LOUISVILLE, Ky. (WDRB) -- Greater Louisville Inc., the metro chamber of commerce, announced its opposition Tuesday to a proposal to raise the minimum wage in Jefferson County above the federal minimum of $7.25 an hour.An ordinance filed Monday by five Metro Council Democrats would gradually raise the minimum wage to $10.10 per hour by July 1, 2017
GLI President and CEO Kent Oyler said the proposal would put local businesses “at a distinct disadvantage while potentially costing jobs and creating a disincentive to hire young people and other first-time job seekers.
“The business community believes all workers should be paid a fair wage, but it is important to understand the facts and the potential economic impact of a minimum wage increase at the local level.”
On the advice of Paul Coomes, a retired University of Louisville economist, GLI said it instead supports a Kentucky earned income tax credit to supplement the wages of the working poor.
Here is GLI's full statement on the issue:
Greater Louisville Inc. announced its opposition to the proposed ordinance to raise the minimum wage in Metro Louisville to $10.10 an hour by the year 2017. The ordinance filed on Monday, September 8 calls for the minimum wage to increase in phases over the next three years.
“GLI opposes a minimum wage increase at the local level that would only affect Jefferson County, putting our local businesses at a distinct disadvantage while potentially costing jobs and creating a disincentive to hire young people and other first-time job seekers,” said Kent Oyler, President and CEO, Greater Louisville Inc. “The business community believes all workers should be paid a fair wage, but it is important to understand the facts and the potential economic impact of a minimum wage increase at the local level.”
GLI called upon Dr. Paul Coomes, a noted expert in regional and urban economics research, to provide a presentation of the latest data and research available on this issue. That data, along with comments from numerous companies employing large numbers of people in Jefferson County subject to the increase, strongly suggests that increasing the minimum wage will result in job losses amongst those most vulnerable. This includes teens, recently located immigrants, seasonal workers, and those recently released from the criminal justice system.
One West Louisville employer, Mesa Foods, shared that if the proposed minimum wage increase is passed they would need to rethink their planned $4 million expansion that would include adding an additional 75 jobs. Mesa competes nationally and an increase would put them at a distinct disadvantage versus competitors in states at the federal level. It is estimated this change would cost them $500K to $1M annually.
Over the last few years Mesa has invested over $10 million dollars in their West Louisville facility. The company, which focuses their hiring on local residents, currently pays a starting wage between the federal guideline and the proposed increase, and then moves workers up the scale as they are trained. Employees have the opportunity for two pay increases per year as they progress within the company. Once employees become established most positions in the company pay from $11-20 per hour. Mesa employees recently negotiated a 4-year union contract, which was voted and passed by a large majority.
Pete Hanekamp, Chairman of the Board for Packaging Unlimited noted, “Our company competes on a national level for contract packaging services. If the minimum wage increases in the City of Louisville, we will be at a disadvantage competitively with our current customers.” Hanekamp added, “This will put us at risk of losing current business and detrimental to obtaining future business. At times, we provide work to close to 1000 people who live in the City of Louisville.”
At the GLI event Coomes shared data and research from the US Bureau of Labor Statistics and The Congressional Budget Office that indicates half of minimum wage workers are aged 16 to 24, are more likely to be never-married, working part-time, and employed in restaurants and bars (where tips supplement wages). In addition the COB points out that only 20 percent of low wage workers would be in families with income below the federal poverty line, while 35 percent of low wage workers would be in families with income of at least three times the 2016 federal poverty threshold ($24,100 for a family of four).
Both the CBO report and a University of Kentucky Center for Poverty Research study suggest raising the minimum wage is a very ineffective way to reduce poverty due to the number of minimum wage workers that are young and not living in poverty. Instead they support using the Earned Income Tax Credit as a way to offer more resources to poor families by providing a wage subsidy to workers in low-income households.
There is a federal EITC, but Kentucky does not supplement this with a state-level version. Twenty-three states have an EITC, including neighbors Indiana and Ohio.
“It is important that we ensure that actions taken to lift people out of poverty accomplish the intended purpose. Establishing a state EITC is a better alternative to an increase in the minimum wage,” said Oyler.
GLI is absolutely interested in increasing the median income for workers across our 26 county region; however this increase should come from the result of growing more high-wage jobs and not from imposing artificial and unfunded mandates on the private sector. Raising the median income requires a collaborative effort between educators, employers and employees and is not solved by unilateral action from elected officials.
GLI's position was determined after a thorough analysis of available data, solicitation of members' feedback and input from the GLI's volunteer Public Policy Steering Committee.
For additional information on the data referenced in Paul Coome's presentation see the following: