Good morning, my name is James DeChene, Government Affairs Director for the Delaware State Chamber of Commerce. On behalf of the state of Delaware’s largest coalition of businesses we stand opposed to Senate Bill 39.
The Chamber does not reach this conclusion lightly, especially as Delaware’s economy continues to struggle in the aftermath of the Great Recession. While our unemployment rate remains below the national average, overall wages have not risen to where they were prior to 2009, and unfortunately, SB 39 does nothing to alleviate that problem, and in many ways does more to exacerbate the situation.
We believe that there are examples of the seriousness, and the aftermath, of proposals such as SB 39 that should serve as warnings to Delaware. Numerous articles have been written on the number of small businesses, especially restaurants, which have been forced to close their doors as a result of significant increases in the minimum wage. Areas such as Seattle and Los Angeles have seen such closures, as well as employers forced to roll back benefits, such as matching 401(k) contributions, in order to cover the costs of higher wages. In addition, close to home in Philadelphia, nonprofits that contract with the city say they can’t afford the new $12 per hour wage scale without help from the city. They want more money from the city or an exemption to allow them to pay less than $12 an hour. This was also the case in Los Angeles, where the very unions that pushed for an increase in the minimum wage then petitioned City Council for an exemption for their members to be paid lower.
On the employee side, articles have also been written about employees choosing to work part time in order to maintain their state benefits, even when full time work is offered.
What remains is clear, and has been evidenced by actions national level retailers have taken in recent months, is as the labor market continues to strengthen, the demand for workers will increase, and there will be a natural, market driven increase in wages.
Special consideration should be taken as to what this will do for our younger workers, currently the highest percentage of minimum wage earners in the state, as well as those with developmental disabilities. A marked increase in the minimum wage could serve as a barrier for those looking for first time employment, traditionally in areas such as food service, where these workers start to learn the soft and hard skills necessary to move up in the workplace. Impediments to youth employment, especially in our cities, will cause additional problems to be addressed. Speaking directly to those with disabilities, organizations like Waggies by Maggie, whose entire workforce is comprised of workers with intellectual disabilities will be forced to close their doors if faced with an increase in the minimum wage.
I would urge the members of this committee to consider an alternative measure aimed at low income workers, without suffering the employment losses that raises to the minimum wage are proven to have, which is to increase the Earned Income Tax Credit. It matches at the first earned dollar, and phases out as a worker hits an income threshold. The goals are the same, with positive outcomes.
James DeChene is the Chamber's Senior Vice President of Government Affairs.