Apr 7, 2007

More Increases Coming

We had to find a way to stop this thing. So we raised the minimum wage. It was something very un-Republican that we did, but we had to do it.

With these words, state Sen. Gerald VanWoerkum, R-Muskegon, recounted why the Michigan Senate voted to boost Michigan’s minimum wage, for the first time in nine years, to one of the highest in the country.

A week later, the Michigan House of Representatives followed suit and sent the bill to Gov. Jennifer Granholm, who signed it March 28. The new law will raise the minimum wage from $5.15 to $6.95 Oct. 1, to $7.15 July 1, 2007, and to $7.40 a year later.

The “thing” the Republicans wanted to head off was a petition drive that would have put a proposal on the November election ballot to raise the minimum wage to $6.85.

So why would the Legislature vote for $6.95, 10 cents more? The purpose was to remove the incentive for voters to support the ballot initiative.

Besides raising the minimum wage, the ballot initiative contained an “inflator” that would have tied it to the consumer price index ¬– and would have made that provision part of the state Constitution, untouchable by lawmakers. That terrified them.

State Rep. Geoff Hansen, who represents three rural western Michigan counties that grow fruit and vegetables, said: “We had a couple of choices. Let the ballot initiative pass and lose all control, or do this, almost as bad, and at least be able to control where we’re at.”

Opinion polls indicated overwhelming support for increasing the minimum wage, which had been at $5.15 an hour for nine years. The U.S. Congress “has no plans to increase the minimum wage,” according to U.S. Rep. Peter Hoekstra.

All three of the Republican politicians spoke to farmers March 10 during the Asparagus Summit meeting in Oceana County.

“You guys don’t have a clue about what you’d be getting into,” said another speaker, Alan Schreiber, administrator of the Washington Asparagus Commission. “We have indexing in Washington, as does California and Oregon. Indexing will kill your industry. It has made mechanization our No. 1 priority.”

About half of the cost of bringing asparagus to market is labor, he said.

“We are the most labor-intensive crop. We’re the canary in the coal mine on labor issues.”

Kent Karnemaat, the Fremont, Mich., vegetable grower who is president of the Michigan Vegetable Council, said he “is having trouble finding the positives in the whole thing.”

While a case could be made for raising the minimum wage, which had not been increased in nine years, he was not impressed with “how much and how we got there.”

No provision was made for a period for “training wages” for youthful workers who want summer work, providing a disincentive to hire them.

“In general, people view our labor force as unskilled, but that’s not true today,” he said. “They have a lot of skill and a lot of talent. They are not just picking vegetables, and they are often making considerably more than the minimum wage.

“But during slow periods, we pay minimum wage, as a service to our workers rather than providing no work at all. This higher minimum may result in less continuity in farm work.”

Competitively, Karnemaat said, Michigan growers will be challenged.

“Other states with high labor rates aren’t neighboring states,” he said. “We’ll be at a disadvantage in our region.”

He said raising the minimum wage would likely put pressure on employers to raise wages for all workers.

Mike Wittenbach, Belding, Mich., president of the Michigan State Horticultural Society, said the increase would not impact his business directly, since workers are paid more than the new minimum wage. But indirectly, it will have impact. The packer of his apples may need to boost wages in the packinghouse, and that will affect his net return.

“I’m thankful it’s not tied to the rate of inflation,” he said, noting he believed the legislators when they described their motivation in boosting the minimum wage.

Relatively few Michigan workers are paid the current minimum wage. U.S. Bureau of Labor Statistics estimated that among 2.9 million Michigan hourly workers in 2004, 90,000 were paid at or below the minimum.

Still, polls indicated that more than three-quarters of Michigan voters approved increasing the minimum wage, and the petition drive to collect 318,000 valid signatures of registered Michigan voters by July 10 had the backing of labor unions and the Michigan Democratic Party.

The National Federation of Independent Business opposed the minimum wage hike, noting that since Michigan is “rock bottom in many rankings of business climate when compared to other states, any state ballot proposal that would hike Michigan’s minimum wage sends another negative message to job providers and boosts costs to small business.”

Rep. Hoekstra echoed those sentiments. Michigan ranks 47th in creating new jobs, he said, adding that the state’s Department of Environmental Quality “makes it a tough place in which to do business” and that “we can be successful here, but we can’t be ruled by the unions.”

He said United Automobile Workers’ contracts have given the auto industry its problems.

“The ‘good things’ UAW did for Flint and Detroit, the same strategies used to build that are being used to build the state. Who wants to live in Detroit or Flint?” he asked.

NFIB saw the ballot initiative as the main threat for raising the minimum wage, and did not anticipate legislation, especially from Michigan’s Republican-controlled Legislature.

In 2004, Florida and Nevada residents voted by about two to one to increase their state minimum wages to $6.15. Rep. Hansen indicated the virtual assurance the same thing would happen in Michigan spurred the Legislature to pre-empt the initiative. Schreiber agreed that raising the minimum wage is so politically popular, “if you do anything to undercut it, you’ll be killed politically.”

John Freeman, a former state representative from Madison Heights, directed the minimum wage campaign, called Michigan Needs a Raise. At the start of the petition drive, he said:

“Unfortunately, there’s almost no movement in Washington, D.C., to raise the minimum wage. Congress doesn’t see the need or the desire to raise it, and, frankly, the Michigan Legislature is not interested in raising the minimum wage either, under the leadership of the Republican Party. And so we have to go a different route.”

Results came sooner than expected and in an unlikely manner. Detroit newspapers labeled the Senate’s vote “a stunner.”