Can minimum wage rise too fast?

The minimum wage in Rhode Island could rise again, by 50 cents, under Gov. Gina M. Raimondo’s budget plan, to $10.10 an hour.

If the General Assembly endorses her vision, it would be the fifth consecutive year of minimum wage increases.

The series of yearly increases has taken the rate from $7.38 to $7.75 to $8 and finally, to the current $9.60. The increase proposed by Raimondo this year would affect an estimated 40,000 Rhode Island employees, according to the administration.

If approved, the new rate, effective in 2017, would remain less than that of Massachusetts, now $10 and set to rise to $11 an hour in 2017. It would be the same as what is scheduled to take effect in Connecticut.

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Is it too much? Not enough?

Rep. David Bennett, D-Warwick, who has consistently sponsored increases in the minimum wage, thinks it should go higher than Raimondo’s proposal. He introduced a bill in January that would take the rate to $10.50 an hour, although he doesn’t think it will pass.

“If we could get it up to a living wage, then people don’t have to struggle to make ends meet,” he said. “This is just living. This is putting food on the table.”

A livable wage in Rhode Island, he said, is closer to $12 an hour.

Many small businesses, however, have already started communicating that they are wary of any additional imposed increases in minimum wages.

The Rhode Island Hospitality Association, which represents more than 600 restaurants, hotels and tourism-related businesses, questions whether businesses have had time to absorb the last four increases.

“Every increase further burdens the many small businesses which fuel the local economy,” association President and CEO Dale Venturini said in an email.

University of Rhode Island economist Leonard Lardaro said increasing the wage may be fair to workers with low incomes. But the minimum wage itself is a symptom of a broader problem, he says, which is that many hourly workers in the Ocean State lack skills that could propel them to higher-wage jobs.

The impact of increases in the minimum wage on the broader economy is not clear, he argued.

“To the extent they keep their jobs and their hours, it does in some ways help demand,” he said.

But some businesses, to counter the increases, may try to curtail hours for workers.

To Lardaro, however, raising the minimum wage is akin to treating the symptom, not the problem.

“The most effective way to deal with the issue of the minimum wage is to upgrade your workforce,” he said. •

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