Some Groups Are Trying to Reverse Minimum Wage Hikes

March 23, 2017

Last November, voters from four states, Arizona, Maine, Colorado, and Washington, approved ballot initiatives that raised their state’s minimum wage. In each state, the measures passed by a significant margin, after making it to the ballot by citizen petition. However, these wage hikes are now under threat from business groups that have been fighting to undermine the increases.

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Arizona is one example:

In the state of Arizona, Proposition 206 won nearly 60 percent of the vote. It will increase the minimum wage to $12 per hour by 2020. The state’s minimum wage was $8.05 on election day. It went up to $10 per hour on January 1st of this year, and will rise each year until hitting the $12 mark in 2020. The minimum wage will be adjusted further, based on the cost of living, beginning in 2021.

“Working people need a livable wage. You can’t get by on minimum wage,” James Neal, who was a supporter of Prop 206, tells the Arizona Republic. “You could work two or three jobs at minimum wage and still not make enough to support your family.”

The voters made it clear that they felt the minimum wage should be increased. However, there has been some significant push-back. Several of the state’s Chambers of Commerce have filed a lawsuit to stop the increase. So far, the courts have upheld the voters’ decision.

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“As attorney general, my job is to uphold the rule of law,” Arizona state Attorney General Mark Brnovich said in a statement after the court’s decision, according to Courthouse News. “The constitution is designed to protect our rights. It’s not a tool to be used to undermine the will of the people.”

The Future of Minimum Wage Increases Is Unclear

Special interest groups are pushing forward on laws that would create roadblocks to passing similar initiatives in the future. For example, a bill in Arizona would require thousands more signatures for future initiatives to make it to the ballot.

Similar situations are playing out in other states. Business groups are challenging minimum wage laws in Washington and Maine, while Republican state lawmakers in Iowa and Missouri have introduced bills that would make it illegal for local governments to raise minimum wage above state level.

The Impact of Minimum Wage Laws

Why would lawmakers attempt to reverse minimum wage laws that arose directly from their constituents’ desires? Much of the pressure comes from business groups who stand to lose money if forced to pay higher wages. There are, however, some who argue that higher minimum wages hurt both workers and the economy.

“Higher wages resulting from an increase in the minimum wage are no cause for celebration as everyone in the economy is in fact worse off,” Paul Kupiec of the conservative think tank the American Enterprise Institute writes at Forbes. Kupiec argues that higher minimum wages lead to higher unemployment and taxes and a lower GDP.

However, analysts from left-leaning groups point to studies indicating that minimum wage hikes do not raise unemployment.

“Contrary to most of the rhetoric, the results of these studies are not surprising to those who understand how the minimum wage affects the labor market,” write David Madland and Keith Miller for the Center for American Progress Action Fund. “The minimum wage may make some employers reluctant to hire – as critics maintain – but the many positive effects of the policy counteract this negative effect. A higher minimum wage creates new customers by boosting demand and also lowers some costs for employers by, for example, reducing turnover. Furthermore, such wage hikes are particularly beneficial to working women and can cut the costs that low-road employers impose on taxpayers.”