From the American Revolution to the Civil War and on through the civil rights era, the city of Richmond, Virginia has continually served as a pivotal locale in our nation’s struggle for progress. Today, Virginia’s capital city is home to almost 229,000 Richmonders and is one of the state’s fastest growing localities. Richmond County’s population increased by 12% during the last decade putting it in the top 10% of counties within Virginia in terms of population growth over the corresponding time period (1,2). Steeped heavily in American history, this burgeoning city once again seems poised to grab headlines as the Virginia State legislature reviews two bills concerning the state’s first minimum wage adjustment in more than a decade.
On February 11th of this year the Virginia State senate passed a bill to gradually increase the state’s minimum wage to $15.00 an hour, a value that, based on 2019 MIT Living Wage Calculator data, would represent a living wage for approximately 90% of counties within the state. The bill passed the senate by a vote of 21-19 while an almost identical bill was passed in the Virginia House of Delegates by a vote of 55-45 on the same day. Both pieces of legislation have now gone into a reconciliation process in the General Assembly after which the bills will be sent to opposite houses for approval before becoming law. This bill would drastically shift the policy infrastructure surrounding worker’s compensation within Virginia as the state hasn’t increased its minimum wage since the federally required minimum wage was shifted in 2009. In the interim, efforts to adjust that minimum have proven unsuccessful, most notably a bill to increase the minimum wage to $11.25 an hour in 2018 (3).
Senate Majority Leader Richard L. Saslaw, a democrat from Fairfax Virginia, first introduced this bill in November of 2019. His proposal was for the state minimum wage to be increased to $10 an hour starting in July of 2020, and then be increased by $1 annually in subsequent years reaching a value of $11.50 an hour in 2023 (4). He also proposed that this wage floor be updated in accordance with the United States Average Consumer Price Index (CPI) from that point forward. This structure and timeline for the minimum wage increase met significant backlash within the state legislature as many senators feared that such drastic shifts to the minimum wage would stunt the development of Virginia’s economy (5). Interestingly enough, Virginia was ranked number one on the CNBC list of Top States for Business in 2019. CNBC’s system uses publicly available data provided by various government agencies to give states scores in several weighted categories including workforce, economy, and friendliness to business. This friendliness to business category accounts for the “legal and regulatory climates of each state, as well as overall economic freedom for businesses and individuals”. CNBC’s 2019 ranking has Virginia ranked third in the nation in this category, and it is conceivable that the proposed shifts in minimum wage policy may shift the perception of how friendly the state is to business (6,7).
In an effort to combat these fears of adverse economic impacts stemming from the minimum wage shift, many senators sought to revise various aspects of the proposed legislation. The version of the bill passed earlier this year has a more modest initial wage floor increase with the value being raised to $9.50 per hour in January of 2021 and graduated increases in subsequent years to still reach the target of $15 an hour by the year 2025. The most recent iteration of the bill also calls for the establishment of “wage regions” across the state, so that after the year 2023 the minimum wage shift will be indexed to the wage region having the highest median household income. Finally, once the wage floor of any wage region reaches $15.00 an hour the wage floors of all regions will be adjusted proportionally in accordance with the shift in CPI for the region with highest median household income (5).
The road so far for Virginia’s minimum wage increase highlights some of the more common complexities in adjusting policy around worker’s compensation. Concerns of insufficient granularity in larger, more varied, geographies as well as detrimental impacts on employment and business development often stymie the implementation of substantive policy surrounding the minimum wage. However, the legislators seated in Richmond have demonstrated that these roadblocks shouldn’t be enough to stop change in its tracks. Effective policymakers work to account for these uncertainties while pushing for progress on behalf of their constituents.