choice to pursue employment beyond NH only exacerbates the difficulties NH employers face in trying to hire workers.
Finally, there are those who contend that raising the minimum will result in a loss of jobs. As reported in NH Business Review (11/10/16), when NH raised the minimum from $5.15 to $7.25 (increase of 41%) the Federal Reserve estimated a job loss to the State of less than 1500 jobs—quite minimal. Other studies have concluded that job losses when one state raises its minimum wage are not very significant and soon matched by job growth. We all know, however, that a rising tide lifts all boats, so an increase in the minimum wage will push up the wages of those in the bottom 15-20% among hourly wage-earners, with most of those earnings being spent quickly and locally, thereby fueling local economic growth within the State.
Conclusion: I believe there are many powerful and ethical arguments for raising the minimum wage and improving the economic and social situations of thousands of our citizens and the thousands more depending upon them. I am sure others can/will make those arguments and I agree with them. My focus, however, is on the economic benefits. It involves simply keeping up—the 1968 minimum wage had a buying power of $11.00 in today’s dollars, so clearly the minimum has slipped over the years. Even since 2009, changes in the Northeast CPI measure an erosion of 10.7% in buying power, meaning the minimum of $7.25 in 2009 is now worth $6.47 in 2009 dollars. Thus, those working at minimum have suffered wage decreases over the past seven years.
NH faces many economic challenges in the years ahead. Energy costs, a declining infrastructure, the exodus of 1000s of young people, all of this makes for difficult economic times ahead. Maintaining a low minimum wage provides no competitive advantage to NH in our regional economy, whereas increasing the minimum will infuse more spending into our State economy while bettering the lives of those who toil at the low-end of the wage spectrum. I know this Committee will keep all these points in mind as you consider this legislation, and I thank you for your kindness and patience today.