MONTGOMERY, Ala. — Governor Robert Bentley on Thursday signed a bill passed by the Republican-controlled legislature that blocks cities from imposing minimum wage hikes.
The move comes less than 24 hours after Birmingham’s mayor signed an ordinance increasing the city’s minimum wage to $10.10 per hour.
Republican legislators said the bill was crafted to encourage economic growth and job creation by creating uniform statewide minimum wage and labor policies. Senator Jabo Waggoner (R-Vestavia Hills) and Representative David Faulkner (R-Mountain Brook) sponsored the bill.
“Senate Republicans deserve credit for championing and affirming that free enterprise creates opportunity for all,” said Waggoner. “By passing the Alabama Uniform Minimum Wage and Right to Work Act, we are protecting job creators from having to deal with dozens of different minimum wages and labor rules that would vary from city to city.”
The bill prevents local governments from instituting a minimum wage and requires all cities and counties in Alabama to use the federal wage standards as a measure.
In addition, Republicans say the bill cements Alabama as a right-to-work state by giving the Legislature alone the authority to establish uniform employment policies and regulations of collective bargaining.
“We want businesses to expand and create more jobs – not cut entry-level jobs because a patchwork of local minimum wages causes operating costs to rise,” said Waggoner. “Our actions today will create predictability and consistency for Alabama’s economy, which benefits everyone.”
BACKGROUND:
Last August the Birmingham City Council passed an ordinance to increase the city’s minimum wage to $8.50 this year and $10.10 by July 2017. Alabama does not have a statewide minimum wage so the federal $7.25 minimum wage currently applies.
The vote on the citywide minimum wage hike came just days after the council voted 8-1 to increase its own salary from $15,000 per year to $50,000 per year in 2017. City councilmen serve in a part-time capacity.
The council claimed the minimum wage increase was necessary because of the rising cost of living in Birmingham, although The Magic City was ranked the most affordable city in the United States in a recent study by Forbes Magazine.
“The goal of it is to really try to bring in line the cost of living standards,” said City Council President Jonathan Austin, who sponsored the measure.
Free market economists have long criticized minimum wage hikes for chopping the bottom rung off of the economic ladder, warning such mandates only increase layoffs and cause prices to rise, effectively eliminating the supposed benefits of the forced wage increase.
Most recently, Seattle has become the poster city for a minimum wage hike gone wrong.
The city increased its minimum wage to $15 per hour last year and has experienced disastrous consequences.
In an effort to avoid layoffs as a result of the hike, some small businesses have reacted by tacking on to customer’s bills an additional 15 percent surcharge.
Additionally, some low-wage workers have asked their bosses to cut their hours after realizing the wage increase would push them past the threshold of receiving government assistance, such as food stamps and rent assistance. This has left employers scrambling to pay the increased wages while their employees’ production has plummeted.
“If they cut down their hours to stay on those subsidies because the $15 per hour minimum wage didn’t actually help get them out of poverty, all you’ve done is put a burden on the business and given false hope to a lot of people,” said a local radio host.
Seattle’s restaurant industry has been the hardest hit.
Many restaurants now peg labor costs approaching 50 percent of total operating costs, making it nearly impossible to survive. As a result, restaurant closings in Seattle are far outpacing the national average. Perhaps even more alarming for Seattle is that data from the Bureau of Labor Statistics shows a slowing of growth in restaurant jobs, meaning future jobs that would have been created will never even have a chance to exist.
This is particularly concerning for Birmingham’s flourishing culinary scene.
Earlier this year Birmingham was hailed by Zagat as “America’s Next Hot Food City.”
“This Southern contender took the top spot due to a delicious combo of fine dining, barbecue and a fresh batch of more casual restaurants,” explained Zagat. “The food culture – and the city itself – have changed dramatically in recent years.”
Alabama Democrats are also pushing to install a statewide minimum wage as part of their legislative agenda this year.
“Alabama does not have a state minimum wage, and the federal minimum wage is not a living wage,” they wrote in a release. “House Democrats will introduce legislation to establish a state minimum wage and to gradually set that wage at $10.10 an hour with an automatic cost-of-living increase that would be increase when federal social security benefits increase.”
Troy University economist Dr. Daniel J. Smith believes such a minimum wage increase would actually hurt individuals on the lowest rungs of the economic ladder.
“The reality is, the least-skilled Alabamians — primarily young, part-time workers — will face unemployment as mandated wage rates exceed their skill and experience levels,” he said. “Sadly, their best option for gaining the skill and experience necessary to earn a higher wage through on-the-job experience is taken away. To truly help these workers, policy makers should focus on helping this group boost their skills through educational reform and by expanding economic opportunity, not by increasing the costs of employing them.”
