Hardly anyone who lives in my city (pop 12k) works in my city. Yes the residents here would benefit from the higher payroll through our income tax, but the increase would not put more money in the pockets of the vast majority of residents.
Even if they raised the minimum wage in the city of Cleveland, most people who work in Cleveland live in the suburbs. Again, it’d raise income tax revenue (Cleveland and Akron generally have the highest tax rates in the region so they don’t lose anything in reciprocity) but not add money to the pockets of many residents I don’t think. Well maybe. Maybe a higher percentage of residents also work in the city than is the case in the suburbs.
Another point about the suburbs is that there’s a lot of competition at that level for the consumer dollar. If it costs me more to run a Dunkin in CityA and I have to raise prices there, people will pop over to Dunkin in CityB to save 75 cents on their coffee.
When it’s done at the state level and everyone’s costs go up accordingly, it helps the individual businesses.
Not sure if this is what Dr. Paprika had in mind, but I think being able to actually enforce these laws on the local level might be an issue. The local government would either need to hire people to go through reporting of people’s income and hours or rely on the state or federal government to tell them if they see minimum wage violations in people’s taxes or similar. And then if they found someone making under minimum wage, they may have limited options. AFAIK corporations are registered on the state level and an EIN is on the federal level, so it seems like the enforcement mechanism would have to be on local licenses to operate in a building. So I guess the town could revoke that (not even sure if that would work to be honest).
And then you run into probably the larger problem which is power dynamics. If a town shuts down a business and puts a bunch of people out of work because they broke the rules, a local government that presides over a relatively small number of people is at serious risk of getting voted out by a whole lot of unemployed people who just got kicked to the curb.
I’m surprised at many of the answers here. I live in a city that has a higher minimum wage ($16.69) than the state ($13.69) that has a higher minimum wage than the feds ($7.25).
Until this thread, I had been under the assumption that most cities could set their own minimum wage if they wanted to.
I don’t see where that says a city can’t set a higher minimum than the state has set. - do you know of a cite that actually says that?
Can you give me a cite that this applies for intra-state commuters?
New York - If you are a New York State nonresident you must file Form IT-203, Nonresident and Part-Year Resident Income Tax Return , if you meet any of the following conditions:
Maine - Maine generally imposes an income tax on all individuals that have Maine-source income
Pennsylvania -Individuals who do not have either their domicile or statutory residence in Pennsylvania are considered nonresidents for personal income tax purposes. Nonresidents are taxed only on the income they receive from sources within Pennsylvania, and cannot qualify for the credit for taxes paid to other states
As has already been discussed, it can be a shit-ton of work to try to balance the cost of living in the locality where you actually live with the assumptions made about cost of living in the locality where you work.
Not just commuters but also people who relocate locally—to be in a better school district, nearer to an aging relative, whatever—would have to deal with the burden of minimum wage fluctuations across municipality lines.
This proposal sounds somewhat like various libertarian ideas for privatizing the road system, where what you gain in local control you lose in large-scale standardization and convenience. In practice, it would just be a confusing mess of fragmented nitpickery. There’s such a thing as having too much local devolution.
Say I am the mayor of a town of 50,000 people. Three big companies employ a few thousand people. There is a thriving Main Street but much of the downtown has seen better days. There is a small college and the town is surrounded by several local farms. Housing used to be cheap but is becoming more expensive as Big City people tire of Covid, which has hit local businesses very hard. I have a degree in philosophy.
As mayor, I get a moderate salary. I work with several other people who get paid a modest stipend. There are several volunteer committees. The town has a small police and fire department and a small hospital. The town mainly does things like sewers, road maintenance, planning, zoning, taxes, bylaws and the like.
The regional minimum wage is $12/hr and there is an agricultural minimum wage of $9/hr. The price of housing rose 3% each year for the last decade, but went up 10% last year, and 15% so far this year. The farmers at the meetings say Covid has reduced demand and are against any local increase. Downtown businesses have also suffered - several have closed due to Covid lockdowns. The college, services and one big business are unionized and most jobs pay above minimum. The two big non-unionized companies provide a lot of the tax revenue and employment and do not support any mandatory increase in wages regardless of housing prices. Many students, some younger and some working older townspeople get paid minimum wage.
The numbers would be somewhat different for a town of 5000 a city of 200,000 but say that the basics are similar but scaled; there are more companies, etc.
Housing prices are no longer stable. Is this a temporary effect or long-term? If a change is made now, how should it be re-evaluated?
What negotiating power does the town have to enforce bigger wages on the big businesses?
With Covid reducing profits and businesses closing, how would increasing wages be received by the local business community?
Assume the town increases minimum wages by $2 an hour. Who will enforce it? Will this be re-evaluated? How? How is the number justified? What would be the likely reactions if the various groups?
Would much of the increased wage go into an increase in local prices, given supply is already less than demand for housing? Would it help business thrive? Would the mayor get re-elected? What movement would there be to the neighbouring county or town? Would business relocate? Will they even stay open?
The councilmen are divided on the issue based on their background and what part of town they live in. They complain the limited time they have to devote to town issues is being taken over by this one.
The neighbouring city offers a new incentive for the upset bigger companies to move. This would lower local employment, increase commutes and lower the tax base. How should the mayor react?
To be sure, I think a living wage should be omnipresent. The state has economists, more economic leverage, can offer other incentives to business, has politicians less susceptible to local lobby, has enough staff to concentrate on many matters and can follow up to see what happens not only to local housing prices, but employment and many other issues. Wage should be tied perhaps to cost of living which is different in different states and between big and rural areas in that state. A city has to be of a certain size and level of attraction to resist some of the pressures implied above - including a broad tax base, many competing issues and expertise.
What I’m envisioning at this point is a minimum wage that follows the employee based on residence. City A enacts an ordinance setting its minimum wage at $15 (or whatever). The minimum wage in City B is $8.50 or something. Widgetcorp is located in city B. If Widgetcorp hires employees who reside in City A, it must pay those employees a minimum wage of $15.
It should be able to piggyback on the existing infastructure for local payroll taxes.
I don’t think that will be a major problem. Ideally a big enough business that won’t put up with a wage hike will be able to get it through the town’s head that a wage hike means closing shop. If the town decides to go ahead anyways, I think in most cases they will be well advised of the consequences.
And either way, I think it serves the interests of society at large. A single-industry town that can’t operate without paying its workers with living wages really shouldn’t exist. If the industry is somehow a net social good, it needs subsidies from the state because sub-living wages indicates a market failure.
Well ok then. I got nothing to say to that other than the idea is absurd and impossible and actually not helpful. Of all the things that have been pointed out in this thread as nearly logistically impossible, this is the impossibilest.
The cite is found in an obscure New York court case, Wholesale Laundry Board of Trade v. City of New York , 189 N.E.2d 128 (N.Y. 1963), aff’g 17 A.D.2d 327 (N.Y. App. Div. 1962). The higher court affirmed without writing an opinion, so here is the lower court’s rationale (footnote omitted):
“However, where the extension of the principle of the State law by means of the local law results in a situation where what would be permissible under the State law becomes a violation of the local law, the latter law is unauthorized ( Jewish Consumptives’ Relief Soc. v. Town of Woodbury , 230 App. Div. 228, affd. 256 N.Y. 619).* Here, that is plainly the case. The local law forbids a hiring at a wage which the State law permits and so prohibits what the State law allows. Semantic exercises in this connection cannot change the concept.”
And so, since 1963, New York state law has “preempted” local minimum wage ordinances.
Oh good heavens. Sure, that won’t at all disincentivize Widgetcorp from hiring residents of City A, nor will it cause workplace friction between City A residents and City B residents who are getting paid vastly different wages for doing the same job.
I think it heavily depends on how much of a gap you’re envisioning between the local minimum wage and the floor set by the state or feds. If the gap gets big enough and there is doubt that the law would be enforced, some businesses are going to call the town’s bluff. It’s really not out of character for businesses to break rules when they think the benefits outweigh the risk of consequences.
Yeah, I think in this scenario Widgetcorp will end up blatantly hiring only residents of City B, unless City B also passes an anti-discriminatory law against this kind of practice. If City B doesn’t, then every company in the state will try to poach residents from City B (assuming City B has the lowest wages in the state) … but then the number of jobs will dwarf the number of residents of City B, and after the supply of City B residents has been exhausted, companies will move on to the next lowest minimum wage city, and so on and so forth.
Clever people will try to model how all the jobs will fill up each city-sized “bucket”, and try to game the system by moving to a city that is the perfect intersection of having the “highest lowest” minimum wage, yet at the same time having a plentiful supply of jobs. I’m actually quite curious to see how the Nash equilibrium will play out when there are millions of residents, thousands of companies, and hundreds of cities.
Yes, that builds off what RitterSport was saying earlier this afternoon. I’m not averse to statewide solutions similar to New York’s minimum wage or the Medicare relative value system, but if possible I would like to keep some discretion within the hands of localities.
I’m not very worried about fragmented minimum wage rates across different municipalities. Especially in the age of information, it would be simple to have the state track each municipality’s minimum wage on a webpage or public form.
