Minimum Wages Rise In US States as Employment Regulation Goes Local

Minimum Wages Rise In US States as Employment Regulation Goes Local

Even as federal workplace regulations are set to become more employer-friendly under president-elect Donald Trump, the state and local level tells a different story. For instance, the Wall Street Journal’s Eric Morath points out, a whopping 19 states raised their minimum wages at the start of the new year, which the Economic Policy Institute estimates will give 4.3 million low-wage workers a raise:

In Massachusetts, the minimum wage will rise $1, to $11 an hour, affecting about 291,000 workers. In California, the minimum goes up 50 cents, to $10.50 an hour, boosting pay for 1.7 million people. Wages are also going up in many Republican-led states, where politicians have often been skeptical of the benefits of minimum-wage increases. In Arizona, one out of every nine workers is set to receive a wage increase—a move firms are challenging in court. So will tens of thousands of workers in Arkansas, Michigan and Ohio, all states that backed GOP President-elect Donald Trump in November.

Trump’s choice for labor secretary, fast food executive Andrew Puzder, is an outspoken critic of mandatory wage floors and other employment regulations, much to the dismay of activists seeking a significant increase in the federal minimum wage. Voters in several states approved referenda in November raising the minimum wage, however, and action is also happening at the level of cities, a trend kicked off by Seattle in 2014: New York City’s minimum wage will increase to $15 an hour by the end of 2018, and Washington, DC, plans to do the same by 2020.

The shift in the battle over employment regulation from the federal to the local arena was an important trend in 2016. Kevin E. Hyde writes at Labor and Employment Law Perspectives, as states and localities both fought back federal regulations like the overtime rule and “acted to fill voids that they believed the federal government allowed to exist”:

For example, since the implementation of the Family and Medical Leave Act in 1993 – which provides for unpaid leave – there have been cries at all levels for paid leave. To fill this void, in 2016, more and more states and municipalities passed laws or ordinances requiring paid leave. For instance, on January 1, 2017, laws requiring paid leave will go into effect in Vermont and Spokane, Washington. Similar laws or ordinances will take effect in Minneapolis, St. Paul, and Chicago and Cook County, Illinois on July 1, 2017. Expect the trend to continue as other cities consider similar paid leave requirements in 2017.

So what does this mean for employers? Is this merely an interesting political science trend? No. The importance of what is occurring is that states and cities are asserting their own authority to craft employment laws particular to their own jurisdiction or belief. These cities and states are not content to follow the lead of the federal government. This trend is likely to continue in other areas as well, such as broadening local or state anti-discrimination protections challenging when employers can require employees to avoid or limit on call scheduling practices for employees.

The other important trend taking place is companies acting on their own to raise entry-level wages and expand benefits like parental leave as governments either decline to set new policies or fail to reach consensus on how to regulate these matters. For example, employers like JPMorgan Chase scored public relations points and burnished their employer brands last year by publicly announcing their own minimum wage hikes, and many large companies are keeping in place raises they implemented in response to the overtime rule, even though the requirement now looks unlikely to take effect.