Monday, October 22, 2018
News Roundup

How fast is too fast to raise the minimum wage? St. Pete might be about to find out

Say this about St. Petersburgís City Council members:

Their hearts are in the right place.

Itís their math thatís askew.

The councilís budget, finance and taxation committee voted unanimously last week to move forward with a mandatory minimum wage increase for contractors doing business with the city.

Now, in principle, this is a fine idea. Floridaís minimum wage of $8.10 an hour ranks in the bottom half of the nation, and the current cost-of-living accelerator is comically inadequate.

Even worse, Tampa Bay has the lowest median household income of the nationís top 25 metro markets. That doesnít do a lot for our image, and even less for our residents.

So, yes, this issue needs to be addressed.

Itís the details that are problematic.

The plan proposed by the committee would increase the minimum wage to $12 an hour starting Jan. 1 for any contractor with a $100,000 deal with the city. The minimum wage would then increase annually by a dollar until it reached $15 an hour.

Thatís a pretty aggressive increase. Itís almost like an inverse reaction to the largely stagnant situation weíre used to seeing. Going from $8.10 to $12 an hour would be a 48 percent raise overnight.

Not even Seattle, which has been the nationís role model for increasing the minimum wage, went after it this hard.

When Seattle began plotting a path toward a $15 wage, it was already at $9.47 and its first increase was to $11. That was a 16 percent raise. A year later, they went from $11 to $13, an 18 percent raise. That means Seattle had a smaller increase in a two-year span than St. Pete is proposing for its first year.

And thatís not the only troublesome issue here. While $15 an hour has been the favored target for living wage advocates around the nation, it doesnít account for differences in cost of living.

In other words, a $15 pay rate in St. Petersburg is a heck of a lot more generous than it would be in Seattle or San Francisco or New York. And yet the St. Pete ordinance would eventually give contracted employees the same paycheck as minimum wage workers in the most expensive cities in America. Actually, with a lack of a state income tax, their salaries would be higher.

Finally, there are the potential unintended consequences of raising the minimum wage too high and too quickly. At best, the contractors will incorporate higher wages in their bids and the cost will be passed along to taxpayers. In a worst-case situation, as labor gets more expensive, employees will be replaced by automation and the plan will backfire for some workers.

While Mayor Rick Kriseman has committed to raising the minimum wage for city employees, the administration asked the council to take a more conservative approach when dealing with outside contractors. City Administrator Gary Cornwell suggested the first increase be to $10, along with raising the contract threshold from $100,000 to $500,000. That sounds like a far more prudent approach.

If you have an ounce of compassion or common sense, you have to know the $8.10 minimum wage for adults doesnít work. Itís a recipe for poverty and government assistance programs.

So raising the minimum wage is a step in the right direction.

Just make sure you donít step off a cliff.

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