The ordinance will go into effect on July 1, 2016 ($8.10 in 2016; $9.25 in 2017; and $10.10 in 2018).
Unlike previous draft proposals, this ordinance does not include provisions to increase hourly wages for tipped worker or to tie future wage increases to the Consumer Price Index.
Council members listened to business concerns and removed the particularly troubling CPI provision because of the lack of wage certainty this creates especially during recessionary time periods.
By raising the local minimum wage to $10.10 per hour, Lexington will have the highest minimum wage of any of our border-states or competitor cities - including Louisville which recently passed an increase to $9 per hour.
The Kentucky Supreme Court is currently considering a lawsuit filed against Louisville Metro Government challenging a similar ordinance. Questions remain about whether or not local governments have the authority to enact local wage mandates since wage laws already exists at the state level. It is unclear at this time when a decision will be made but the hope is before July 2016.
Commerce Lexington Inc. has had a long-standing position of opposing local wage mandates that exceed state or federal guidelines because of the competitive disadvantage it would place on Lexington’s economy and ability to create jobs. With relatively little existing research on local minimum wages, even some poverty experts are wary of this approach.
With an estimated price tag of $92 million annually on businesses, our organization asked the Council not to act on the proposed ordinance before studying all the intended and unintended consequences of the proposal. Commerce Lexington Inc. recommended a focused study that would better clarify who would be impacted and how, and whether more effective ways exist to lift working citizens out of poverty.
Some of our concerns included:
- Competitive disadvantages for local businesses.
- An estimated 2,200 jobs lost, and reduced workers hours - particularly among the lowest-skilled employees.
- Increased prices for goods and services, which will disproportionately impact low-income families.
Commerce Lexington Inc. also urged Council members to consider other policy alternatives – such as workforce and education training efforts – to help lift up low-income workers into careers with wages that will truly allow them to become homeowners, invest in post-secondary education, and save for retirement - without hurting local job providers and placing Lexington at a competitive disadvantage.
For example, several cities offer training for low-income workers that leads to community college or university credentials for jobs in growing sectors. These efforts align support services to aid with education navigation, housing, child-care, transportation and other barriers to employment to help workers achieve maximum wages.
We would like to thank the businesses and other organizations who took the time to communicate concerns to Council on this issue, and those Council members who supported the business community throughout the process.
Going forward, Commerce Lexington Inc. will continue to closely monitor the Supreme Court case, make recommendations for a future study of the impact of the local ordinance on businesses and workers, and continue to work with Council members to find alternative policy solutions that will help lift families out of poverty.
If you have questions or concerns about how this ordinance will impact your business, contact Andi Johnson at (859) 226-1614.