Louisiana needs a raise

Louisiana needs a raise

Louisiana is one of only five states without a state minimum wage, meaning many workers in our state are stuck at the $7.25 federal minimum wage — a rate that has not been raised since 2009. Fortunately, two bills pending in the state Senate would raise the minimum wage to $15 an hour: Senate Bill 7, which would raise the wage gradually until 2026; and Senate Bill 49, which would make the increase immediate starting on Jan. 1. LBP’s Jackson Voss explains in a new blog how both of these bills would bring immediate and long-lasting benefits to a large segment of the state’s workforce that has been struggling for years. 

An analysis by the Economic Policy Institute shows that nearly 1 in 3 Louisiana workers – about 629,000 people – would get a pay raise under Senate Bill 49, which makes the $15 an hour wage effective on Jan. 1. Senate Bill 7 would raise the minimum wage to $11 an hour in 2022, and provides for additional increases of $2 an hour every other year until it reaches $15 an hour in 2026. EPI estimates that this would eventually affect 33.5% of Louisiana workers. This includes people making less than $15 an hour who would see an immediate raise, and people making slightly above that rate who would see a wage increase thanks to a higher wage floor.

Black lawmakers draw a line in the sand
Lingering anger over a legislator’s attempt to ban the teaching of “divisive concepts” involving institutional racism and sexism is threatening to derail a separate effort to overhaul Louisiana’s tax structure. As The Advocate’s Tyler Bridges reports, the Legislative Black Caucus is refusing to vote for any tax bills that require a two-thirds supermajority to pass until Rep. Ray Garofalo – who authored the racially-charged bill – is removed as chairman of the House Education Committee. Without support from Black lawmakers, House GOP leaders lack the votes to pass their tax measures. 

State Rep. Ted James, D-Baton Rouge, the chair of the Legislative Black Caucus, said he has met “too many” times over the past week to discuss concerns about Garofalo – and racially-insensitive comments by other White members – with Schexnayder, R-Gonzales, and House Speaker Pro Tem Tanner Magee, R-Houma, to no avail. Now the caucus is leveraging its influence on tax votes, which require at least 70 votes, a two-thirds majority, to win passage. “All 70-vote bills are where our caucus can show our concern and displeasure,” James said in an interview. He said members of the Black Caucus are also trying to win support for their own tax bills that would help the poor.

Budget caps hurt people
Louisiana has had a constitutional cap on state spending since the mid-1990s. Last year, when the Capitol was mostly empty due to the pandemic, the Legislature voted to change how the spending cap is calculated in ways that would force the state to make damaging budget cuts even in years when there is enough revenue to fund essential services. Fortunately, Louisiana voters saw through the gambit and rejected the new spending cap by a 56%-44% margin. But the sponsor of that bill isn’t giving up. House Bill 276 by Rep. Beau Beaullieu is virtually identical to the bill that voters turned away last year, and it is making its way through the Legislature. The Center on Budget and Policy Priorities’ Samantha Waxman explains why restrictive spending caps are bad policy. 

They force cuts over time to things that people need, like health care, infrastructure, and education. Colorado’s experience with its “Taxpayer Bill of Rights” (TABOR), a particularly harsh tax and spending limit, explains why. Even as the state’s population has grown, TABOR’s rigid spending limits and voter requirement to raise taxes have kept it from making needed investments that ensure broadly shared prosperity. Colorado ranks 44th among states for school funding as a share of the state’s economy. And the Colorado Department of Transportation’s ten-year, $5 billion plan has less than half the resources needed to complete it. 

Taking away unemployment benefits
The COVID-19 pandemic has taken a devastating toll on Louisiana workers, and widened the disparities between those struggling and everyone else. People from every walk of life have experienced job loss and economic uncertainty. That’s why enhanced federal unemployment benefits need to remain in place as long as the economy – and people – are still recovering. Unfortunately, the Louisiana chapter of the National Federation of Independent Businesses is trying to add another hardship for unemployed workers in the state by taking away the $300 benefits that laid off workers have been receiving per week from the federal government. The Baton Rouge Business Report’s Stephanie Riegel reports

“What South Carolina did is outrageous,” LBP Executive Director Jan Moller says. “It’s a mean-spirited idea that should go absolutely nowhere and businesses that cannot find workers should look at what they are paying workers.” Moller says the issue is not as simple as wage rates alone. Part of the problem is that people still have pandemic-related responsibilities that keep them from joining the workforce, whether because they have kids at home or sick relatives to care for. “I also think the pandemic has given a lot of people an opportunity to retrain for other jobs, so people who were in the service industry may have reconsidered the service industry as a career,” he says. “So people are reevaluating what they want to do but I also think the problem in Louisiana has not been a lack of jobs but a lack of good paying jobs. The answer is not to cut unemployment benefits but to raise the minimum wage.”

Number of the Day
– Effective tax rate that Amazon paid from 2018 through 2020, compared to their nominal rate of 21%. Amazon recently announced that it is opening a $200 million fulfillment center in Shreveport. (Source: Institute on Taxation and Economic Policy via The Center Square).