Indiana Senate Democrats to Call For Minimum Wage Increase

September 8, 2006; 06:42 AM
INDIANAPOLIS – In an effort to improve the lives of Indiana’s working families and stimulate the economy, today Senate Democrats announced plans to raise the state’s minimum wage to $7.25 an hour.

Indiana is currently one of 22 states that match the federal minimum wage of $5.15 an hour, a rate that has not increased since 1997. According to the U.S. Bureau of Labor Statistics, in 2005 approximately 37,000 Hoosiers were employed in jobs paying at or below that standard.

“With all of Indiana’s natural assets, our greatest strength remains our people,” said State Senator Tim Lanane (D-Anderson). “Our workers are the driving force behind our economy and we need to do a better job of supporting them – and that means paying them a decent wage.”

Under the Senate Democrats’ proposal, all Indiana workers currently making between $5.15 and $7.25 an hour that are covered by either the federal government’s Fair Labor Standards Act or Indiana’s Minimum Wage law (IC 22-2-2) would see their wages increase. The change would impact an estimated 143,000 Hoosiers.

The federal minimum wage law includes employees of companies with revenues of at least $500,000 a year, small businesses engaged in interstate commerce, domestic workers as well as employees of federal, state, or local government agencies, hospitals and schools. Indiana’s law applies to employees not covered by the federal statute and employers with two or more employees.

“Raising the minimum wage is not an unreasonable request. Over the last decade, it’s the only thing that hasn’t gone up,” added Lanane, who proposed a similar measure last session. “You can barely buy lunch at a fast-food restaurant for $5.15 anymore, so how can we expect anyone to be able to survive on it?”

At the current rate, an individual working a full-time job earns about $10,700 a year, which is $5,900 below the federal poverty level for a family of three and $9,300 below the poverty line for a family of four.

As Congress continues to debate increasing the national wage rate to $7.25 an hour, 20 states and the District of Columbia have already enacted their own higher minimum wages, with two more going into effect in 2007. Several cities have also enacted minimum wage rates higher than the federal rate in the last few years.

“Raising the minimum wage will help to lift a lot of people out of poverty, reduce some of the burden on government, grow the economy and could even create a ripple effect in which all Hoosiers could earn more,” said State Senator Frank Mrvan (D-Hammond).

“And by looking at the experiences in those states that have already raised their minimum wages, we can expect it to help spur job growth, especially in our small business sector,” added Mrvan.

According to a 2006 Fiscal Policy Institute study, states with higher minimum wages saw stronger job growth in small businesses than states with the $5.15 rate. In fact “the number of small businesses across the economy with fewer than 50 employees grew by 5.4 percent from 1998 to 2003 in the higher minimum wage states, compared to a 4.2 percent increase for the balance of the states.”

Similarly, a study released by the Economic Policy Institute in 1998 proved that the federal minimum wage increases in 1996 and 1997 led to increased worker productivity, reduced training and recruiting costs and improved employee attendance and morale.

“There doesn’t appear to be a downside to this,” said State Senator Karen Tallian (D-Portage). “Raising the minimum wage has proven to be a great economic development tool, and with Governor Daniels’ interest to raise the income level of Indiana workers, I think this will have and should have bi-partisan support.”

Senate Democrats also announced plans to introduce legislation to create new tax credits for companies that create in-house child care centers. Under the Senate Democrat plan, businesses would be eligible for tax credits equal to the lesser of $20,000 or 40 percent of the expenses related to its set-up. Over the last six years, only eight businesses in Indiana have established child care centers.

“The cost of child care is a big hurdle to many families’ financial success. Many times a parent is working just to keep up with the costs of day care – and that doesn’t allow our families to get ahead,” said Tallian. “By creating this incentive hopefully more Indiana businesses, especially small businesses, will be in a position to offer child care options – and that’ll not only help working families, but employers as well.”

According to a December 2004 study released by Cornell University, employee absences caused by child care breakdowns cost American businesses $3 billion annually. The report also found that 54 percent of employers reported that providing child care services positively impacted absenteeism rates, reducing the number of missed days by as much as 30 percent, while also decreasing turnover rates by as much as 60 percent.

“Over the last decade we’ve spent a great deal of time developing programs to improve Indiana’s business climate so we could grow and attract more jobs here,” added Mrvan. “Now, it’s time we take some additional steps to raise income levels and improve the quality of life Hoosiers enjoy.”

Earlier this week Senate Democrats announced plans to introduce legislation to raise the state’s workers compensation levels and require Indiana businesses to notify their employees 60 days prior to any layoffs or closures. These initiatives will all be offered by the caucus during the 2007 session of the Indiana General Assembly which convenes in January.

For more information on these proposals, other business before the Indiana State Senate or the Senate Democrat Caucus visit www.senatedemocrats.IN.gov or call 1-800-382-9467

Source: Senate Democrat Caucus