Can a NC city set a minimum wage higher than the state's? (Part 2)

Committee member, Jim Boyett, responded to some of Brod's concerns about a minimum wage hike. The first concern was about whether state law allowed for such an ordinance. Here is Jim's response:

I was glad to see that Andrew Brod took the time and effort to comment on the proposal to increase the minimum wage in Greensboro. We need a broad discussion of the issue from all points of view. My hope would be this will lead to a better decision by the people when they make their decision. I want to comment on several points that he made.

"Right off the bat, however, my understanding is that such an ordinance isn't allowed by state law."

What I would like to suggest is that I don't want those of you out there reading these comments to take as absolute truth anything that Andrew Brod or anyone else says about this issue. You should question and demand that opinions be supported by facts and other authorities. On the question of legality I am providing a link to North Carolina General Statute GS 160A-174 because it is the grant of broad power that gives cities like Greensboro the "Police Power." If a City has this "Police Power" it has the power to create a minimum wage. The New Mexico Court of Appeals issued its opinion on November 29, 2005 affirming the right of the City of Santa Fe to create a minimum wage because it had this broad legislative police power. Read the statute and case for yourself. What we are proposing is not an off the wall crazy scheme. It has already been done in 4 cities.

Reason #3 to support a minimum wage hike in Greensboro

My grandmother was a secretary at the Winston-Salem Chamber of Commerce in the mid-to-late 1940s. A few years ago, I asked her about that job and she told me about when Western Electric came to Winston-Salem. She said that she was taking minutes in meetings between leaders from Western Electric and Chamber leaders (dominated, she recollected, by R.J. Reynolds people) in which the Chamber representatives were negotiating with Western Electric about the wages Western Electric would be paying to its new employees. The Chamber wanted to make sure that the wages wouldn't be too high. Western Electric had planned to pay its workers, my grandmother recalled, at a significantly higher rate than workers were paid at places like RJR and the Chamber was concerned that this would have adverse effects on local business. My grandmother recalled that the Chamber was successful in bargaining Western Electric down.

For me, my Grandmother's story begs the question of how "free" the market really is. As has been said elsewhere, "companies aren't bound to pay the least they can get by with," but when companies are getting extraordinary pressure from organized groups of businesses advocating to do just that, I think there is a need for a group of citizens working to advocate for their own concerns. This initiative is one example of such advocacy.

Response from Andrew Brod (UNCG)

A commenter suggested recently that we call on UNCG's Andrew Brod to get a response about the proposed minimum wage ordinance and we appreciated Mr. Brod's response, which is posted here:

I'm flattered that someone would care what I think about the concept of a minimum-wage ordinance for Greensboro. Thanks for asking.

Right off the bat, however, my understanding is that such an ordinance isn'tallowed by state law. I'll admit that my understanding is a few years old,however. In 1999 I was asked to chair a Living Wage Study Committeeestablished by the city council to study a living-wage ordinance that wouldcover city employees and contract workers. Therefore, the proposedordinance was distinct from a minimum-wage ordinance (MWO) that would coverall workers in the city regardless of their employers. I wanted to makethat distinction clear when I presented the study committee's report to thecity council in February 2000, and so I stated as fact what I'd been told bycity staff, that cities in North Carolina couldn't enact their own MWOsunless authorized by the state legislature. Was that claim wrong then, orhas the law changed? I've read a post on this blog that claims the former,but I'm not convinced. However, it's beside the point whether I'mconvinced. Let the attorneys worry over that. For the sake of argument,let's assume that municipal MWOs are kosher in North Carolina.

Even if legally kosher, a Greensboro MWO seems like a really bad idea to me,most fundamentally because minimum wages tend to hurt the low-skill workersthey're designed to help. More generally, I believe that public policy should, as much as possible, keep its mitts off of prices (and wages are prices). I have no general objection to inviting government to muck aroundwith the economy if there's a good reason. I'm no libertarian. But in a market economy like ours, the price system is such a delicate andinformative mechanism that I'd rather we just left it alone.

At the very least, some study is needed, because in spite of my basic opposition to minimum-wage laws, I agree with the emerging view amongeconomists that holds that attributes of local labor markets can, in some circumstances, trump the general theoretical view. For example, if the demand for labor is sufficiently insensitive to changes in wages, a minimum wage could cause a relatively small decline in employment, and then it'd be a simple cost-benefit calculation to determine if the gain enjoyed by thejob-keepers outweighed the loss suffered by the job-losers. We'd have to know a lot about the local economy, including labor-demand elasticity.

So I'm basically against minimum-wage laws, though I'd be open to the results of a study that incorporated local economic idiosyncracies. But mygeneral opposition shouldn't be construed as opposition to fighting poverty. Poverty is bad! And there are some useful and effective ways for governmentto make adjustments to market outcomes, even while leaving prices alone.Rather than depend on minimum-wage laws, I'd prefer to see an expansion of the earned-income tax credit, which has the potential to do a much betterjob of subsidizing the incomes of the working poor. And the EITC wouldspread the cost of the subsidy across all taxpayers rather than focusing iton the employers of low-wage workers (and their customers).

Finally, suppose a Greensboro MWO were enacted. The proposed wage of $9.36/hour is pretty high compared to the state's new $6.15 minimum. If you saw that wage gap and had a business that depended on cheap labor, wouldn'tyou give some serious thought to moving it out to Summerfield? Remember, it's not as easy to annex outlying areas as it used to be. Of course the move-to-Summerfield ploy wouldn't work for most fast-food restaurants, because driving 5 miles up Battleground at rush hour to get a Big Mac wouldsatisfy no one's idea of "fast." Therefore, even if minimum-wage laws were the way to go (and I believe they're not), then in enacting one for Greensboro, we'd be betting that the majority of employers of low-wage workers are as unlikely as fast-food restaurants to migrate out to the'burbs. Is that a good bet? Again, a little study might be needed.

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Ed Whitfield, a GMW committee member responded to Mr. Brod's comments:

I think Mr. Brod's extreme view in opposition to all minimum wage regulations is out of step with the broad community's sense of fairness. Employers who control the means of living for their employees should not have the right in our community to benefit from people's labor and not compensate it fairly. This is the basis for minimum wage regulations in general. The issue relative to a local minimum wage ordinance is how high should that minimum wage be and who should decide it.

The experience of the communities where minimum wage ordinances have been passed has not been as dire as that predicted by economists like Mr. Brod. There has not been the loss of low paying jobs and there have been no wholesale exodus of businesses. It might be argued that the economic realities of each community are unique. There can be no complete understanding of the effects of these changes on Greensboro until they are implemented. One certainty is that a number of lower wage workers will have additional income to spend in other businesses with the possibility that this will make the local economy more vital. At the very least, we have a need to take a stand that in this community those who work will be paid a respectable amount of money because that is just the type of community that we are.

As to the legality of local minimum wage ordinances, local ordinances often require amendments at the state level to the local charter. Such amendments tend to be routinely granted on the basis of requests from the city council. We need to decide what we want in this community, and then do all that is necessary to amend the necessary laws for it to come into being.

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I'd also encourage readers to take a look at a response from Roch Smith, Jr.

Who earns less than $9.36/hour?

In recent conversations, many have asked me to research who makes less than $9.36/hour in Greensboro and how many people are in this category. I haven't yet been able to find numbers on average ages of low-paid workers, but Joel Landau pointed me to the Employment Security Commission of NC's website which breaks down rates of pay for some pretty specific occupational categories in the Greensboro/High Point area (as of June 2006).

A few occupations jumped out at me:

• Preschool teachers (an estimated 1,940 in GSO/HP area) make $6.86 upon entry to the profession, an average wage of $8.52 and an estimated "experienced" wage of $9.35.
• Home health aides (3500 total in this area), correspondingly, make $7.21, $8.54, and $9.21
• Pharmacy aides (number not available)- $7.31, $8.62 and $9.27
• Veterinarian assistants and lab animal caretakers (number not available)- $6.53, $7.93 and $8.63
• Food preparation workers (2040)- $5.85, $7.84 and $8.83
• Bartenders (930) - $5.91, $6.67 and $7.05 (having been a bartender, I'm assuming this includes average tips, though I'm not sure)

In addition to these low wages, what strikes me about these occupations is that they represent labor on which our society largely depends. I don't see that a minimum wage hike would result in the need for these jobs disappearing. We'd still send our kids to preschool, need home health care, take prescription drugs, attend to our pets' medical needs, conduct experiments on animals, eat food in restaurants and - of this I can be sure - drink alcohol. And I don't think that these employers are likely to relocate their businesses outside of Greensboro simply to keep from paying their employees a little bit more.

Want to sign the minimum wage petition?

I'll be taking advantage of the wifi, good coffee and calm atmosphere at the Green Bean from 4-6pm this Wednesday (Feb. 28). Those interested in signing the minimum wage petition, getting involved in the campaign, or just registering to vote (you do not have to sign the petition) should drop by and find me. (I included my goofy "mug-shot" here so you can recognize me.)

We'll be having other opportunities around town for petition signing and voter registration and will try to keep this website updated with that information as it becomes available.

Reason(s) #2 to support a minimum wage hike in Greensboro

Ed Whitfield, a GMW Committee member, posted the following in comments below and I'm reposting it here so folks won't miss it:

There are a couple of possible attitudes toward a higher local minimum wage: one might take the position that there should be no minimum wage at all. Few on this blog seem to be saying that, though some pure free-market types will argue the point. But if we accept that there should be some minimum level at which people should be paid the questions are what should it be and who should decide it.

Those arguing that only the state government should decide such a standard might tell us why they think this is so. It would seem to me that we in this local community should have a right to decide on a standard of living that we think is fair for full time work.

Such local decisions are made all the time. For instance, there are wage level standards that the City Council uses to decide whether or not to offer incentives to businesses wanting to locate here. An ordinance establishing a base rate of pay is not that different.

The question of how high a local minimum wage should be is one that needs to be discussed. After I heard about the calculation that $9.36 / hour returns us to the purchasing power of the minimum wage of 1968, it seemed to me that this was a reasonable level.

I have glanced at some of the material that has been linked on this blog to economic studies done in San Francisco and Sante Fe where local minimum wages ordinances have been enacted. While I haven't read them in detail, I know from a cursory scanning of the news that the sky hasn't fallen in either of those communities. I am led to believe that raising the minimum wage will not cause dire economic consequences here either.

It is indeed a moral issue and a question of community standards. We get to decide what kind of community we want to be. It is for that reason that I support this proposed increase in the local minimum wage.

"Growing" US economy leaves behind record numbers of severely poor

The McClatchy Washington Bureau published a story Thursday about how the number of poor Americans living in "severe poverty" - defined as an individual who makes less than $5080/year and a family of four with two children with a combined income of less than $9903 - has reached a 32-year high:

The plight of the severely poor is a distressing sidebar to an unusual economic expansion. Worker productivity has increased dramatically since the brief recession of 2001, but wages and job growth have lagged behind. At the same time, the share of national income going to corporate profits has dwarfed the amount going to wages and salaries. That helps explain why the median household income of working-age families, adjusted for inflation, has fallen for five straight years. These and other factors have helped push 43 percent of the nation's 37 million poor people into deep poverty - the highest rate since at least 1975.

Other than Mexico and Russia, the article says, the US devotes the smallest percentage of its GDP to anti-poverty programs and, also excepting Mexico and Russia, these programs are the least effective. US States with the highest numbers of severely poor are as follows:

California - 1.9 million
Texas - 1.6 million
New York - 1.2 million
Florida - 943,670
Illinois - 681,786
Ohio - 657,415
Pennsylvania - 618,229
Michigan - 576,428
Georgia - 562,014
North Carolina - 523,511

Useful minimum wage links

Jim, a reader and commenter, posted the following link-filled comment yesterday and I found it useful, even if I haven't had the time to thoroughly review all of the linked information:

My immediate reaction was to stock a survival bunker, but I've been working my way through it and am finding:

It is a reasoned, unhysterical debate.

It's already happened in various places, in various flavors.

There is already substantial data.

There is a lot of information available.

I'd be most interested next in surfacing issues relevant to Greensboro's unique economic conditions. For that, I'd recommend a visit with a local subject matter expert.

On the latter comment, I would welcome the chance to hear what Andrew Brod has to say on these topics. Anyone know him and want to encourage him to chime in here or in a more formal capacity? I'm happy to post his thoughts instead of letting them be buried in the comments section.

Can a NC city set a minimum wage higher than the state's?

In a comment thread below, Percy Walker asked a good question: "Are you sure a N.C. city can have a higher minimum wage than the state minimum wage under N.C. law?" I've read that the CA has been voicing similar concerns which aren't entirely off base. I asked an attorney, Jim Boyett, who has been a leader in getting this campaign up and running for his opinion, which he summarized as follows:

The best way to answer the question is that there is no legal opinion on point because this has never been done in North Carolina. The best legal guess is that Cities have the power to create their own minimum wage based upon the fact that the General legislative power was granted to Cities in 1971. Further, the only appellate level court to consider all the arguments against a city adopting its own minimum wage was the New Mexico Court of Appeals in the case of New Mexicans for Free Enterprise VS The City of Santa Fe. That Court found that the City of Santa Fe had the power to create a minimum wage higher than that of the Federal and State Government.

Thanks to Percy and Sam for asking the question. Keep 'em coming.

At the risk of breaking what I've observed to be a blogging norm, I will admit that I don't know definitive answers to all of the questions/concerns that have been raised about a minimum wage increase in Greensboro. I will be spending some of my free time over the next few months trying to seek out answers and opinions when they are available. But what I'm learning is that no one knows exactly how a higher minimum wage would affect the economy of Greensboro. People can make educated predictions, but no one knows for certain.

What I do know for certain is that it would be extremely difficult for me, a single, childless, healthy woman renting a one-bedroom apartment in Greensboro, to cover my modest living expenses on $9/hour or less, even if I were working a full time job. It would be downright impossible for me to do so if I had a child and/or significant medical bills. (For one set of estimates on living wages in Greensboro and other cities in 2006, check out this website, sent to me by Cara Michele.)

Beyond that, it is all hypothetical. But since some Greensboro leaders are currently struggling to come up with a "brand" for the city, I think it would be a courageous and logical starting point to say that we are a city where anyone who works full time will not live in poverty. (Someone else can probably make that sound more catchy.)

"What's up with the slow growth in workers' pay?"

Click here for an interesting USA Today article about why wages aren't increasing at a more rapid rate in the US. It begins:

When Federal Reserve Chairman Ben Bernanke testifies on Capitol Hill Wednesday and Thursday he will likely be peppered with questions about why wages are not rising at a more rapid pace.

But he may have to leave lawmakers guessing.

That's because economists aren't sure why wages haven't increased at a faster pace even though the labor market is tight.

(Thanks to Andy Coon for the link.)

Reason(s) #1 to support a minimum wage hike

Here are the thoughts of committee member, Jim Boyett, about why Greensboro needs a minimum wage hike:

Wages are a moral issue.

In the richest society in human history the failure to pay just wages is not an economic issue. It is a moral issue. Tens of thousands of our neighbors in Greensboro are suffering from poverty wages. We think it is time to correct this injustice. The Federal Government’s own research shows that the minimum wage would have to be $9.36 per/hr to equal its purchasing power in 1968.

The minimum wage is a floor for wages. It is the point where society says no to lower wages. To pay a lower wage is wrong. It is immoral just as child labor is immoral. People are not machines. They must have enough to sustain themselves. We believe that business can afford to pay its workers at least as much as they paid 38 years ago. Inflation has hidden actual pay cuts for millions of hard working Americans. Two minimum wage workers today make approximately what one minimum wage worker made 38 years ago.

The trend towards paying working people less is accelerating. On October 23,2006 the News & Record reported that the real inflation adjusted median household income in Greensboro fell from $46,459 to $36,733 over the last five years. The typical Greensboro household’s income has dropped 21 % while business profits soared and America created record numbers of new Billionaires.

President Roosevelt when he established the first minimum wage law during the great depression of the 1930s said,

“ A self-supporting and self-respecting democracy can plead no justification for the existence of child labor, no economic reason for chiseling workers’ out of wages or stretching workers’ hours. Goods produced under conditions that do not meet a rudimentary standard of decency should be regarded as contraband and ought not to be able to pollute the channels of interstate commerce.”

The Golden Rule, the ethics of reciprocity, is our most universal moral value. It is a fundamental moral principal in all of the world’s major religions. Its power was the driving force behind the elimination of slavery, another form of economic exploitation.

Quaker George Keith printed the first abolitionist publication in 1693. His reason to end slavery was, ”Do unto others as you would have them do to you.” Today we face another form of economic exploitation. The exploiters try to use the language of economics, science and law to justify their actions. They argue that the market should BE THE ONLY WAY to determine wages. Under their logic it is proper and just to work children 80 hours per week at 30 cents per hour sewing clothing for K-Mart, Target and Wal-Mart.

We say it is wrong to pay people a minimum wage that is not enough for them to live on. When you strip away the fancy language the only guiding principal the exploiters follow is,” Do unto others as much as you can get away with.” We must establish a higher standard than “the market”. If we don’t then one day it will be our children working 80 hours per week at 30 cents per hour.

If we stand together, act together and vote together we can increase the minimum wage for people that work for a living in Greensboro to $9.36 per hour. Citizen groups have already made it happen in other cities. The minimum wage for all workers in San Francisco is $9.14 per/hr and in Santa Fe, New Mexico it is $9.50 per/hr.

If I want decent pay for myself, I should want it for my neighbor.

Citizens Initiative

Our committee is working to get the minimum wage in Greensboro raised to $9.36 per hour. We are using the citizens initiative ordinance as a tool to do this. Basically, this tool allows us to get at least 5,000 signatures on a petition which we will present to the Greensboro City Council this fall. If the City Council does not choose to approve the petition, the ordinance will go on the ballot in the November election and voters will get to decide.

Click here to review the petition, which includes the reasons we are organizing this initiative as well as a process for phasing the wage in for small businesses.

Email me if you have any questions about how to help with this initiative.