Minimum wage battles are shifting to the states

Chances appear slim for a vote to increase federal minimum

WASHINGTON — President Obama pledged in his 2013 State of the Union message to pursue a minimum wage increase nationwide, an issue all but forgotten since his first White House run. Declaring that “no one who works full time should have to live in poverty,’’ Obama called for boosting the hourly minimum to $9.

Nearly a year later, that goal remains unfulfilled, derailed by a slowly recovering economy and opposition from Republicans in Congress. So with the federal rate stuck at $7.25 and few prospects for change, the real focal point for wage battles in 2014 is moving to individual states.

Twelve states and the District of Columbia will be considering minimum wage hikes this year through legislation or ballot initiatives. That includes Massachusetts, where advocates are trying to increase the minimum wage from the current $8 to $11 an hour over three years.

“The longer Congress is gridlocked on this issue, the more states are going to act,” said Paul Sonn, counsel at the National Employment Law Project, an advocacy group in New York.

Some states are already boosting their minimum wage. On Jan. 1, low-wage employees in Connecticut and Rhode Island were among workers in four states who were granted minimum hourly wage increases of up to $1, to levels ranging from $8 to $8.70. In nine states, smaller, automatic minimum wage increases linked to inflation went into effect.

Weymouth resident Patricia Federico, who works for $9.10 an hour part time at a movie theater, said her low wage has prevented her from buying back her foreclosed home. It’s also made the bank refuse to work with her in her efforts, she said. “The majority of us that earn minimum wage are not lazy,” said Federico, an activist campaigning for change. “We’re just trying to make ends meet.”

Wages have surged to the national agenda as a strong stock market and better business climate have continued to concentrate American wealth in the top 1 percent of earners. Of the hourly workforce, 3.6 million workers, or 4.7 percent, earned wages at or below the federal minimum level in 2012, according to a Bureau of Labor Statistics report released in 2013. About half are less than age 25, and three-fifths worked in food preparation or other service jobs.

Democrats are planning to make wage disparities and opportunities for the middle class a major issue in the 2014 congressional elections. They believe that strategy can galvanize low-income voters, as well as portray Republicans as insensitive and out of touch.

Republicans in Congress argue that hiking the minimum wage is counterproductive because rising costs will lead businesses to hire fewer people. Low-wage workers, they say, end up being hurt the most. Last year, House Speaker John Boehner said that when rungs are taken away on the economic ladder, “you make it harder for people to get on the ladder.”

In November, Obama threw his weight behind a proposal that would raise the federal minimum wage to $10.10 over two years and then index it to inflation. Public opinion is on the side of Democrats. By a 71 to 27 percent margin, American voters support raising the minimum wage, according to a Quinnipiac University poll released Wednesday.

Although some small businesses back a higher wage, opposition is strongest from the retail and business industries. Jon Hurst, president of the Retailers Association of Massachusetts, said increasing the minimum wage would raise the cost of doing business, as well as the cost of goods and services. Consumers, he said, no longer have “very much loyalty” and would turn to businesses in New Hampshire or to online vendors with cheaper prices.

“You create a disincentive for Massachusetts consumers to spend money in the economy,” he said.

Economists have not reached a consensus on the effects of a minimum wage increase. Some studies have reported that higher minimum wages lead to higher unemployment, while others report no significant effect. Some critics say wage increases force employers to cut costs in other ways, leading to fewer hours and jobs. The result, they argue, hurts the workers the wage increases aim to help.

“What you see is that opportunities for people who are less experienced tend to be reduced,” said Michael Saltsman, a research director at the Employment Policies Institute.

Nonetheless, 21 states and the District of Columbia already have minimum wages that are higher than the national level. Only five states, all of them in the South, do not have minimum wage laws.

In Massachusetts, the state Senate passed a bill that would boost the minimum wage from $8 to $9 and an additional dollar each year until 2016, up to $11. After that, the rate would increase automatically to keep pace with inflation. It is unclear when the Massachusetts House will take up the legislation.

Governor Deval Patrick, who backed Obama’s proposal to increase the federal minimum wage, indicated he favors a state increase. The state’s current minimum wage is one of the most generous in the country, but the bill’s sponsor, state Senator Marc R. Pacheco, said employees working full time on that salary cannot meet basic needs. Most of them hold two or three minimum-wage jobs, the Taunton Democrat said.

“The economics of it don’t work for the vast majority in our economy,” said Pacheco, a steady ally of organized labor.

A separate initiative spearheaded by advocacy groups would raise the state’s minimum wage to $10.50 and tie automatic future increases to inflation. On Jan. 1, it was sent to the state Legislature for action. If the Legislature does not adopt the measure, supporters must collect an additional 11,485 signatures from registered voters by July to place it on the November election ballot, state officials said.

Much of the activity around wage increases is a result of fallout from the recession, but specialists say states tend to ratchet up minimums in years after Congress raises the federal level. Congress last lifted the rate to $7.25 an hour in 2009.

“Once Congress enacts an increase, it starts picking up in the states,” said Jeanne Mejeur, a senior researcher at the National Conference of State Legislatures. “There’s been a groundswell.”