SB 105, legislation which would raise the minimum wage to $15.00 per hour, in increments over the four-year period between 2020 and 2024, and index it to inflation thereafter, was before the Senate Labor Committee last Wednesday, June 12.
The Chamber’s lobbyist, Joe Fitzgerald testified against the legislation and said “ Such a precipitous increase in this entry level wage will cause substantial inflation at all levels of the hourly wage scale, result in fewer jobs, greater automation and the shuttering of a number of small businesses.”
Concerning provisions in the legislation which would index minimum wage increases to inflation, beginning in 2025, Fitzgerald added that “In addition to the Chamber's concerns about the impact on job growth and small businesses, we find the language indexing the minimum to increases in the consumer price index for all urban wage earners and clerical workers particularly problematic. The Chamber strongly believes that any governmental action to raise wage costs for employers should be subject to a vote of the people’s representatives.”
Following a lengthy hearing, the legislation was released from the Senate Labor Committee. However, rather than being added to the Senate Ready List (a list of bills which are out of committee and available for Senate consideration.), the bill was assigned to the Senate Finance Committee.
Leadership assigned the legislation to the Senate Finance Committee as the fiscal note for the bill indicated a cost to the State of Delaware of $1.16 million in FY 2020, $3.02 million in FY 2021, and $5.4 million in FY 2022.
These figures do not account for the cost increases which would result from inflation adjustments; nor do they account for inevitable inflation at other parts of the wage scale.
Proponents of minimum wage increases often argue that they have a negligible effect on an economy, and often a positive effect. Such arguments ignore a fundamental concept in macroeconomics, that ultimately, market forces determine the cost of labor. Many employers currently exceed the minimum wage for entry level employers, as that what the market in Delaware currently demands. Premature government action to increase the minimum wage rate will simply create scarcity where entry-level jobs are concerned, and will lead to more automation.