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Minimum wage bill clears Kentucky House

Published 8:51 am Friday, January 31, 2014

A bill that would gradually raise Kentucky’s minimum wage from $7.25 to $10.10 over a three-year period cleared a House committee Thursday, despite criticism that such an increase would hamper businesses.

House Bill 1 would affect some 30,000 Kentuckians earning minimum wage, said House Speaker Greg Stumbo, the bill’s sponsor. The House Labor and Industry Committee passed the bill 15-1 with Rep. Adam Koenig, R-Erlanger, voting against it. Two others, Rep. Lynn Belcher, R-Marion, and Rep. Regina Bunch, R-Williamstown, voted “pass.”

The state’s minimum wage is currently $7.25 an hour, which would generate $12,132 in annual take home pay for a person working 40 hours per week in Fayette County, Stumbo said. If passed, HB 1 would eventually raise that hypothetical employee’s wages to $16,209.

While some opponents have claimed raising the minimum wage would only affect younger workers, Stumbo quoted a study showing 70 percent of those earning minimum wage or less are women and more than half are older than 22.

HB 1 would also address pay equity for women and raise the minimum wage threshold from companies with gross sales totaling $95,000 to $190,000. That means businesses with less than $190,000 in sales would not be required to pay a minimum wage.

“Ladies and gentlemen, I would submit to you that the people affected by this bill, by and large, are not able to come to Frankfort and lobby you today like some who will stand in opposition because they toil at the jobs that they’re given for minimum wage, barely a wage of subsistence,” Stumbo, D-Prestonsburg, said.

But opponents of the bill said raising the minimum wage to $10.10 would add another burden to businesses’ bottom lines. 

Tod Griffin, president of the Kentucky Retail Federation, said small businesses face single-digit profit margins, and the proposed increase would hamper employment opportunities, “especially for those with little skills or those who are just starting out in the workforce.”

Lee Greer, president of Greer Companies and an owner of Cheddar’s restaurants, said HB 1 would cause his company to default on more than $120 million in debt and bankrupt his business. Federal and state taxes have risen 8 percent since last year, he said.

Others would face similarly bleak outlooks, Greer said.

“Nine out of 10 restaurants close in their first three years,” he said. “… He’s going to close the door sooner, and the very people you’re trying to help, who we are trying to help, just lost their jobs.”

Stumbo, however, countered that sudden, unexpected costs such as spikes in prices for gasoline and goods do more damage to businesses than an incremental increase in the minimum wage. He said he would gladly buy Greer’s company if it went bankrupt because of HB 1.

Rep. Tim Couch, R-Hyden, said he voted for the last minimum wage increase in 2007, even though he has lost three employees at his grocery store since then.

He voted in favor of HB 1 Thursday, but he predicted further staff reductions if the legislation passes.

“Right now I’m at 19 (employees),” Couch said. “When this passes, I’ll be down to 15.”

After the meeting, Stumbo said HB 1 would come to the floor early next week. He expects the bill will pass the chamber, but its fate remains uncertain in the Senate. Stumbo noted Senate President Robert Stivers voted in favor of the last minimum wage increase.

“I would hope that they would not kill the bill just because I happen to be the sponsor,” Stumbo said.

With President Barack Obama proposing a similar federal minimum wage of $10.10, Stumbo said he doesn’t expect HB 1 will face resistance because of the president’s push.

“I don’t believe anybody can reasonably argue that it’s going to happen at the federal level, so I think we need to give Kentucky workers this small raise, if you will, to reward them for the hard work they do everyday,” Stumbo said.