Louisiana Senate committee advances $15 minimum wage; freezes employer unemployment taxes

By David Jacobs | The Center Square

A Senate committee advanced a proposal Wednesday to raise Louisiana’s minimum wage to $15 an hour.

The Senate Labor and Industrial Relations Committee also moved instruments that will extend the suspension of state laws that trigger higher taxes on employers and lower worker benefits when the unemployment trust fund’s balance is low.

Senate Bill 49 also calls for the minimum wage to be increased each year by the percentage increase in the federal government’s Consumer Price Index for All Urban Consumers.

Louisiana doesn’t have a state minimum, so the federal wage floor of $7.25 an hour applies. Sen. Troy Carter, the New Orleans Democrat who authored the bill, said it would help many residents climb out of poverty and benefit the economy by giving low-wage workers more money to spend.

“Working families deserve better,” Carter said.

Twenty-nine states have a higher wage floor than the federal minimum, according to information presented Wednesday.

The minimum wage has lost 20% of its purchasing power through inflation since it was last raised, said Jan Moller with the Louisiana Budget Project. If the minimum wage since 1968 had kept up with productivity, it would be more than $22 now, he said. Arkansas, which recently raised its minimum wage to $11 an hour, had an unemployment rate of 4.4% in March, three percentage points lower than Louisiana’s, he said.

If you force businesses to pay higher wages, rather than letting the market dictate wages, however, companies will hire fewer people, business advocates said. The change also could encourage employers to replace workers with technology and lead to higher prices for consumers, meaning the benefit to low-wage workers would be temporary, said Jim Patterson with the Louisiana Association of Business and Industry.

“This does not particularly help the people it’s intended to help,” Patterson said, adding he believed the Earned Income Tax Credit was a better tool to help low-income workers.

Dawn Starns McVea, Louisiana state director for the National Federation of Independent Business, said 92% of her members oppose the change.

The committee advanced the bill on a 3-2 party-line vote.

The committee objected without objection Senate Concurrent Resolution 3Senate Concurrent Resolution 5 and Senate Bill 89. Taken together, the instruments suspend laws that would lead to higher taxes on employers and reduced benefits for unemployed workers in order to replenish the unemployment insurance trust fund, which has been tapped out by unprecedented demand during the COVID-19-related downturn.

Legislative leaders and Gov. John Bel Edwards have said they plan to put some of the state’s estimated $3.2 billion allocation from the federal American Rescue Plan into the trust fund.