At a time when Alabama’s unemployment rate is at an all-time low and world-class companies are selecting the state to lay down roots, Alabama is making headlines for entirely different reasons. Articles in The New York Times and The Wall Street Journal have weighed in on the statewide minimum wage law.
The hook in the mouth of the media was the recent decision by a panel of the Eleventh Circuit Court of Appeals to reinstate a lawsuit that could allow the City of Birmingham to set its own minimum wage. The panel in the case cited Alabama’s “racial history” to question legislators’ motives in standardizing a statewide minimum wage in 2016. A request for review to the full Eleventh Circuit Court of Appeals is pending.
This has led some pundits to misconstrue the issue. Take for example the NYT op-ed by Lucas Guttentag, which maligns “predominantly Southern and border states” for preventing localities from raising their minimum wage. Such guilt by regional association is not only a meaningless ad hominem argument, the characterization itself isn’t true. Today 25 states—half the country—have enacted uniform minimum wage laws. Even if we allow Pennsylvania, Michigan, and Idaho to count as “border states” with Canada, how do Utah, Iowa, Rhode Island, and Oregon fit the suggested mold?
The fact is there are good reasons to oppose local minimum wage ordinances. For one thing, there is a dearth of evidence that such hikes combat poverty. To the contrary, rising labor costs tend to have unintended consequences for the same workers they are meant to help. Hiring slows, benefits are cut, and fewer hours are offered to employees. When passed only locally, a move of one or two miles can take a business outside the new wage jurisdiction, resulting in widespread business flight.
Workers generally don’t see better paychecks, but all local consumers lose to inflation, particularly in food prices. Sadly, where there are more low-wage workers, minimum wage-sparked price increases are both larger and more rapid.
This isn’t just economic theory. Seattle, a major city that recently passed a substantial minimum wage increase, has encountered significant problems. A University of Washington study found no windfall for workers. Instead, pay increases were offset by reductions in employment and hours.
Precisely such reasoning led Catherine Pugh, the African-American mayor of Baltimore, to veto a minimum wage ordinance for that city made up of a majority African-American population. She concluded it would be low-income workers who suffered most as jobs and tax revenue departed.
Far from acting with some form of antiquated racial animus, the Alabama Legislature chose to protect the state from future economic harm. Without a uniform minimum wage law, we could have seen passage of over 500 different local ordinances. This would add devastating levels of complexity to business operations and suppress economic growth in the state.
As Alabama’s second largest employer, the restaurant and foodservice industry supports the State of Alabama’s stance and plans to join representatives from other job creators in the state in asking the full Eleventh Circuit Court of Appeals to review the panel’s decision. While a patchwork of local minimum wage laws would be a disservice to our employees and communities, the rising tide of the state’s economy is steadily bringing greater prosperity to all.
Angelo Amador is Executive Director of the Restaurant Law Center, which supports the Alabama Uniform Minimum Wage and Right to Work Act. This bill blocks cities from setting individual minimum wage rules. The Restaurant Law Center is a 501(c)(6) legal entity affiliated with, but separate from, the National Restaurant Association. The Center’s goal is to promote pro-business laws and regulations that allow restaurants to continue growing, creating jobs and contributing to a robust American economy.