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Economic Development News

Neighboring states outpace Delaware in push for $15 minimum wage 

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By Alexander Vuocolo 

As the national push for a $15 per hour minimum wage builds momentum, neighboring states have outpaced Delaware in raising the wage floor.

On March 28, Maryland lawmakers overrode a veto by Gov. Larry Hogan to pass a bill raising the minimum wage to $15 per hour by 2025. In February, New Jersey passed legislation to hit the $15 mark by 2024. Pennsylvania Gov. Tom Wolf has proposed similar hikes, and so far has wide support for making the leap to $12 per hour.

Delaware has taken a more moderate approach. In 2018, after a hard-won fight in Legislative Hall, the state committed to raising the minimum wage 50 cents a year until 2021, capping out at $10.25. In January, the wage floor jumped from $8.25 to $8.75 and will rise again on October 1.

Both states are on track to pass Delaware’s rate before 2021. New Jersey’s current minimum wage is $8.85 and will rise to $10 on July 1, and to $11 on January 1, 2020. Maryland’s current rate is $10.10 and will increase by 75 cents per year until 2025. Virginia and Pennsylvania, for comparison, remain tethered to the federal rate of $7.

As legislators weigh the pros and cons, Delaware’s largest employers have taken the initiative themselves. Christiana Care Health System, which employs 12,000, and Amazon, which employs upwards of 2,600 at its Middletown Fulfillment Center, both raised their base pay to $15 per hour in late 2018.

“In every position, at every level of our organization, each of our employees plays a vital role in the care of our patients and their families,” said Christiana Care President and CEO Janice E. Nevin, M.D., MPH. “This is the right thing to do for our employees, and we also believe that it will have a positive economic impact on our community.”

Nationally, a handful of major brands have softened their stance. McDonald’s announced this week that it won’t oppose hikes. (The Dukart family, the largest McDonald’s franchisee in the state with six locations, did not return calls before this story was published).

Delaware business groups and trade associations, however, maintain a hard line against any minimum wage increases.

“Our concerns mirror the business community’s in Maryland,” said James DeChene, senior vice president of government affairs for the State Chamber of Commerce. “Artificial, upward pressure on wages can be a major disruption on businesses, and in many cases cause harm to those intended to receive help.”

The Chamber has lobbied Delaware lawmakers to defer further action until the impact of the last round of raises is measured.

“In the interim, Delaware will maintain a competitive advantage for companies looking for alternatives to surrounding states, and the State Chamber is working with the business community on efforts to continue to make Delaware an attractive place to grow a business, or to relocate and invest,” DeChene said.

Advocates say higher minimum wage rates have their own competitive advantages and could potentially draw workers across state lines.

“What I expect is some folks who would prefer to make more money will choose to come over to Maryland,” says Ricarra Jones, chair of the Fight for $15 Coalition in Maryland. “I would hope as an advocate that this puts pressure on Delaware.”

Carrie Leishman, president of the Delaware Restaurant Association, says the new law in Maryland isn’t likely to impact Delaware’s service industry. Many Delaware restaurant workers, she said, already make above the minimum wage when you account for tips.

“We’re seeing, for the first time in decades, that wages are finally rising,” Leishman said. “We’re seeing large increases in base wages. I’m hearing that beach restaurants are hiring dishwashers for $18 an hour.”

It’s more likely, she said, that smaller mom-and-pop shops will feel the pressure.

“You’ll see more problems in seasonal t-shirt shops, non-tipped locations, some fast food restaurants that pay minimum wage,” she said. “You may see some wage pressure in the farthest edge of Delaware’s border with Maryland, less from your full-service restaurant community, where employees earn tips.”

Tim Cureton, founder and CEO of Rise Up Coffee, which has eight locations in Maryland and plans to open a location in Rehoboth this month, has publicly supported raising the minimum wage. He believes it cultivates strong employees and grows the larger economy.

Rise Up employees currently make roughly $12.50 an hour plus $4-5 in gratuity, according to Cureton.

“I know small businesses,” he said. “We have thin margins with coffee too. But if you think about it, if we’re turning over positions because people are moving onto other jobs, that turnover is going to lead to additional labor hours.”

In addition, better compensated employees, particularly in the millennial demographic, means more discretionary income and more customers, he said.

Cureton noted that he plans pay his Delaware employees the same as his Maryland employees, regardless of the minimum wage.

“For us, we don’t need the state of Maryland to interject and dictate this, because it’s been a part of our culture from the beginning,” Cureton said.  “I support it on a human level, essentially for my fellow citizens.”

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