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House rejects bills to limit minimum wage increase 

click to enlarge ANOTHER DEFEAT: For Rep. Robin Lundstrum. - BRIAN CHILSON
  • Brian Chilson
  • ANOTHER DEFEAT: For Rep. Robin Lundstrum.

Two bills sponsored by Rep. Robin Lundstrum (R-Elm Springs) to undo substantial portions of the minimum wage hikes approved by voters in November were voted down easily Monday in the Arkansas House of Representatives.

Lundstrum said after the votes that she does not plan to make further efforts on the issue this session.

In 2018, 68 percent of Arkansas voters backed a ballot initiative that increased the state minimum wage to $9.25 on Jan. 1, 2019 and will increase it again to $10 in 2020 and to $11 in 2021. Lundstrum's bills would create exemptions to the two wage hikes that are yet to come. House Bill 1752 would exempt businesses with fewer than 20 employees, nonprofits with an operating budget under $1 million, and certain nonprofits that provide services for people with developmental disabilities. House Bill 1753 would exempt any employee under the age of 19.

For those groups exempted, the bills would freeze the minimum wage at the current level of $9.25, blocking the coming raises to $10 and $11.

According to analyses by Arkansas Advocates for Children and Families, the bills would exempt more than 84 percent of businesses in the state and impact tens of thousands of workers.

The measures needed two-thirds approval in both the 100-member House and the 35-member Senate in order to alter a voter-approved initiated act. HB 1752 fell with 34 voting for the measure, 42 against and 10 present. HB 1753 tallied 29 votes in favor, 45 against and 9 present.

When presenting the legislation, Lundstrum told the House that her bills were an effort to protect nonprofits, small businesses and young employees from “unintended consequences.” She argued that workers 16-18 years old would have trouble getting hired at a higher wage and that nonprofits and small businesses could face financial trouble if forced to pay the minimum wage approved by voters.

Regarding the vote for the wage hikes in November, she said, “just like all good intentions, things happen.”

In speaking for HB 1753, she told the story of her own first-time job at Western Sizzlin’. “When you’re 16, you deserve a chance at that first-time job and you’re not going to get that when the wage goes up to $10 or $11,” she said.

Speaking for HB 1752, Lundstrum told the House that nonprofits “desperately need our help. … Our Boys and Girls clubs are directly impacted and they’re looking at cutting hours.” She said that the Small Business Association and the Chamber of Commerce “look after our small businesses just like we do. Our small businesses are the heart of our downtowns and our business corridors.” She also trumpeted the bill’s exemption for fee-for-service providers of services for the developmentally disabled.

She noted a separate bill, sponsored by Rep. Reginald Murdock (D-Marianna), that would increase the Medicaid reimbursement rate for certain fee-for-service home and community care providers, partly in order to help them keep up with the higher costs to pay low-wage employees.

“The Constitution allows this body to mitigate unintended consequences,” Lundstrum said. “That’s what we’re here for as representatives, to handle those unintended consequences.”

“This matter was submitted to the voters of this state,” said Rep. John Walker (D-Little Rock), speaking against HB 1753. “They overwhelmingly passed the [law] to increase the minimum wage. They did not make the exception that is being proposed.”

Regarding unintended consequences, Walker said, “The voters of this state had an opportunity to consider Ms. Lundstrum’s position. It had the opportunity to argue it, and it was indeed argued, by the people who were opposed to the minimum wage [increase] — largely the state Chamber and others who were opposed to it. ... They’ve had their opportunity — now they want to change it.”

Walker said that Lundstrum offered no objective evidence to support her contention that the minimum wage hikes would create consequences so dire that the legislature should reverse what voters had approved. The reasons presented, he said, were superfluous, undocumented, and without empirical backing. "There's no answer other than that 'it is in my head,' " Walker said.

“The law comes from the people," he said. "It was presented to the people. We should not be called upon now to overrule the will of the people.”

Lundstrum insisted that voters did not intend changes that she argued would squeeze teenage employment opportunities and the bottom line for small businesses and nonprofits. “The people of Arkansas only had one button to push,” Lundstrum said. “We’re the last button to push.”

"We are the checks and balances for the people of Arkansas," she said.

'I'm not trying to thwart the will of the people.'

"The people voted to have a minimum wage increase," Lundstrum said in an interview last month after filing her bills. "I'm not trying to thwart that."

Lundstrum acknowledged that the coming wage hikes were approved by a two-thirds majority, but argued that her bills would not "roll back" the will of the voters. "We're not rolling anything back," she said. "That's what the people passed. I'm not taking that back — I think that would be wrong. It would not roll up [for the exempted groups]. It would not roll up to $10 and $11."

David Couch, the Little Rock attorney who drafted the ballot initiative for the wage hike, countered that in fact raising the minimum wage up to $11 by 2021 is precisely what the people passed.

"This is what the people voted for," Couch said. "This is what the people intended. These bills roll back what voters passed. Those people are entitled under the law to a raise January of next year, and a raise January of the following year. This would take that away from them."

Couch said Lundstrum's predictions about the consequences of raising the minimum wage were familiar. "They made that same argument in 2014, and it didn’t come true," Couch said, referring to the previous wage hike approved by voters. The 2014 ballot initiative, also drafted by Couch, was approved by 66 percent of voters and raised the state minimum wage to $7.50 in 2015, $8 in 2016 and $8.50 in 2017. "We have a little historical perspective there. She’s just hearing that from the Chamber of Commerce. She has no data to show that, no studies to prove that."

Far from raising new points about unintended consequences, Couch said, Lundstrum is making the very same arguments that voters rejected in approving the minimum wage hikes. "These points were argued about and debated in 2018 and in 2014," he said.

'Sub-minimum wage nonsense.'

Governor Hutchinson announced his opposition to Lundstrum's bills last month. In doing so, he highlighted a provision that already exists under current law, allowing employers to pay certain students 85 percent of the minimum wage. This exception pre-dates the minimum wage hikes that were approved by voters in 2014 and 2018, and those initiatives left the exception in place. It applies to full-time students attending an accredited institution of education in the state if they are employed to work 20 hours per week or less when school is in session or 40 hours per week when school is not in session.

In practice, this provision, which requires a waiver from the state Department of Labor, has been little used. It currently impacts fewer than 60 workers in the entire state. Lundstrum's bill would eliminate such waivers and simply impose the $9.25 minimum wage for anyone under 19 years old.

On Monday, Lundstrum offered a novel argument to the House that she had not mentioned in her previous testimony in committee, claiming that her bill would help young workers by striking the 85-percent provision. She described it as a “sub-minimum wage for teenagers,” and noted that employers that currently have such waivers can pay workers $7.86 (85 percent of the current $9.25 minimum wage), which she called “sub-minimum wage nonsense.”

However, Lundstrum’s bill would not go into effect until next year. Under current law, as the minimum wage rises in the next two years, the waivers would allow full-time students to be paid $8.50 in 2020 and $9.35 in 2021 and beyond. The "sub-minimum wage" waiver for students, once the wage hikes fully go into effect, is thus slated to be slightly higher than the frozen $9.25 wage Lundstrum proposes for teenagers under 19 years old.

Couch said that he would support eliminating the 85-percent waivers, but said that Lundstrum's bill would in effect create a sub-minimum wage for all workers under 19 by exempting them from the higher minimum wage slated for 2020 and 2021.

Most students who work in the state are not impacted by this provision because very few employers seek the waiver to pay them less than the minimum wage. According to Denise Oxley, general counsel for the state Department of Labor, there are currently only eight employers and 58 employees in the state utilizing the 85-percent wage. She said those numbers would likely go up some in the summer when more students are hired, potentially impacting 300 to 500 workers based on the pattern in previous years. She added that the numbers could be slightly higher this year because the media attention to the minimum wage has increased interest in the provision.

Lundstrum said that her bill would eliminate burdensome paperwork related to these waivers, in order to establish enrollment in school and the hours per week that the student is working.

Oxley said that the waiver required a one-page application signed by the student and the employer, along with verification of enrollment such as a letter from a principle or a statement of enrollment issued by a college. She said that unless there was a complaint, the department would not typically seek to further verify hours or enrollment status. Employers can also elect not to seek the waivers and pay students the full minimum wage, Oxley said, as most currently choose to do.

'A sneak attack' and legal questions

Lundstrum first ran her bills in the House Public Health committee in a sparsely attended meeting on the evening of March 12. The bills passed on a voice vote with little to no discussion and only a single substantive question from the committee. Though the bills are controversial, they were brought after 6 p.m. with no additional notice, and no one was in attendance to speak against them. The committee spent around six minutes on the two bills.

Minimum wage advocates argued that bills on such hot-button issues should be given a special order of business to allow the public to respond, rather than being skipped over during the legislature's daytime meeting hours only to reappear suddenly in the evening. "No one spoke against these highly controversial bills because no one knew they would run," the Citizens First Congress stated in a press release the following morning.

Couch called the quickie evening vote "a sneak attack and an ambush." Lundstrum said that these complaints were misleading, stating that she had waited to run the bill in committee since it began at 9 a.m. and noting that the meetings are livestreamed online.

The lack of discussion meant that there were no questions about legal issues that had been raised about Lundstrum's bills, Couch noted. Lundstrum told the committee that her bills would freeze the minimum wage for those exempted at the current rate of $9.25. But that's not what the language of the bills that the committee approved said, according to Little Rock attorney J. Bruce Cross, an expert in employment and labor law. As originally written, those exempted would not be subject to the $9.25 rate or to the wage hikes passed in 2014. They would be exempt from the state minimum wage altogether, subject only to the federal minimum wage of $7.25.

When she was initially asked about these issues prior to the first committee vote, Lundstrum disputed that there was any such discrepancy and insisted that her bills would freeze the minimum wage at $9.25, despite the plain language in the text. Two days after the bills were passed out of committee, on March 14, she reversed course and filed an amendment to fix the problem for HB 1752. However, she did not file a similar amendment to fix HB 1753, stating, “There’s no need.” By March 18, she filed an amendment to fix the issue for HB 1753 as well.

Couch argued that the kerfuffle over these legal questions exposed that the initial hurried committee vote came out of a flawed process. Whether intentionally or not, Lundstrum misrepresented what was in the bills to the committee, he said. "Her bill is the best example of why you should give notice. All they had to rely upon was her word. Nobody had talked to anybody about it. She told them what that bill did and it was absolutely incorrect and they voted it out."

Once amended to fix the language around freezing the bill at $9.25 (as well as lowering the age threshold in HB 1753 to 19), Lundstrum once again ran her bills late in the day without any special notice. The two amended bills passed by voice votes with no questions or discussion from the committee — HB 1753 at around 5:30 p.m. last Tuesday and HB 1752 a little after 9 p.m. last Thursday.

Bill Kopsky, executive director of the Citizens First Congress, said these evening votes buried in a packed committee agenda represented more dodging of public accountability. Lundstrum said there was no reason for a special order of business.

"This was an amendment to a bill that had already passed," she said. "I had waited my turn on the agenda just like everyone else."

'The voters spoke'

When they were first passed out of committee on March 12, the bills faced heated opposition. A "Rally to Protect the Wage" was organized by advocacy groups at the Capitol. The Democratic Party of Arkansas quickly held a press conference, where chairman Michael John Gray said, “We can’t start a trend of letting people in a marble building in Little Rock overturn the will of 68 percent of Arkansas voters.”

At around the same time, at a luncheon held by the Political Animals Club in Little Rock, Governor Hutchinson announced that he opposed the legislative efforts to alter the minimum wage passed by voters. "This is an act of the will of the people of Arkansas, and I do not believe it should be changed by legislative action," he said. The Republican Party of Arkansas also issued a statement in opposition to the legislation, stating, "We respect the will of the people and their majority vote."

Lundstrum was unbowed. Asked after the governor's comments whether she would still run the bills, Lundstrum responded in a text message, "Oh yes!" She told the Arkansas Democrat-Gazette, "It's like belly buttons; everybody's got an opinion."

"The voters didn’t want to hurt those small businesses or their nonprofits," she said. "They only had one button to push. Trust me, Arkansas people are good." She said that nonprofits and small businesses that she had been communicating with had been expressing worry about the coming wage hikes. "They are scared," she said.

"The voters spoke," she added. "I'm not trying to do anything radical or scary or thwart the will of the people. That's not my intention at all."

'The body can then decide.'

The rejection of Lundstrum's bills likely means the end of legislative efforts to roll back the minimum wage this session. Sen. Bob Ballinger (R-Berryville) filed his own bill earlier this session to undo much of the wage hikes approved by voters, but it sits dormant on the "deferred" list in committee, and Ballinger said after the vote Monday that he did not think he would try to run his bill this session.

Speaking against HB 1752 on Monday, Rep. Charles Blake (D-Little Rock) said, "The people's will was spoken in November. Even in Rep. Lundstrum's district, 65 percent of the people voted to increase the minimum wage. ... Let's continue to do the will of the people, and not get here three or four months after they have spoken and change what they said they wanted."

In a statement after the vote, Lundstrum said, "I proudly offered a solution to the unintended consequences of the minimum wage increases that will have a negative impact on our nonprofits, small businesses and our most vulnerable populations. As representatives, our job is to offer those solutions and the body can then decide whether to accept or reject those solutions. I look forward to hearing other solutions going forward."

Couch said that he was "happy and pleased that the General Assembly respected the will of the voters."

This reporting is courtesy of the Arkansas Nonprofit News Network, an independent, nonpartisan news project dedicated to producing journalism that matters to Arkansans. Find out more at arknews.org.
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