Analysis: Is a small business minimum wage compromise an option?

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Good afternoon,

As opposition mobilizes over legislation that would raise the minimum wage to $15 an hour by 2025, online giant Amazon is becoming more vocal in its support.

The measure raced through the Senate last week on a party-line 14-7 vote.

Last week, Amazon passed along the results of a poll it commissioned that shows broad support among Americans for the $15 an hour wage. The findings mirrored those of a University of Delaware poll from 2016.

Amazon has joined mega-retailers Costco, Best Buy, and Target in moving to $15 an hour.

Amazon seems to emphasize that its case for the higher wage applies to larger businesses. The small business community might view Amazon’s position as one more way to squeeze competitors.

The poll showed that about 80 percent of Americans believe the current federal minimum wage of $7.25 an hour is too low.

In Delaware, opponents say the higher minimum wage would strike a fatal blow for many small businesses recovering from the Covid-19 crisis. Opponents also believe a higher minimum wage would inflate all wages and lead to layoffs.

One study that will bolster their case comes from a report out of the non-partisan Congressional Budget Office, which forecasts job losses from a phased in $15 an hour wage. Some economists say the findings reflect outdated assumptions that ignore evidence to the contrary.

The usual arguments have become less effective over the years as Democrats in Delaware banished the $7.25 federal base wage. The current minimum wage is slated to rise a dollar to $10.25 an hour in October.

Both Maryland and New Jersey appear to be on track to hit $15 an hour, while Pennsylvania remains a stubborn holdout at $7.25.

Concern about the higher wage effects on small businesses contributed to Delaware’s two Democratic U.S. senators. Chris Coons and Tom Carper voting against federal $15 an hour legislation.

President Joe Biden supports a higher wage path but did not press the issue and would probably prefer to let states deal with the issue.

Still, time and momentum appear to be on the side of those pushing for $15 an hour.

While Covid-19 hammered many businesses, it also laid bare economic inequities.

During 2020 and into 2021, stock market gains fueled the fortunes of a largely white minority. At the same time, many lost their jobs or worked in front-line positions that came with a greater risk of contracting the virus.

Opponents see a ray of hope since the measure will go to the Delaware House, with no action slated until later in April.

The wild card here is Gov. John Carney, who, despite claims to the contrary, listens to small businesses’ concerns.

A compromise that carves out a lower wage for businesses under 100 employees is one possibility. Even California has such a provision for companies under 25 workers.

The small business wage might also allow Delaware to jettison the little-used provision for training and youth wages that was hammered out a bleary-eyed end-of-the-session deadlock with GOP legislators.

In 2021, Delaware has a General Assembly that leans further to the left. At this point, a small business carve-out could be the best option. – Doug Rainey, chief content officer.

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