SUNDAY EDITION | At one-year mark, few problems with Louisville Metro minimum wage
Louisville Metro's minimum wage ordinance is nearly a year old. WDRB.com business reporter Chris Otts examines its effects so far.
LOUISVILLE, Ky. (WDRB) – Like many other entry-level workers in Louisville, 17-year-old Brittany Marshall got a small raise last year when metro government’s minimum wage ordinance kicked in.
But Brittany, a rising senior at Ballard High School, hardly noticed the jump from the federal standard of $7.25 an hour to Louisville’s new floor, $7.75.
“That little extra really didn’t do much,” she said. “It really wasn’t a big difference to me.”
But a few weeks ago, Brittany and her friend Brashawna Howard set their sights on a number of better-paying gigs at a job fair hosted by KentuckianaWorks.
Both were looking at UPS, where the starting pay for dayshift package handlers – even minors with little job experience – is $10.10 an hour. Brashawna, also a senior-to-be at Ballard, already had a job at a daycare lined up for $9.50 an hour.
Nearly a year after going into effect, Louisville’s minimum wage appears to be having little discernible impact amid a resurgent local job market that provides even entry-level workers plenty of options to earn more than $7.75 an hour.
Local Starbucks shops are hiring 16-year-old baristas at $8.20 per hour. Kentucky Kingdom, the amusement park where many teenagers hold summer jobs, starts workers at $8, with a raise to $8.50 after 30 days.
WalMart announced earlier this year that starting pay was going up to $9 per hour at all of its stores.
Fed-Ex still needs workers for its new distribution center in eastern Jefferson County, where the starting pay is $10.46 per hour – no high school diploma, GED or drug test required.
Zenith Logistics, a warehouse operation serving Kroger stores, has placed several signs around south end and the University of Louisville advertising starting pay over $16 per hour.
“The job market is so tight in Louisville, companies are realizing -- if I want a good outcome, I have to pay them $10 and up,” said Antigona Mehani, who helps place refugees in entry-level jobs around Louisville for Kentucky Refugee Ministries.
Mehani said she never has to settle for a $7.75 pay rate for her clients, no matter how inexperienced.
Louisville’s minimum wage, which applies to all of Jefferson County, may have more of an impact on July 1, when it steps up to $8.25. Then, on July 1, 2017, the wage goes up again to $9, with adjustments for inflation after that.
Unless the policy is stopped in its tracks.
On Friday, the Kentucky Supreme Court takes up a challenge to the Louisville ordinance, which was passed by the Metro Council and signed by Mayor Greg Fischer in late 2014.
The Kentucky Retail Federation, the Kentucky Restaurant Association and western Louisville employer Packaging Unlimited argue that cities and counties in Kentucky don’t have the power to set minimum wages within their borders.
The Supreme Court decision, expected later this year at the earliest, will also determine the fate of Lexington-Fayette County’s minimum wage, which begins on July 1 at $8.20 per hour, stepping up to $10.10 on July 1, 2018.
Louisville increase less than other cities
Louisville and Lexington are now among a few dozen cities and counties across the country to enact local minimum wage laws.
But, according to information from the National Employment Law Project, Louisville’s ultimate threshold of $9 per hour is on the low end.
Of the 39 cities and counties that have set local minimum wages, Louisville is among only four where the top rate is below $10 per hour.
Seattle and several cities in California – where the cost of living is a muchhigher than in Louisville, to be sure – have set floors of $15 per hour.
Some members of the Democrat-controlled Louisville Metro Council originally wanted a $10.10 wage floor, but Fischer said he would veto it, which led to the $9 per hour compromise.
As the council debated the original proposal, some warned a $10.10-per-hour law would entice employers to automate more work – like the self-checkout machines at grocery stores – and cut jobs.
Retired University of Louisville economist Paul Coomes said businesses would be tempted to move over the Jefferson County line to take advantage of cheaper labor.
“You’re going to hang yourself out there as a high (cost) labor place, and you're going to lose business and jobs,” Coomes told the Metro Council.
But with the more modest increase to $7.75, it’s hard to see any of those effects in the scant employment data available at the county level.
As of April, Jefferson County’s unemployment rate was 4.1 percent, down from a 4.5 percent a year earlier, before the wage ordinance took effect.
The broader metro area, which includes Southern Indiana and Kentucky counties surrounding Jefferson, gained 21,400 jobs – about a 3 percent increase – in that same 12-month period, according to the U.S. Bureau of Labor Statistics.
In the three months following the law’s implementation last year, the average weekly wage of Jefferson County workers was up by about 4 percent, to $933, compared with the same three-month period in 2014.
In an email, Coomes it’s possible that the Louisville market has naturally set a higher starting wage that the government mandated minimum.
“The small step up in the minimum wage so far would be hard to detect in data we have on the labor force – there are just too many variables moving around to prove causation,” he said. “I still believe it has impacts, but probably too small to detect in our data if it only (affects) hundreds of people in Jefferson County. The most likely first impacts would be on 16-17 year olds trying to get their first job – unproven people, who would quickly make more money once they demonstrate they can show up and produce.”
But in at least one instance, the policy appears to have led to the opposite of what Coomes warned about surrounding counties with cheaper labor getting jobs at Louisville’s expense.
At Kroger – one large employer that does hire at minimum wage – the United Food and Commercial Workers Local 227 was able to secure starting pay at $7.75 per hour in Oldham, Shelby and Nelson counties once the wage had to be raised by law in Louisville, said Caitlin Lally, the union’s political director.
Meanwhile Kroger stores in Scott, Woodford and Jessamine counties will also start at $8.20 – to mirror Fayette County – once that law goes into effect July 1, she said.
“And we are going to continue to use this to help push for higher wages around the state,” Lally said.
A Kroger spokesman did not respond to a request for comment.
Kent Oyler, CEO of Greater Louisville Inc., said the current economic climate in Louisville may be masking the negative effects of the minimum wage, which the metro chamber of commerce opposes.
“The effects – they happen job by job and they are very dispersed,” he said. “But when the world slows down – and the economy is cyclical – you will see it more pronounced than you do today.”
Few problems with compliance
Under the Louisville ordinance, all workers in Jefferson County are supposed to receive at least $7.75 per hour, except for those groups that state law already exempts, such as farm workers, domestic servants, babysitters and apprentices.
Employers also have to keep records that ensure those who work for tips – such as restaurant servers – are paid at least $7.75 per hour, and it’s the employer’s responsibility to make up any shortfall, according to the Jefferson County Attorney’s Office.
To ensure employers are complying with the law, the Louisville ordinance also attempts to allow employees to take them to court for not paying the minimum wage – another aspect that the business groups hope to overturn at the state Supreme Court.
But prominent labor lawyers say they know of no such lawsuits in the 11 months since the ordinance took effect.
Attorney David Leightty, whose firm often represents employees in wage and hour cases, said the ordinance is “fairly straight-forward” and easy for employers and employees to understand.
“It’s pretty clear in this one and nobody wants to get themselves in hot water” by not complying, he said.
Meanwhile, the Louisville Metro Humans Relations Commission – which was tasked with investigating minimum wage issues – has received only one complaint since the ordinance went into effect, according to open records requests.
But the lack of formal complaints and lawsuits doesn’t necessarily mean that every employer has complied with the new wage requirement, said Anne Marie Regan, an attorney at the Kentucky Equal Justice Center.
“Our experience is there are lots of wage and hour violations going on with lower-income workers across the board,” she said. “We see a lot of it in the restaurant industry and in the construction industry.”
Regan, whose group filed a brief with the Supreme Court supporting Louisville’s ordinance, applauded the city for the action but said the new wage falls short of a “living wage” needed to support a family with increased costs for rental housing, food and other necessities.
“We hope in the future they will increase it more,” she said.
But Coomes said the higher Louisville sets the wage, the more likely employers will cut jobs, reduce benefits and invest in technology that replaces human workers, like the iPad ordering stations at Panera Bread cafes.
“I feel sure that the proponents will start calling for $15 an hour, as we are seeing nationally,” he said. “This is very significant and will do harm to the very people we want to lift.”
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