Attaching a COLA to a minimum-wage increase allows Louisville politicians to avoid accountability for future hikes
(Note: This release contains a corrected phone number from today's email version.)
(LOUISVILLE, Ky) – Instead of considering policies that would make Kentucky’s largest city a mecca of economic growth, a majority of Louisville Metro Council members are resorting to a policy that would raise the minimum wage and harm the very people they intend to help.
While the Democratic majority on the council has apparently reached an agreement with Mayor Greg Fischer to raise the city’s minimum wage from the current $7.25 rate to $8.75 per hour, this should not be viewed as some great compromise or example of strong leadership.
“It’s neither,” said Jim Waters, president of the Bluegrass Institute for Public Policy Solutions, Kentucky’s first and only free-market think tank, which has successfully led efforts during the past few years to stop Frankfort’s big-government politicians from increasing the minimum wage statewide.
“We call on Mayor Greg Fischer to veto any proposal that would tell business owners what they must pay their employees,” Waters said. “If the mayor caves on this, it will be a demonstration of the weakest leadership possible as it will place populism over principle and harm the chances that Louisville’s young and inexperienced workers can get meaningful employment that will give them the skills needed to begin a successful career in an increasingly competitive workplace. With his business background, the mayor ought to know better than to participate in this kind of economic nonsense.”
In addition, the Institute calls on the mayor to veto any minimum-wage increase that ties the rate in future years to a cost-of-living adjustment (COLA). This would only serve to drive up the wages small businesses are forced to pay their youngest workers in years to come – without so much as a vote or an ounce accountability by the politicians who support this poor policy.
“We believe that tying a COLA to the Consumer Price Index – which is what most of these measures tend to do – overly inflates the cost of living and the rate of inflation,” Waters said.
Today’s blog posting here offers several reasons to be concerned about attaching a COLA to any kind of already ill-advised minimum-wage increase.
We urge our Louisville supporters to contact the Louisville Metro Council at (502) 574-1100 and the mayor’s office at (502) 574-2003 and urge them to oppose a minimum-wage increase along with the embedding COLAs that would automatically increase the rate in future years without requiring so much as a vote.
“While Louisville already is at an economic disadvantage with Indiana – the state right across the Ohio River – in terms of a lack of a business-friendly tax policy, right-to-work law or stellar educational options for its poorest citizens, forcing a minimum-wage increase on its business community will only add to its inability to compete for jobs and economic opportunity in the future,” Waters said.
In a Bluegrass Institute report to be released in January on the impact that raising the minimum wage statewide would have on Kentucky’s economy, Western Kentucky University economist and Bluegrass Institute Scholar Brian Strow, Ph.D., notes the makeup of the segment of the minimum-wage workforce:
Nearly a quarter are teenagers
More than half are between the ages of 16 and 24
Almost two-thirds are part-time workers
Only 15 percent are breadwinners trying to support a family
About 45 percent are in occupations related to food-service preparation and serving.
“The groups most likely to be put out of work by minimum-wage increases are the very people whom the policy is supposed to help: young people and the working poor,” Strow concludes.
For interview or comment, contact Bluegrass Institute Jim Waters @ (270) 320-4376 or jwaters@freedomkentucky.com.