Last week, the Kentucky Supreme Court pulled the rug out from under tens of thousands of low wage workers in Lexington and Louisville by ruling localities don’t have the authority to raise the minimum wage.
The court’s decision was a blow to local leadership that had stepped up to boost sagging wages. In 2014 Louisville established a minimum wage that would rise to $9 an hour by 2017, benefiting 45,000 workers, while last year Lexington went further with a minimum rising to $10.10 an hour by 2018, assisting 31,000 workers.
These cities had taken action because of the failure of state and federal governments to increase the minimum wage, which has lost about one-fourth of its value since the late 1960s. Louisville’s was the first local law in the entire South, while Lexington’s was the third.
Action on the minimum wage is a critical part of an overall strategy to lift wages across the bottom and middle of the workforce. In Kentucky, those wages fell by 7 percent between 2001 and 2014 after adjusting for inflation. While wages finally rose last year with an improving economy, evidence suggests momentum may have stalled since.
More broadly, the gains from economic growth over the last few decades have gone overwhelmingly to those at the top while many workers face difficulty making mortgage and rent payments, affording education for themselves and their kids, and saving for retirement.
A minimum wage increase is a key, simple policy change that can be a big help. And an increase aids not just low wage workers, but the economy as a whole as people have more money in their pockets to spend. It also results in savings on programs that help those struggling to get by: an increase to $10.10 an hour would save Kentucky $34 million on Medicaid expenses according to the Center for American Progress.
With the state Supreme Court stopping these local wage increases, pressure to fix the problem falls on higher levels of government. Minimum wage increases have been introduced in the Kentucky House of Representatives the last three years — passing two of those years only to fail in the Senate. And Congress is blocking an increase in the federal minimum wage. Impatience with congressional inaction has led 30 states and 29 localities across the country to raise their minimum wages.
Here in Kentucky, increasing the state-wide minimum wage and allowing local governments the freedom to go beyond the state minimum should be at the top of the to-do list when the General Assembly returns to Frankfort in January.
An increase in the state minimum wage to $10.10 an hour would boost incomes for 1 in 4 Kentucky workers, or about 300,000 Kentuckians. And permitting the duly elected bodies of local communities to go beyond whatever bar the state sets gives higher cost of living localities a chance to set a wage that will really make a difference in the future.
We’re now wrapping up a year marked in the news by (among other things) the anger of Americans at a government that doesn’t seem to be working for them. That’s rooted in an economy where jobs are too scarce and wages have been stuck even while corporate profits are at record highs and CEO salaries continue to soar.
This situation isn’t the natural outcome of market forces, as we are led to believe, but the result of leaders’ failure to take the side of working families even when the policies to do so are right in front of them.
This column originally ran on KyForward.com on Oct. 31, 2016.
