Delaware General Assembly

Delaware Chamber of Commerce is Wrong About the Minimum Wage

Surprise, right?

The current President of Delaware’s Chamber of Commerce took to the Opinion Page of the News Journal to try out this argument against raising the minimum wage — that we should leave minimum wages be since they were not meant to support a family, but re-train workers for high wage work.

I’m here for worker training and re-training. There’s no reason why anyone working should not have the opportunities to up their skills or gain additional ones to better their employment prospects. But I’m not here for the Chamber of Commerce (or the Government for that matter) make an argument that you need a high-level of work skills before you even deserve a livable wage.

“For years, people have advocated for a higher minimum wage for workers in entry-level or low-skilled jobs. They argue that those low wages are not enough to sustain a family and, in 2020, they’re not wrong. These jobs and their minimum wages were never intended to do that; these were entry-level, part-time positions that were a supplement to your other income or a way to develop a work history as a new entrant in the job market. “

Except that FDR *did* intend for a minimum wage to be a livable wage — this is what he said in 1933 in his Statement on the National Industrial Recovery Act: “By living wages, I mean more than a bare subsistence level — I mean the wages of a decent living.”

That seems clear — a decent living.

FDR also has words for the business executives who spin up a ton of reasons why the people who work for them should not get paid fairly:
“Do not let any calamity-howling executive with an income of $1,000 a day, who has been turning his employees over to the Government relief rolls in order to preserve his company’s undistributed reserves, tell you – using his stockholders’ money to pay the postage for his personal opinions — tell you that a wage of $11.00 a week is going to have a disastrous effect on all American industry.” (1938, Fireside Chat, the night before signing the Fair Labor Standards Act that instituted the federal minimum wage)

Let’s inform ourselves about a couple of things:

  • Less than livable wages invoke government supports for people who work but don’t make enough to sustain themselves. Most of the people who receive TANF benefits work and the Trump administration is trying to cut these benefits. These low wage workers are also eligible for Medicaid, possible housing supports and other government benefits to supplement the non-sustainable wages the DE Chamber wants to argue for. Ask yourself why a taxpayer should be subsidizing the low wages sanctioned by the government?
  • In 2019, the highest growth in wages came in the low wage sector, largely reflecting an upward push in wages from higher state minimums. And yet — inflation only rose from 2.1% in 2018 to 2.3% in 2019. Wage growth with relatively stable inflation is not a sign of impending economic disaster.
  • Seattle has the highest minimum wage in the US and when it was passed, restaurant owners sounded the death knell for restaurants in Seattle. Data from the St. Louis Fed would show you that the Seattle area restaurant scene is booming:

There’s no doubt that a change in minimum wage will cause business owners who rely on minimum wage workers to make some adjustments to their business model. But it will make sure that these owners are accounting fully for their costs to do business rather than relying on a taxpayer to make up the difference. And increasing the minimum wages won’t stop the need to train workers in higher-skilled jobs. But while a worker is trying to become an electrician, that worker should be paid livable wages at their job at McDonald’s to keep a roof over their head, gas in the tank and food in the fridge.

A livable wage tells business owners that Delaware refuses to provide a “serf” class of workers just because it is convenient for these businesses. A livable wage also tells workers that what they do is worthy of the dignity of fair compensation and helps lift them out of the intentional poverty that the current minimum wage leaves them in. We’ll let FDR have the last word for the Chamber:
“No business which depends for existence on paying less than living wages to its workers has any right to continue in this country.” (1933, Statement on National Industrial Recovery Act)

32 comments on “Delaware Chamber of Commerce is Wrong About the Minimum Wage

  1. Perhaps neither here nor there, but though the Seattle area restaurant scene may be booming, given that Seattle’s population is less than 20% of the metro area’s, no conclusions can be drawn from that data about the impact of Seattle’s minimum wage on restaurants or restaurant employment.

    • Yes, the data are mixed, but it’s worth noting that no economist I’ve read has raised your point, so I’m not sure it has any bearing on this. But you’re wrong about one thing. A firm conclusion can be drawn — that those who forecast disaster were dead wrong.

      https://www.vox.com/the-highlight/2019/7/13/20690266/seattle-minimum-wage-15-dollars

    • cassandram

      Minimum wage impacts ripple out to markets because while the wage may be higher in Seattle, wages will rise in close outlying areas because they are part of the market pool for labor. If NCCO has a minimum wage of $15, wages in Wilmington would get pretty close to if not that pretty quick because the labor pool will migrate to the higher salaries. Restaurants come and go especially in a big place like Seattle. And everywhere else. Restaurants are a high-risk business. So far there is no data that provides the correlation that you try to make there.

    • Restaurant workers typically have a different minimum wage than the base minimum. It’s called a tipped minimum wage.

      • Not in Seattle.

      • cassandram

        Not in Seattle, like Chewy here says. The minimum wage is $15/hour across the board and tips are not included in that wage. Sparking a bunch of conservative commentary that the Seattle restaurant industry is dead. There’s tons of data to the contrary of that and Seattle has been at the forefront of no-tipping and alternative compensation schemes for restaurant workers (including commissions on sales for a shift).

        • But, ask any server in a high end restaurant they would rather have the $15 per hour with greatly reduced tips or a low wage and higher tips and they generally choose the tips, as they make substantially more. Raising the minimum wage in this case harms them.

          • cassandram

            It can. Even this is sorta mixed — the places that still encourage tipping or who split sales as commission can be OK. Otherwise they are definitely taking a hit.

            • My point exactly. This is an egregious example of government overreach that actually harms the people it is supposed to help.

              • cassandram

                It harms a very small subset of the people it is intended to help. The VAST majority of people covered by this law are not tipped workers and they are doing better. Even the majority of tipped workers are doing better. It is the small subset at the high end who are not.

            • So how is universal $15.00 per hour a good idea?

              • I disagree. When a high minimum wage is mandated, fewer jobs become available. Economics 101. It is very important for young people to enter the work force and learn how it works…getting up early, dressing appropriately and earning a paycheck. This is an education that no school can teach.

                • cassandram

                  Once there are higher wages there can be a small period where jobs are lost, jobs are gained and then get back to some growth. The places where jobs are lost are with businesses that could not absorb that additional cost. And from where I sit, they should be out of business if they cannot pay a living wage. You can navigate the St. Louis Fed data (if you can) and see that in the places where $15/hour is the law, these are not places in an economic downturn by any stretch — SF, Seattle, NYC. People making minimum wage now are people turning to he government to make up the difference. That’s a business subsidy by taxpayers that we did not agree to. But people making more money need fewer government supports, relieving the taxpayer burden. Plus people at that compensation level spend their money, which adds to the economy and adds to jobs. Economics 101.

                  • You haven’t responded to the lost jobs for younger people. Having a work ethic and advancing in the system is invaluable. Take that away and government becomes the provider. Minimum wage jobs are a minute percentage of actual wage earners, but very large for teens. Economics 101.

                    • cassandram

                      Younger people will still have jobs. Just like they always have. And in the same places too. About 40% of people in poverty are working. Which isn’t minute. And who we want to lift out of poverty with a livable wage.

                    • This is a Trojan horse argument. Ask around and see how many teens have the jobs you’re talking about. Hell, go to Burger King and see how many of the jobs are held by teens vs. adults.

                      Your arguments are standard boilerplate from your economic masters. Read, learn and come back with something worth reading instead of this palaver.

                • It is not economics 101 — anyone who says that flunked economics 101. And young people no longer fill the jobs you’re talking about.

  2. Thomas O'Hagan

    The $15.00 living wage started being discussed in 2012. The Dept. of Labor says that between Jam. 2012 and Dec 2019 to maintain the same purchasing power you would need $17.01. That assumes that the bill was already passed and people were already getting the living wage NOW. As the slippage continues that rate should be going up.If this rate is implemented gradually over 2, 3, or 4 years that should also be factored into the rate. Further their should be a annual cola adjustment linked to the actual CPI increase so we do not find ourselves behind the 8 ball again down the road.

    • cassandram

      Excellent point. Any minimum wage will need some regular mechanism to increase that wage so that the “livability” part is maintained.

      • Livability? Who decides that? People in NYC have a vastly different definition than people in Tulsa. Government has no business de hiding this. The free market does.

        • You just lost the game. The “free market” does not exist. It’s like absolute zero.

          You really need to take more economics courses than 101, which you clearly didn’t advance beyond.

        • cassandram

          Plus there’s no free market if the government is subsidizing it. By definition.

  3. RE Vanella

    Owners want to exploit workers labor and keep the extra money. It’s in their financial interest to keep people dirt poor. That’s it. That’s the issue.

  4. Bravo.

  5. John Kowalko

    Here is the comment I posted on the opinion piece authored Mike Quaranta (Chamber of Commerce head) in Delaware Online.
    “Yeah Mike. I’m sure all of you Chamber board members are struggling to make ends meet and working up a sweat 40 to 60 hours a week. Time to grow a conscience and acknowledge that your organization and its hacks don’t give half a damn about poor working people and the dignity they’ve earned. Your offensive article in the Delaware Business magazine propaganda section, “Let’s give Delawareans a Hand Up instead of a Handout” displays a striking lack of empathy and humanity towards working people. I guess you see giving any family a pittance more to raise them out of poverty because it might cause you and your investors to lose a penny in dividends as a disaster for Wall Street and the Trumpian doctrine. You ought to be ashamed of yourself and your selfish cronies. Let me thank you for printing the five bills your group lists as Delaware State Chamber of Commerce opposed. Three of them are mine and I’m damn proud of them. Shame on you sir”.
    Representative John Kowalko

    • Thomas O'Hagan

      Well said John. The only words that the Delaware State Chamber of Commerce knows as it relates to business is “more” or “me”.

      I hear that they are building an image of Trump which will be bowed to before each Chamber meeting. I hope they remember “Thou shalt not make unto thee any graven image, or any likeness [of any thing] that [is] in heaven above, or that [is] in the earth beneath, or that [is] in the water under the earth”

  6. Dumb people think a higher min wage will not have a salutary impact on all hourly rates.

    • cassandram

      That’s ECON 301 and given that he hasn’t been through ECON 101, you know that’s over their heads.

  7. If you haven’t yet, check out Stephanie Barry’s op-ed on the minimum wage (and the youth and training wage) in Delaware: https://www.delawareonline.com/story/opinion/contributors/2020/01/21/minimum-wage-shouldnt-political-football-should-raised/4529990002/

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