New from me and Cato colleague Ryan Bourne in the Washington Post:
One thing we’ve learned in this year’s debate over a statewide $15 minimum wage, now set to become law after the legislature overrode Gov. Larry Hogan’s (R) veto today, is that affluent central Maryland doesn’t want to listen to hard-hit rural Maryland….
In the debate over the $15 minimum wage, lawmakers from [already high-wage] Montgomery County, Baltimore City and Howard County were nearly unanimously in favor, with most delegates supporting strong versions of the scheme. Meanwhile, most lawmakers from depressed parts of the state were passionately opposed.
Guess who had the numbers to outvote whom?…
Affluent sections of Maryland can vote for $15 without much worry that a large share of their job base will disappear. Poor counties can’t.
Whole thing here (update: unpaywalled version). Related: Highly informative Jacob Vigdor/Russ Roberts interview on the Seattle studies, and on the strategies that employers (restaurants in particular) use to adjust [David Henderson, Econlib] More on the problems of applying a uniform law to portions of the country with seriously different wage levels and costs of living [Daniel McLaughlin, NRO] Some observations of mine at an earlier stage of the Maryland debate [Free State Notes] Ryan Bourne on adjustments at Whole Foods following its accession under political pressure to a $15 minimum [Cato].
12 Comments
Now that the job pays $15 an hour, I can raise your rent. Too bad the job no longer exists.
Bob
I subscribe to a rural newspaper published in northern Alabama (long story).
I regularly see classified ads there for city and county positions like police dispatcher, patrol officer, maintenance worker, etc. at $10-12 per hour. These are regular, full-time positions with local government. A $15 minimum wage would absolutely destroy this region.
Last year, Colorado dealt with teachers’ complaints of low wages, low state funding, etc. Some interesting information came out of that discussion regarding the high-low range of average teacher salaries across the state.
The results mirror the Maryland MW situation described in your post. Some Colorado school districts can financially support wages higher than others, given the local employment, commercial activity, tax base, etc., circumstances. Here’s one of those news stories, just as a sample. Check the range between the highest and lowest average salary. Those low-paying districts are not paying so little because they want to cheat their teachers of income or their students of a quality education; they’re paying lower wages because that’s what they’ve determined they can financially afford.
https://www.9news.com/article/news/local/next/interactive-average-teacher-salary-in-each-colorado-district/73-549701960
I’m certainly not an economist, but does not the concept of imposing either a state or (far more insane) a national minimum wage, notwithstanding that we’ve had such since (when?), boggle economic common sense? Why should someone in D.C. presume to know what the “right” minimum wage is for someone in La Plata County, Colorado? …no more than the Colorado state government should mandate what the average teacher salary should be in Bent County, Colorado?
https://en.wikipedia.org/wiki/List_of_Colorado_locations_by_per_capita_income
There are some good points being made that minimum wage in different places should be different. For example, someone in rural Colorado most certainly afford basic necessities more easily than someone in Denver making the same wage. The problem seems to be perspective. From the perspective of the rural areas, minimum wage at the city rate seems to be silly. From the perspective of the urban areas, wages set at the rate that is correct for rural areas is inane.
Assuming that a “minimum wage” is desirable, we should come up with something that addresses both perspective. Of course, that assumption may have no basis in reality.
If there “must be” a national and/or state MW, then how’s about periodic adjustment up/down to reflect localized purchasing power? Somewhat similar to, say, the military’s adjustments for housing allowance in more-expensive locations? …except down as well as up?
This, from the Tax Foundation, is already 3 years old; I wonder what it might look like now?
https://taxfoundation.org/real-value-100-each-state-2016/
“From the perspective of the rural areas, minimum wage at the city rate seems to be silly. From the perspective of the urban areas, wages set at the rate that is correct for rural areas is inane. ”
You seem to be missing the point that rarely (never?) are the rural voters attempting to set wages for urban areas.
I wouldn’t say never certainly. A number of state legislatures have preempted (or tried to block before court challenges) cities from setting their own higher minimum wages than the state minimum, such as Alabama, Colorado, Arizona, Iowa, Florida, and Kansas. In these cases, where a city government has passed a higher minimum wage that applies only within city limits but the state legislature is preempting them, doesn’t that boil down to rural voters, through their elected representatives, overriding the minimum wage decisions of urban voters?
If the issue is that minimum wages should be set locally based on purchasing power, surely state preemption of local decisions is unjustified?
IANAL. but I suspect that, in Colorado at least, your scenario would probably end up in court under the Home Rule provisions of the state constitution. The first link is from 2011, so may have been amended by now (I’m not going to spend any more time looking). The second link is just a search-result court case that may serve as an example of a Home Rule – type case.
https://legisource.net/2011/11/03/when-can-a-local-government-override-state-law-home-rule-cities-in-colorado/
https://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Opinions/2011/11SC536.pdf
At the very least, the relative interests of urban v rural would be hashed out locally as opposed to the remote corridors of the U.S. Capitol.
Perhaps, on a logical basis, in this one case, but that is not remotely what the law is like.
The relationship between local governments and the state governments are in no way like the relationship between the state and federal governments.
Local governments are creations of/subjects of the state government. Always, in all areas of law, state law preempts local law unless the state legislature has explicitly provided otherwise.
MattS,
” state law preempts local law unless the state legislature has explicitly provided otherwise.”
Not in Colorado. There are certain areas that cities have sole discretion without interference from the state government. Yeah, it is weird. But it is enshrined in the state Constitution.
Further to Alan’s reply to MattS (because I can’t reply to Alan), here’s a brief history of home rule in Colorado. You’ll notice, starting on page 7 that the author acknowledges that there is and always has been “tension” between state and local control. …that sometimes local seems better, other times the state. Often, it depends on the specific matter at issue.
It’s a 100 year + work in progress….I
http://www.cml.org/uploadedFiles/CML_Site_Map/_Global/pdf_files/09_home_rule.pdf
To the committed progressive, the destruction of low-cost-of-living rural economies with unrealistically high minimum wages is a feature, not a bug. (1) As these areas become depopulated, conservative voting power is reduced. (2) The remaining population could be converted to a dependency culture, opening up a new political market for progressives. Like the collectivized villages of Soviet Russia, the new progressive countryside would be a drag on the economy but a net plus for progressive governance.