Photo: High school students, union activists and fast food workers marched in New York City to demand a $15 per hour federal minimum wage Apr. 15, 2015.
Photo Credit: a katz / Shutterstock.com
Published February 15, 2021
The Center Square [By Chris Krug]-
We’re only a few weeks into the new Biden-Harris administration and the debate over a much higher minimum wage is already here.
If you follow the news – even esoterically – you know that this story comes around at least once a year and has for the past decade. National mainstream media can’t get enough of the “Fight for $15” because it has a Robin Hood vibe to it for one thing, and is an undeniable clickbait monster for another.
With the ball in hand and blockers out front, President Joe Biden and Vermont Sen. Bernie Sanders, whose progressive brand of politics pushes into democratic socialism, lurched last week into the idea of raising the federal minimum wage to $15.
As The Center Square was amongthe first to report, after word from Biden that he was thinking of plunging forward on a higher minimum wage, the underlying consequences of forcing a minimum wage at the federal level are well known and have been for some time.
Nonetheless, here we go again with an attempt to revive a non-starter issue that – if ever adopted at the federal level – threatens a generation of entry-level workers from achieving the fulfillment and responsibility of their first job while simultaneously placing untold pressure on low-skilled workers whose contributions to their employers may not justify the new wage level.
To establish a baseline of understanding, the federal minimum wage for 2021 is $7.25 an hour. Most states around the country hang at about that level.
The actual minimum wage range in states begins at $5.15 in Georgia and Wyoming (for workers who don’t meet the requirements of the federal Fair Labor Standards Act) and scales up to $14 an hour in California. In Washington, D.C., where barbed wire still rings our Capitol, it’s $15 an hour – tops in the country.
The problem is a simple one: $15 isn’t a magical pay rate that fixes poverty. Even the Congressional Budget Office’s latest report suggests a $15/hour minimum wage would lift about 900,000 Americans out of poverty. More importantly, the CBO acknowledges that such a wage mandate would be the root cause of the elimination of about 1.4 million jobs.
In short, even if you’re not so hot at math, you can see that it’s not a great tradeoff against any set of circumstances.
Now consider this economy with unemployment that is nearly twice today (6.3%) what it was last February (3.5%) and struggling to rise above the recent past and current state-level policy decisions governments made as part of their respective COVID-19 mitigations.
After hearing for the better part of a year from Republican lawmakers that they felt left out of the state’s coronavirus fighting efforts, Gov. Tom Wolf has finally relented and created a formal process to involve legislators in planning. A new COVID-19 task force, including lawmakers from both parties from the state House of Representatives and Senate, will work to improve the state’s vaccine rollout. A spokesman for House Republicans, however, argued that it was too little, too late from a governor who has vetoed several bills that sought to ensure legislative oversight of the pandemic response.
Democratic New York lawmakers are moving forward with a bill that would dramatically increase the state’s tax on capital gains. State Sen. Gustavo Rivera and Assemblyman Ron Kim, both Democrats, envision a $7 billion increase in annual revenues for the state. Outside analysts, however, have cast doubt on the plan. A Tax Foundation report indicated that it would drive wealthy New Yorkers out of the state, and that as a de facto tax on wealth it violated the state’s constitution.
After making what some lawmakers called historic progress in trimming business regulations last year, the Ohio Senate continues to attack business rules it says stunt economic growth. Senate Bill 9 sponsor Sen. Kristina Roegner, R-Hudson, said the redraft of legislation from the last session that failed to pass when time ran out gives Ohio a way to relieve the “regulatory albatross” that burdens the state.
A bill before the Indiana legislature would dramatically expand the state’s school voucher program, opening it up to most middle and upper-middle-class Indiana families who could use the voucher to pay for tuition at a private school. The bill proposes, beginning in 2022, families having an income up to 225% of the maximum income to qualify for free or reduced lunch would qualify for a school voucher for 90% of the amount the state would normally pay to fund that child’s education in the traditional public school.
Indiana lawmakers want to offer thousands of dollars to encourage remote workers from states such as Illinois to become Hoosiers. The bipartisan piece of legislation is straightforward: Move to Indiana and work remotely there for a year and the state will reimburse up to $5,000 in taxes or moving costs. They up the ante for workers who earn more than $100,000 in that year, paying them $8,500.
Illinois’ forthcoming budget from Gov. J.B. Pritzker won’t include tax increases, but continues historic levels of spending while relying on federal funding, sweeping funds from cigarette taxes and other budget maneuvers. “The combination of the cuts that we’ve proposed, the fact that we have a flat budget to last year, and the fact that the economy has done better is what’s allowing us to balance the budget,” Pritzker said. The budget Democrats passed last year was billions of dollars out of balance. Pritzker also said that budget was balanced.
When the federal government juiced unemployment benefits for states as a result of the COVID-19 pandemic, the 14.8% of the U.S. population finding themselves jobless might not have been aware their benefits would be taxed as income. In Michigan, one of the hardest hit states for unemployment (20%), the state will still demand its flat 4.5% cut as will the IRS. Michigan, however, will waive tax penalties and interest on unemployment income.
Michigan businesses that received $15.7 billion in Paycheck Protection Program loans and had those loans forgiven will not face federal taxes, but it’s not yet clear if they’ll owe state taxes.
Retail sales tax collection in Iowa dropped from fiscal year 2019 to 2020 for the first time in at least five years. The COVID-19 pandemic in a 0.23% loss ($4.9 million) in sales taxes in the second quarter of 2020, according to a report released Tuesday by the Iowa Department of Revenue.
Iowa students eligible to enroll in the 34 public schools identified under the federal Every Student Succeeds Act in 19 Iowa school districts could receive a “student fund scholarship” to attend a nonpublic school instead, if SF-159 becomes law. The bill passed the Senate in a 26-21 vote on Jan. 28 and was referred to the Education committee in the House of Representatives on Feb. 1.
Gov. Tim Walz said last week that January tax collections will be “substantially higher” than expected, improving a previously projected $1.3 billion deficit. January tax collections in Minnesota were $296 million above expectations – 14.1% above the forecast and a significant improvement over a previously projected $1.3 deficit. Senate Republicans say there’s no need to raise taxes in the state.
Lawmakers in Madison continue to challenge the legitimacy of last November’s national election . The legislature is reasserting its function as crafter of the state’s election laws, rather than the Wisconsin Elections Commission. Many Republicans at the Capitol say there remain unanswered questions about both absentee voting and indefinitely confined ballots.
A report published by Kentucky Auditor of Public Accounts Mike Harmon found multiple issues with the state’s unemployment program over the past year, including a decision to pay claims without determining eligibility and a decision to archive more than 400,000 unread emails. The audit, part of Harmon’s Statewide Single Audit for Kentucky, found several issues with the unemployment program that ran counter to federal law due to a “weak control environment.” It provides more detail to several unemployment issues his office uncovered as part of the Comprehensive Annual Financial Report in December.
Virginia House and Senate leaders released their budget proposals, both of which propose teacher pay raises higher than Gov. Ralph Northam’s initial plan, but differing on how high the increase should be. The House version would provide a 5% salary increase to teachers beginning July 1, 2021, which would cost the state more than $231 million. The Senate version includes a more modest increase – a 3% raise beginning in August, which would cost the state more than $140 million.
During his State of the State address, West Virginia Gov. Jim Justice laid out his tax reform recommendations, which include cutting the income tax in half for most West Virginians, increasing the sales tax and creating a wealth tax for large purchases. With Republican supermajorities in both chambers of the General Assembly, lawmakers have indicated their intent to join nine other states in fully phasing out its income tax. Such a reform would completely overhaul the state’s tax system, which receives about $2.1 billion in income tax money, accounting for half of its yearly revenue.
Lawmakers in Georgia approved an amended budget for fiscal year 2021 on Thursday that spends an extra $654 million. The state budget for the year increased to $26.5 billion from $25.9 billion. Most of the spending hike will go toward increasing funding for the state’s public schools. Gov. Brian Kemp still needs to approve the amended spending plan, but lawmakers said most of the governor’s recommendations are in the approved proposal.
Gov. Roy Cooper signed legislation last week that spends $2.2 billion in federal COVID-19 relief funding, including $1.6 billion to help North Carolina schools reopen. The spending bill also directed $94.7 million to help with COVID-19 vaccination efforts and more than $546 million to help residents pay rent and utilities. Another $155 million was allocated for local governments with more than 200,000 residents.
Gov. Bill Lee unveiled his nearly $42 billion state budget proposal Monday in his State of the State address. Among Lee’s spending requests was the largest allocation for capital investments in state history – more than $900 million for maintenance and renovation projects at state buildings, state parks and universities and community college facilities. Lee also proposed spending $200 million on broadband internet expansion and $120 million for teacher pay raises.
State Rep. Jack McFarland, R-Winnfield, predicted his proposal to raise Louisiana’s gas tax by 22 cents a gallon will attract a “groundswell” of support this year. McFarland’s plan would increase the gas tax immediately by 10 cents, then add 2 cents a year until the increase reaches 22 cents. TIf approved, the increased revenue would be used on infrastructure.
The U.S. Supreme Court overturned California Gov. Gavin Newsom’s in-person worship ban in the state. In the majority opinion, Associate Justice Neil Gorsuch wrote, “… if Hollywood may host a studio audience or film a singing competition while not a single soul may enter California’s churches, synagogues, and mosques, something has gone seriously awry.
Colorado brought in a record $387.5 million in tax and fee revenue from marijuana sales in 2020, the first year total sales surpassed $2 billion since its legalization in 2014. Between 2019 and 2020, marijuana sales spiked by over $400 million, according to the state’s data. Colorado collects three taxes from marijuana sales: a state sales tax, a retail marijuana sales tax, and the state retail marijuana excise tax on wholesale sales or transfers of retail marijuana. The state sales tax is levied at 2.9% of sales, while both the retail and excise taxes are levied at 15%.
A proposal to tax Washington’s wealthiest residents is splitting along party lines in the legislature, where lawmakers disagree on how to cover the costs of helping struggling parents in the pandemic. House Bill 1496 joins a handful of other Democrat-backed tax bills this year aimed at making affluent Washingtonians spread their wealth around. The legislation would slap a 7% tax on capital gains from property sales in excess of $200,000 and $400,000 for joint filers, and a 9.9% tax on the sale of other long-term assets including corporate stocks and bonds. Tax revenue would be split between the state’s general fund and a program that funds child care copays for parents. The legislation faces an uphill battle to become law based on decades of court precedent against state income taxes that legal scholars and free market advocates have likened to similar efforts to in past years.
The Nevada Legislature passed a bill last week allocating an additional $50 million to support small businesses, marking the largest small business aid program in state history. The legislation will allow eligible businesses and nonprofits to apply for up to $10,000 in direct grant funding that can be used for a wide range of expenses. Gov. Steve Sisolak has already said he will sign the bill into law.
In Arizona, a Democratic Arizona legislator is looking to outdo President Joe Biden’s call for a $15 an hour minimum wage. Sen. Martin Quezada, D-Phoenix, recently introduced a bill that would increase the state’s minimum wage to $20 an hour beginning Jan. 1, 2022, and increase it each year based on the rate of inflation. Arizona’s minimum wage has increased every year for the past four years and now sits at $12.15 an hour. That is up from $10 an hour in 2017, $10.50 an hour in 2018 and $11 an hour in 2019.
About the Author:
Chris Krug, The Center Square Publisher, President of the Franklin News Foundation
Chris Krug brings more than 25 years of award-winning media experience to The Center Square. He is the former publisher of the Chicago Pioneer Press newspaper chain, and was vice president for Shaw Suburban Media and a deputy editor at the Denver Post.