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$15 minimum wage bill hits speed bump in Finance Committee

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With just two weeks left in the legislative session, a bill to raise Delaware’s minimum wage to $15 per hour by 2024 was unexpectedly referred to the Senate Finance Committee for consideration due to its potential impact on the budget.

The detour means the window is getting tighter for the bill to reach the Senate floor before the end of the session.

“That’s the big question. That’s what we have to decide, whether this gets out by [June 30th],”says Finance Committee Chair Sen. Harris McDowell, D-Wilmington North.

The bill introduced by Sen. Darius Brown, D-Wilmington is the latest attempt by Democrats to substantially raise the minimum wage. The current rate is $8.75 and will rise to $9.25 on October 1 as part of a prior wage bill passed in 2018.

The new bill would raise the minimum to $11 per hour in 2020 and rise another $1 each year until 2024. At that point, the rate would be pegged to the consumer price index and rise automatically.

“I am committed to providing the dignity of work to the hard working men and women in Delaware where 1 in 3 workers in our state – 145,000 people – plus their family members would be lifted out of poverty,” said Brown in a statement.

In many ways, this accelerated debate over the minimum wage follows a familiar formula. Business interests argue it will hamper job growth and put a burden on small businesses. Proponents say it is essential to giving workers a living wage and addressing poverty.

“It’s an age-old debate,” says James DeChene, senior vice president of government affairs for the State Chamber of Commerce. “The numbers have changed, but I think the reality of what it takes to run a business remains the same.”

The next hurdle facing the bill, however, has everything to do with numbers.

The Finance Committee must approve any bill that is tagged with a fiscal note. These notes are applied by the Office of the Controller General when a piece of legislation could cost the state money.

In this case, a higher minimum wage could have a number of potential costs, from higher wages for state employees to more expensive payments for contractors and vendors that use low-wage labor.

“There is a fiscal note attached to the bill because its financial impact to the state was not factored in when we debated the bill.” says Sen. Bryan Townsend, D-Newark and senate majority whip.

Another potential cost surfaced yesterday during a lengthy public hearing before the Senate Labor Committee – one that reflects the changing political stakes of higher minimum wages.

In the past, says DeChene, the restaurant and agricultural industries have played the most active role in opposing hikes. This time out, Delaware nonprofits have stepped up to express their concerns.

“This is something that would affect the broad spectrum of nonprofits in the state,” said Verna Hensley, vice president of public affairs at Easterseals Delaware and Maryland’s Eastern Shore, which provides hands-on services for children and adults with disabilities.

The biggest concern for nonprofits like Easterseals is that state reimbursements won’t rise with wages. The nonprofit is currently reimbursed $9 per hour for support staff. Its starting wage is $11 per hour. The gap is filled with private funding.

As the minimum tips over $11, Hensley says, making up the difference will become more difficult without additional state funding.

“We’re opposed to the minimum wage bill unless there is a corresponding increase in reimbursement rates,” Hensley says. “Our challenge is that we haven’t had much success in moving that needle despite some pretty passionate advocacy over the years.”

DeChene says nonprofits’ concerns about reimbursement may have played a part in the bill getting moved into the finance commitee.

Gabe Morgan, vice president of 32BJ SEIU, a property services worker union covering the mid-Atlantic, says trotting out cash-strapped nonprofits is a common tactic among business groups.

“This is not new,” says Morgan.”This has been their standard argument.  One reason is that it’s very hard to put the biggest employers in the state in front of the state legislature and say “˜well, we shouldn’t pay our folks a decent wage.'”

In a statement, Gov. John Carney’s office said he’s tracking developments, but that he has not yet committed to the proposal.

Carney is concerned with the schedule of increases in the Senate legislation and how this may affect jobs in a down economy.  

Brown’s measure is also unusual because, traditionally, lawmakers don’t try enacting minimum wage increases until a hike is fully in place. The wage hike passed last July is still being phased in.

Another factor that might slow progress this year was the bill’s late introduction. Brown introduced the bill on May 31 after the budget-writing Joint Finance Committee had completed its rewrite of Carney’s budget proposal. Adjusting the budget late in the session can be done, but it frequently results in friction, even in good budget years.

– By Alex Vuocolo and Patrick Wilson

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