Legislative Update

May 9, 2013

After a lengthy hearing before the House Economic Development, Banking, Insurance and Commerce Committee, Senate Bill as amended by Senate Amendment 2, which would have increased Delaware’s minimum wage by a dollar in two increments, was tabled by a vote of 7-3. The Chamber vigorously opposed the bill from its introduction and offered testimony through lobbyist Joe Fitzgerald before the Senate Labor and Industrial Relations Committee, before the full Senate during consideration and in committee in the House.

The bill, Senate Bill 6 as amended by Senate Amendment 2, sponsored by Senator Robert I. Marshall (D-Wilmington) passed the Senate on March 21. The New Castle County Chamber of Commerce led an effort to oppose the measure, testifying before the Senate Labor and Industrial Relations Committee and before the full Senate during floor consideration.

As originally written, the bill would have increased the minimum wage to not less than $8.00 per hour, effective July 1, 2013, and not less than $8.75 per hour, effective July 1, 2014. Additionally, the legislation would mandate that, after July 1, 2014, increases in the Delaware minimum wage would be indexed to increases in the Cost of Living Adjustment (COLA) under the Social Security Act, and that – in the event that the federal minimum wage exceed Delaware’s at any time in the future – Delaware’s would automatically increase by one dollar more than the federal amount.

In response to concerns expressed by the County Chamber and other business groups, Senator Marshall offered Senate Amendment 2, which changed the first increase in the minimum wage to January 1, 2014 and the second increase to January 1, 2015, and reduced the amount of each increase to $7.75 on January 1, 2014 and $8.25 on January 1, 2015. The amendment also removed the COLA increase, and dispensed with the provision that Delaware’s minimum wage be $1.00 higher than the federal minimum wage.

Notwithstanding the fact that this legislation was amended in the Senate to remove its most objectionable provisions, the Chamber and other business organizations continued to oppose it. Small businesses in the State of Delaware face greater challenges than they have in decades and many are struggling to keep their doors open. Even without an increase in the minimum wage, businesses face crushing and unavoidable cost increases in the near term. To name a few:

1. Workers compensation rates increased sharply this year (an average of 19 percent in the residual market and 14.9 percent in the voluntary market).
2. Delaware employers face a surcharge of $42 per employee this year in order to repay the State of Delaware’s borrowing from the federal government to keep our unemployment insurance fund solvent. That surcharge will increase substantially next year.
   
3. Implementation of the Affordable Care Act is expected to increase health insurance premiums in the small group and individual markets substantially. Firms with 50 or more employees will be mandated to provide insurance to their employees or pay a fine.

Delaware’s economy continues to lag behind that of the rest of the region and the nation at large. An increase in the minimum wage will serve to destroy jobs and increase labor costs at higher points on the wage scale.

The Chamber thanks our members who contacted legislators in force to oppose this measure.