I’ll remind readers that the legislative process, defined in our State Constitution, requires a bill to have three readings to move through a legislative body and limits a bill to only one action per day. The first reading occurs when a bill is introduced, the second reading occurs when a bill is reported out of committee and the third and final reading occurs when the full body votes on a bill. The bill is then transmitted to the second house or to the governor for consideration and signature if the bill has passed both bodies.
As I’ve stated, the main focus this week was to move the bill preventing the Birmingham City Council from establishing a minimum wage in their city. The bill moved through the Senate legislative process in three days as the legislature was essentially racing against the Birmingham City Council before their new law went into effect...the city council has won that race as they follow different rules than those outlined above.
The Senate locked down when this bill was brought up for consideration this morning and after several hours of debate passed the Senate in a 23-10 vote. It will now go to the Governor for consideration and signature. Should he sign the bill into law I’m pretty certain it will end up in court in a matter of days.
As most people know, I strive to be a small government guy in all things as the government closest to the people is most responsive to the people. Based on that principal I did not support this bill. I stated my opposition to this bill in Tuesday's blog. Following is additional information regarding my “No” vote (one of two Republicans voting so).
HB174 is a bill preventing municipalities in Alabama from setting a minimum wage within their city. This bill fast tracked its way through the House last week and was passed in a 71 – 31 vote along party lines.
This bill has its origins in the Birmingham City Council having voted in a minimum wage increase starting at $8.50 an hour commencing in July of 2016 and moving to $10.10 an hour in 2017. The Birmingham City Council accelerated the start date of the increase from July to March once they caught wind that the state legislature was moving a bill to prevent them from raising the minimum wage. On Tuesday the Birmingham City Council passed an ordinance accelerating that further – the start date is now 24 February (as in yesterday) and the rate is $10.10 an hour, not the $8.50 an hour with a stepped up increase over the next year. The Birmingham Mayor has signed the ordinance into law and the Attorney General has weighed in on a requirement for the ordinance to be published before taking effect.
Taking just a moment to ponder the impact of the above actions on any business – large or small, for profit or non-profit – and one might wonder why I would oppose such legislation. My opposition is based solely on the fact that the Birmingham City Council is an elected body, elected by the people who they govern.
The Invisible Hand of the Free Market
In simplest terms, I don’t think government should be involved in setting a minimum wage. Doing so sets a ceiling rather than a floor, artificially influencing what the local market will bear. The only thing that should set a minimum wage is the invisible hand of the free market. With this bill we find ourselves on a slippery slope that I don’t think state government should be on. We have become big government, stepping in on what little government has decided is best for the people they represent. What’s next? How far are we willing to go to protect the people from the government they elected? Will we be asked to pass a bill preventing a municipality in Alabama from raising taxes or fees in order to protect the people from the municipality that elected them to govern them? Again, this is an example of bigger government protecting the local people from their big government.
Wal-Mart Case Study
The recent change by Wal-Mart regarding their minimum wage is a great case study on this matter. Last year, without any government intervention at any level, Wal-Mart raised their minimum wage across the country (note - crossing state, county and municipal lines nationwide). It bears saying again, without any government intervention. However, Wal-Mart quickly learned that the increase in liabilities for the new minimum wage nationwide could not be sustained without some offsetting action. Rather than raising prices – something the market would not bear – they had to adjust a subset of their business model expansion and close several hundred small market stores nationwide; thee in North Alabama. This is the invisible hand of the free market at work.
The difference between Wal-Mart and the Birmingham City Council of course is one is a business and the other a municipality. But if we look closer you’ll see that Wal-Mart is a publicly held corporation with an elected board of directors who work to meet the expectations of investors. The success of Wal-Mart is based on sound business decisions. Similarly, Birmingham is a collective of people who have elected a city council to govern them and like investors the council should work to meet the people’s expectations. The Birmingham City Council should be able to set the minimum wage for businesses in their city, and they will find out how much the market will bear. Will businesses have to close, move to neighboring cities? Will the people the city council thinks they are supporting be able to support themselves should businesses close and jobs are moved out of the city?
Of course business closing or moving out of the city are not desired result for one of Alabama’s largest cities. The answer lies in what the community wants and supports not bigger government intervention. I think there is little doubt that if the new minimum wage is allowed to go into effect that it will adversely affect the city of Birmingham. Will the council listen to the people they represent? Most importantly, will the council take action before it is too late? Or, has big government saved the people from the government they elected?
Semper Fi - Bill