Rep. Robin Lundstrum (R-Elm Springs), despite opposition from Governor Hutchinson and the state Republican Party, is proceeding with her bills to undo significant portions of the state minimum wage hike approved by voters just last November.
In 2018, 68 percent of Arkansas voters backed a ballot initiative to increase the state minimum wage to $9.25 in 2019, $10 in 2020, and $11 in 2021. Lundstrum's bills create exemptions to the coming wage hikes: HB 1752 exempts businesses with fewer than 20 employees, nonprofits with an operating budget under $1 million, and certain nonprofits that provide services for people with developmental disabilities. HB 1753 exempts any employee under the age of 20.
According to analyses by Arkansas Advocates for Children and Families, the bills would exempt more than 84 percent of businesses in the state and impact tens of thousands of workers.
"The people voted to have a minimum wage increase," Lundstrum said. "I'm not trying to thwart that." She said that her goal in nixing the wage hikes that voters approved was to protect nonprofits, small businesses and teenage employees from "unintended consequences."
Lundstrum's bills aim to permanently freeze the minimum wage for those exempted at the current $9.25, blocking the coming raises to $10 and $11. She amended both bills last week in response to criticism that, contrary to her claims, the bills in their original form would have eliminated the state minimum wage for those exempted altogether, leaving them subject only to the $7.25 federal minimum wage. That problem has now been solved for HB 1752, the bill impacting small businesses and nonprofits. But the same issue remains with HB 1753, the bill impacting teenage workers, according to labor law experts. [UPDATE: After initially stating that she would not make an additional amendment to HB1753 because there was “no need,” Lundstrum reversed course Monday night and re-wrote the bill to fix the problem.]
Lundstrum acknowledged that the coming wage hikes were approved by a two-thirds majority, but argued that her bills would not "roll back" the will of the voters. "We're not rolling anything back," she said. "That's what the people passed. I'm not taking that back — I think that would be wrong. It would not roll up [for the exempted groups]. It would not roll up to $10 and $11."
David Couch, the Little Rock attorney who drafted the ballot initiative for the wage hike, countered that in fact raising the minimum wage up to $11 by 2021 is precisely what the people passed.
"This is what the people voted for," Couch said. "This is what the people intended. These bills roll back what voters passed. Those people are entitled under the law to a raise January of next year, and a raise January of the following year. This would take that away from them."
Lundstrum said that nonprofits could be in financial trouble if forced to start paying low-wage employees $10 in 2020 and $11 in 2021. She said small businesses would also struggle with that change and could end up cutting some jobs, or that businesses like daycares could be forced to raise prices.
"I don't think the people of Arkansas — they were trying to be generous and trying to help, I don't think their intention was to hurt nonprofits," she said. "This is just a small course correction to help those nonprofits and small businesses catch up."
On the employee side, regarding her bill to exempt workers under the age of 20, Lundstrum said, "I want these kids to have those first-time jobs. You're not going to hire a 16-year-old at $11 an hour — that's what I'm hearing from a lot of these restaurants and a lot of these would-be first-time jobs, they're not going to hire kids.
"They made that same argument in 2014 and it didn’t come true," Couch said, referring to the previous wage hike approved by voters. The 2014 ballot initiative, also drafted by Couch, was approved by 66 percent of voters and raised the state minimum wage to $7.50 in 2015, $8 in 2016 and $8.50 in 2017. "We have a little historical perspective there. She’s just hearing that from the Chamber of Commerce. She has no data to show that, no studies to prove that."
Far from raising new points about unintended consequences, Couch said, Lundstrum is making the very same arguments that voters rejected in approving the minimum wage hikes. "These points were argued about and debated in 2018, and in 2014," he said.
Lundstrum ran her bills in the House Public Health committee in a sparsely attended meeting last Tuesday evening, with little to no discussion, and only a single substantive question from the committee. Though the bills are controversial, they were brought after 6 p.m., with no additional notice and no one was in attendance to speak against them. The committee spent around six minutes on the two bills, which passed on voice votes.
Minimum wage advocates argued that bills on such hot-button issues should be given a special order of business to allow the public to respond, rather than being skipped over during the legislature's daytime meeting hours only to reappear suddenly in the evening. "No one spoke against these highly controversial bills because no one knew they would run," the Citizens First Congress stated in a press release the following morning.
Couch called the quickie evening vote "a sneak attack and an ambush." Lundstrum said that these complaints were misleading, stating that she had waited to run the bill in committee since it began at 9 a.m. and noting that the meetings are livestreamed online.
The lack of discussion also meant that there were no questions about legal issues that had been raised about Lundstrum's bills, Couch noted. Lundstrum told the committee that her bills would freeze the minimum wage for those exempted at the current rate of $9.25. But that's not what the language of the bills that the committee approved said, according to Little Rock attorney J. Bruce Cross, an expert in employment and labor law. As written, those exempted would not be subject to the $9.25 rate or to the wage hikes passed in 2014. They would be exempt from the state minimum wage altogether, subject only to the federal minimum wage of $7.25.
Asked about this issue earlier in the week, Lundstrum insisted that her bills would freeze the minimum wage at $9.25, despite the plain language in the bill. During the committee meeting on Tuesday, she added an amendment to one of the bills, HB1753, describing a noncodified "legislative intent" to freeze the wage at $9.25. However, the bill's impact on the statute would remain the same, said an attorney from Cross's firm who reviewed that amendment: The new "intent" language notwithstanding, workers under 20 years old would still be exempt from the state minimum wage altogether.
By Friday, Lundstrum filed an amendment that fixed the issue on HB 1752, re-writing the bill to establish that it would freeze the minimum wage at $9.25 for the exempted businesses and nonprofits. Thus far, there has been no similar amendment for HB 1753. Lundstrum said on Friday that she has no plans to do so. "There's no need," she said. [UPDATE: AT 6:30 p.m. Monday evening, Lundstrum reversed course and filed an amendment which makes the fix described by Couch below.]
Couch said that an amendment to HB 1753 is necessary if Lundstrum's aim is to set the minimum at $9.25 rather than rolling it back entirely. "The intent does not change the text," he said. "She needs to change the text like she did for HB 1752."
Couch anticipates that the issue will eventually be fixed to square what the bill does with its stated intent, but he said the initial hurried committee vote came out of a flawed process. Whether intentionally or not, Lundstrum misrepresented what was in the bill, he said. "Her bill is the best example of why you should give notice. All they had to rely upon was her word. Nobody had talked to anybody about it. She told them what that bill did and it was absolutely incorrect and they voted it out."
Even if the remaining issues with HB 1753 are resolved, Couch added, the bills still eliminate substantial portions of the minimum wage hikes just approved by voters.
"I think it's a bad precedent to overrule something the people voted on just last November with a two-thirds vote," said Rep. Deborah Ferguson (D-West Memphis), one of two Democrats on the committee who opposed the bills.
By Wednesday morning, numerous activist groups were speaking out against the bills, and a "Rally to Protect the Wage" was quickly organized for the following day at the Capitol. The Democratic Party of Arkansas held a press conference at noon on Wednesday, where chairman Michael John Gray said, “We can’t start a trend of letting people in a marble building in Little Rock overturn the will of 68 percent of Arkansas voters.”
At around the same time that Wednesday, at a luncheon held by the Political Animals Club in Little Rock, Governor Hutchinson announced that he opposed the legislative efforts to alter the minimum wage passed by voters. The governor acknowledged the efforts of Chamber of Commerce lobbyist Ken Hall, who was in attendance. "I see Kenny over here for the Chamber that has worked on this," Hutchinson said, adding that he was "sympathetic" to the concerns the Chamber had raised, one reason that he opposed the ballot initiative to raise the minimum wage in 2018. However, he said, "This is an act of the will of the people of Arkansas and I do not believe it should be changed by legislative action."
The Republican Party of Arkansas also issued a statement mid-day on Wednesday in opposition to the legislation, stating, "We respect the will of the people and their majority vote."
Asked whether she would still run the bills despite the opposition from Hutchinson and the Republican Party, Lundstrum responded in a text message, "Oh yes!" She told the Arkansas Democrat-Gazette, "It's like belly buttons; everybody's got an opinion."
She said that HB 1752 would give a chance for nonprofits and small businesses to "catch their breath. They wouldn't have to go up as drastically. This just gives them a little bit of breathing space." She predicted that HB 1753 would benefit teenagers by helping them get first jobs at lower wages. "Once you get a good teen that's willing to work, their wages are going to go up," she said.
"These bills are very structured and very tight," she said. "They're not broad-sweeping."
In practice, the bills could impact a large number of employers and workers. A report released in September of 2018 by Arkansas Advocates for Children and Families found that around 213,000 workers stood to get a direct pay increase if the state minimum wage was increased to $11. No data has been released to date regarding precisely how many of those workers would be impacted by Lundstrum's bills, but 15 percent of those workers — around 31,000 — are younger than 20 years old, the report found (and thus would be exempt under HB 1753). HB 1752, meanwhile, would exempt the overwhelming majority of businesses in the state. Arkansas Advocates recently crunched the numbers at a slightly lower threshold based on available data and found that 84 percent of businesses in the state have fewer than 20 employees (Lundstrum's bill puts the threshold at fewer than 25, exempting even more businesses).
Arkansans for a Fair Wage, the group that pushed the campaign for the ballot initiatives, issued an online ad last week arguing that wage cuts in Lundstrum's bills would cost the state hundreds of millions of dollars in tax revenue. Sen. Greg Leding (D-Fayetteville) said that he is planning to seek additional information from the Bureau of Legislative Research about the fiscal impact of the bills.
Lundstrum said she was not sure when the bills would run on the House floor. They are on the House calendar and could be up for a vote as soon as this afternoon.
"The voters spoke," she said. "I'm not trying to do anything radical or scary or thwart the will of the people. That's not my intention at all."