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$7.25 an hour has been state's minimum wage for 12th consecutive year

$7.25 an hour has been state's minimum wage for 12th consecutive year

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For the 12th consecutive year, North Carolina's 38,000 minimum-wage workers did not receive a pay raise with the arrival of the new year Friday.

They remain stuck at the federally mandated $7.25 an hour set in 2009.

Meanwhile, the minimum wage in 11 blue, three purple and six red states did rise Friday by virtue of state- or voter-mandated increases, or steps taken toward reaching a $15-an-hour minimum wage.

The majority of N.C. Republican legislators expressed little, if any, interest during the 2019-20 session in a wage hike for private-sector workers.

Constricting minimum-wage increases is that North Carolina's constitution does not allow for voter-initiated referendums, which gives Republican legislative leaders the power to shelve minimum-wage bills.

Seven Democratic-sponsored minimum-wage bills were introduced during the 2019 session.

None of them — House Bill 46, House Bill 146, House Bill 366, House Bill 830, House Bill 832, Senate Bill 137 and Senate Bill 291 — were heard in committee even though they were introduced between February and April.

HB832 would have created a constitutional amendment allowing voters to decide whether to raise the state minimum wage to $12.

There was no specific minimum-wage legislation introduced during the 2020 session, which was held during the first four months of the COVID-19 pandemic.

The state increases that went into effect Friday ranged from 8 cents an hour (to $10.08) in Minnesota, and $1.50 (to $10.50) in New Mexico.

Altogether, 30 states — mostly outside the Southeast — have a minimum wage above the federal level.

States that have increased their minimum wage above the federal minimum typically fall into one of two categories, said John Dinan, a political science professor at Wake Forest University who is a national expert on state legislatures.

“State minimum-wage increases have been passed either by Democratic-controlled legislatures or through citizen-initiated ballot measures in states that allow the public to bypass legislative opposition and place measures directly on the ballot.”

GOP points to markets

The lack of a minimum-wage raise for private-sector employees likely continues to sting considering the minimum pay for all full-time state government employees jumped to $15 an hour in July 2018, as approved by the Republican-controlled General Assembly.

About 8,000 state employees, or 12% of the state government workforce, received that raise, according to the office of Senate leader Phil Berger, R-Rockingham.

Key Republican legislative leaders continue to say that the free-market system should dictate wages for private-sector employers.

They cite studies claiming the possibility of losing private-sector jobs, or reducing the incentive for their creation, as a consequence of increasing hourly pay.

Other studies show little, if any, impact on hiring patterns in states that have raised their minimum wages, including those with a $15 minimum wage as their goal.

For example, a study released in July 2019 by the University of California at Berkeley’s Center on Wage and Employment Dynamics determined that a $15 federal minimum wage by 2024 would “offer more opportunities for workers and their families to lift themselves out of poverty.”

Researchers Anna Godoey and Michael Reich focused on the effects on hourly pay, employment, hours and weeks worked, and poverty outcomes among workers who are most likely to work in minimum wage jobs — those with a high school education or less, and teens.

“The data show that the minimum wage has positive effects, especially in areas where the highest proportion of workers received minimum wage increases,” Godoey said. “We also found reduced household and child poverty in such counties.”

The researchers said they “did not detect adverse effects on employment, weeks worked or weekly hours among workers with a high school degree or less ... among women and minority groups.”

Sen. Joyce Krawiec, R-Forsyth, says that "many companies are raising wages to attract the best talent."

Companies with a Triad presence that raised their minimum wage to or toward $15 an hour include Amazon, Cone Health, First Horizon National Corp., F.N.B. Corp., Hugh Chatham Hospital, Novant Health Inc., Truist Financial Corp., Wake Forest Baptist Medical Center and Wells Fargo & Co.

“This all adds credence to the fact that a minimum-wage increase is unnecessary,” Krawiec said.

There were projections pre-pandemic that raising the state's minimum wage would be a prime 2020 election issue.

However, the issue was overshadowed by state COVID-19 relief packages and a heightened focus — though with little advancement — on permanently increasing the $350 maximum weekly unemployment benefit.

The maximum number of benefit weeks will rise, per a sliding scale in state law, from 12 to 16 for new applicants starting in January.

Rep. Donny Lambeth, R-Forsyth, has said the minimum wage remains a subject “of great debate in Raleigh,” in part out of concern for the ever-widening economic gap between urban and rural North Carolina.

Raising the minimum wage for state employees to $15 an hour “could very well signal to other employers it is time for them to reassess their salary for the low-wage earners and adjust accordingly,” Lambeth said.

“But the market should determine that, not government.”

Poverty level

A full-time N.C. minimum-wage worker earns $15,080 per year — $2,160 less than the $17,240 federal poverty level for 2018 for a family of one adult and one child.

An additional 52,000 North Carolinians make less than $7.25 because they work in the restaurant sector, where their compensation is often based more on customer tips.

Allen Freyer, an analyst with left-leaning N.C. Justice Center, said North Carolina "needs to create jobs that pay workers enough to afford the basics for themselves and their families so that everyone can prosper in our state."

"Unfortunately, North Carolina’s minimum wage has long lagged behind what it actually takes to get by, and work has lost its promise of prosperity.

Freyer said that the jobs "that paid decent wages are largely vanishing, as low-wage service jobs replace the manufacturing positions that once provided generations of North Carolinians with vital pathways to the middle class."

Inflation has eroded the buying power of $7.25 an hour over the past 10 years, said John Quinterno, a principal with South by North Strategies, a Chapel Hill research firm specializing in economic and social policy.

“An increase is more than overdue, both for inflation and to take the threshold to a more meaningful level closer to a living wage,” Quinterno said. “Most states, including most of the most populous ones, have higher minimums.

“Democrats have called for increases, but I am unsure how hard they are willing to push if the votes are not there. So, I do not expect an increase to advance.”

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