Minimum-wage stalemate: Will Senate accept House indexing offer?

This is one in a series of articles funded by a grant from the Northwest Area Foundation.

The debate over increasing Minnesota’s minimum wage came back to life on Tuesday after two weeks of inaction, but DFL lawmakers in control of the House and the Senate still have significant disagreements over everything from policy to timing.

Some legislators in the House want to see a minimum wage bill passed well before the end of session, fearing late negotiations over a bonding bill — which requires Republican support to pass – could complicate the minimum wage debate. 

In a packed Capitol hearing room filled with state union members, House lawmakers on Tuesday made the latest offer on increasing the state’s current $6.15 hourly minimum wage for large employers. On major items, there’s little movement.

The House still wants to see a $9.50 minimum wage increase starting in 2016, with indexing of the wage to inflation starting in 2017. But House conferees want to use the so-called “implicit price deflator” to index the wage instead of the standard Consumer Price Index. 

In non-economist terms, that would mean a lower, more stable measure of inflation going forward. House members have also offered to put a 3 percent cap on how much the minimum wage could increase in any given year.   

Indexing has been a sticking point in the negotiations so far, with senators offering to meet the House at a $9.50 level but saying they don’t have the votes to also index the wage to inflation. Last session, DFL lawmakers stalled on a minimum wage deal, with House members pushing for  $9.50 and senators backing an increase to $7.75. Many of the state’s workers make the federal minimum wage of $7.25 per hour.

“It’s difficult at this point to see getting to a minimum wage bill that doesn’t have some kind of indexing in it,” DFL Rep. Ryan Winkler, the author of the House minimum wage bill, said. “Once you pass a strong minimum wage, establish $9.50 an hour as a floor for wages in this state, the very next year it starts to decrease and go down.”

Senate needs 34 votes

The new offer from the House makes a few other concessions. It would eliminate a 40-hour workweek for agriculture employees, which Winkler said was a major provision for the House. The proposal would also define small businesses as those making up to $500,000 in gross sales (the threshold in current law is $625,000). Those businesses could pay a minimum wage of $7.75 by 2016. The same rate would be applied to the training wage.

Without throwing cold water on the offer, senators said they’d review the proposal and come back with a response later in the week.

“There’s some definite compromise in terms of the agriculture workers, which our members will appreciate,” Senate Deputy Majority Leader Jeff Hayden said. He said staff plans to research the implicit price deflator before presenting it to the full Senate DFL caucus at a Wednesday night meeting.

“This is really talking to the members of the caucus that have some heartburn about it and really getting an understanding of what they want to do,” he said.

Hayden acknowledged there are about eight to 10 senators who are concerned about indexing the wage to inflation.

“Today there has been close to that many members who said that that was something they weren’t interested in, was an inflator,” he said. “It was clear that we didn’t have 34 votes for the last proposal, so I’m trying to see if we can get 34 votes for this one, or come back with a proposal with something they can vote for.”

House, unions want vote soon

For some legislators, timing is everything.

Winkler said he would like to see a bill passed before lawmakers start negotiations on a bonding bill, which may be the last thing lawmakers take up this year.

Legislative rules require a three-fifths majority to pass a bonding bill — 81 representatives and 41 senators — meaning it’s one of the few places the Republican minorities have leverage in negotiations. Winkler and others fear if a resolution on minimum wage is delayed long enough, the GOP could try to leverage bonding votes for some kind of deal on minimum wage.

But Senate Majority Leader Tom Bakk sees less urgency in the timing. No matter when the minimum wage bill passes this session, the law won’t kick in until Aug. 1, he says.

“We had hoped to resolve that in the first couple of weeks. That didn’t get done, and now I think it’s probably on the back burner as we deal with the more immediate pressing things of the committee deadlines,” Bakk said. “Certainly the governor wanted a tax bill by a certain date, and now all the committees are bumping up against deadline, so now I think the emphasis is on the most urgent things that are sensitive to timing.”

Meanwhile, public pressure at the Capitol is intensifying. AFSCME Council 5, the union representing state employees, flooded the Capitol complex Tuesday and rallied in the rotunda for an increase in the wage.

It’s the top priority for unions in the state this session, and they’ve been pressuring senators hard.  They filled the minimum-wage committee room and packed the hallway just outside the door.

“This is a start for a constructive discussion with the Senate on the question of indexing and the other provisions,” Winkler said. “We are trying to address some of their substantive and legitimate concerns on aspects of this bill while not at the same time getting rid of the indexing provision, which we think is crucial to this bill being successful.”