Minumum Wage Legislation Hitches to New Stars
A bill sponsored by Greensboro Democratic Rep. Alma Adams to raise the state’s minimum wage that earlier went down in defeat passed the House by a nudge on Aug. 10 after being hitched to legislation providing a tax credit to businesses for contributing to employee health coverage.
But the Senate Finance Committee referred legislation to the full House on the same day that co-opts the minimum wage increase into a package of tax breaks to corporations and the wealthy, casting uncertainty on whether the minimum wage legislation will emerge intact once the dust settles at the end of the legislative session.
The Health Insurance Credit/Minimum wage bill, which passed 62-57, provides up to $800 in tax credits to businesses for each employee if they pay more than 50 percent of their health insurance premiums, and raises the state minimum wage to $6 per hour. The Guilford County delegation voted along party lines, with Democrats Pricey Harrison, Maggie Jeffus and Earl Jones joining Adams in support of the bill, and Republicans John Blust and Laura Wiley voting against it.
If approved and signed into law, the minimum wage raise would directly benefit 100,000 North Carolina workers, according to the left-leaning NC Policy Institute in Raleigh. Minimum wage has been set at $5.15 for all North Carolina workers covered by federal labor standards since 1997, the last year the US Congress voted to raise it. It was previously set at $4.75 per hour.
‘“It’s a bill for workers that are at the very bottom and need a lift up so they can provide for the basic needs of their families,’” Adams said.
The previous bill, named the Living Wage Act, was more ambitious. It would have raised the minimum wage by a dollar every year until it reached $8.50 in September 2007. That bill was voted down 66-52 by the full House on June 1.
Blust spoke on the House floor against the bill before its passage.
‘“It’s a counterproductive policy,’” he said in a subsequent interview. ‘“If you’re trying to help people at the bottom of the economic scale, the most important thing they need is a work record. It’s unskilled labor. It’s young people and people that are entering the labor market. It’s going to keep a lot of people from getting hired.
‘“Representative Jones asked me: ‘Can you live on ten thousand dollars?”” he added. ‘“No, but most of these people are not heads of households. I would ask: ‘Can you live on zero?””
Adams indicated that she doesn’t consider the inclusion of the minimum wage provision in the Senate’s package of tax breaks to be any kind of favor.
‘“The Senate passed a bill that has a lot of awful things, in terms of tax breaks for very rich people, but also included the language of my minimum wage bill,’” she said. ‘“I hope they take up House Bill 20 that we sent them.’”
She said she would not vote in favor of the legislation as written in the Senate bill.
Sponsored by Senator David Hoyle, a Democrat who represents Gaston County and who is a real estate developer and investor, the 2005 Economic Growth and Tax Relief Act repeals estate and gift taxes, gradually reduces corporate income taxes from 6.9 percent to 6.5 percent, and knocks personal income tax rates for the wealthiest North Carolinians down from 8.25 percent to 8 percent, along with increasing the minimum wage to $6 per hour.
The combined tax reductions to the state would amount to $133.3 million when they went into effect in fiscal year 2008, according to an analysis provided by the General Assembly’s Fiscal Research office.
The state would offset the lost revenue by raising cigarette taxes from 35 cents a pack ‘— as currently set in the 2005 budget ‘— to 40 cents a pack, and would make permanent a half-cent sales tax increase enacted in 2001 and set to expire in 2007. The two tax increases would bring in an estimated $482.2 million in fiscal year 2008, giving the state a net revenue increase of $348.9 million.
Advocates on both sides of the minimum wage issue professed themselves to be less than thrilled about the piggybacking of unrelated legislative items happening in both the House and the Senate.
‘“It’s been a frustrating week for us,’” said Gregg Thompson, state director of the National Federation of Independent Business. ‘“The tax credit to businesses for health care is our number one issue. We definitely supported [the House bill] as originally written. As soon as they introduced the minimum wage we stopped supporting it. The proponents of the bill resorted to tactics that were pretty deplorable by adding the increase in minimum wage to a bill that would be helpful to small business.’”
He said the National Federation of Independent Business also opposed the Senate bill because of the inclusion of the minimum wage provision.
Chris Fitzsimon, who writes a newsletter for NC Policy Watch, alluded to a comment by a state senator that the sales tax increase ‘“was absolutely mashing the working people of this state.’”
‘“The Senate should forget about tax relief for the rich ‘— they seem to be making out OK,’” he wrote, ‘“and instead pass the House minimum wage bill to help workers instead of mashing them.’”
Thompson said both bills have a long way to go before they become public law.
‘“If the Senate bill passes with the minimum wage provision in it, it will of course go to the House,’” he said. ‘“Let me just say that I presume there will have to be a tremendous amount of negotiation between the two chambers for any increase in minimum wage to happen.’”
Senator Charlie Albertson, a Democrat who represents Duplin, Lenoir and Sampson counties, and who is a member of the Finance Committee, said he doesn’t know how the leaderships of the House and Senate plan to reconcile the two versions of the minimum wage legislation, but he’s proud to have voted for the Economic Growth and Tax Relief Act.
‘“Anytime you can promote economic growth, that’s good,’” he said. ‘“We’re trying to compete with these other states and create jobs.’”
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