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New Minimum Wage Law Could Either Sink Or Revive FL Economy

Patch logo Patch 12/30/2020 D'Ann Lawrence White
a hand holding a fork and knife: Florida voters passed controversial legislation that experts say will either revive or destroy the state's economy. © Shutterstock Florida voters passed controversial legislation that experts say will either revive or destroy the state's economy.

FLORIDA — With the coronavirus pandemic cutting the 2020 Florida legislative session short, Florida political leaders admitted this wasn't the year to promote new agendas and tackle groundbreaking statutes.

However, Florida voters didn't need their elected representatives to pass controversial legislation that, depending upon the politics of the prognosticator, could either save or destroy the state.

During Nov. 3's general election, 60 percent of Florida voters approved Amendment 2 to the Florida Constitution, which raises the minimum wage rate over the next six years from its current rate of $8.56 per hour to $15 an hour.

The first stage will take effect in September 2021 when the wage will increase to $10 an hour. The minimum wage will then increase by $1 each year until it reaches $15 an hour in 2026.

(A different formula applies to servers and other employees who depend on tips for their services. Click here.)

The law applies to all wages paid by public and private sector employers regardless of the size of the business or number of employees.

After Sept. 30, 2027, the minimum wage rate will be adjusted annually by the Florida Department of Economic Opportunity based on changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers.

Florida is the eighth state in the country and the first in the South to raise its minimum wage to $15 an hour. California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey and New York have also approved the legislation.

The measure was supported by civil rights groups, labor organizations and social service agencies who maintain that it simply isn't possible for a family to live on a wage of $8.56 per hour, or $17,804.80 a year.

In a statement to Patch, Adrianne Shropshire, executive director of the Black Progressive Action Coalition Florida, said Florida's passage of the minimum wage bill will see the salaries of 2.5 million Florida workers rise over the next five years.

“This is a historic moment in which Black voters led momentous turnout in Florida and across the nation, overcoming rampant voter suppression and a global pandemic in support of leaders and policies that can help transform our nation," Shropshire said. "With the passage of Amendment 2, voters made meaningful progress toward racial and economic justice, making sure that working people across Florida can support their families. Black families will be directly, positively impacted by this measure that starts to unravel the racial wage gap and decades of systemic racism.

Kelley Sims, chief development officer for Feeding Tampa Bay, said her organization was already struggling to serve residents trying to raise a family on Florida's minimum wage. The coronavirus pandemic only unscored how close Florida families are to being forced out on the streets as thousands lost their minimum wage jobs.

According to the American Hotel & Lodging Association, nearly 40 percent of hotel workers in Florida have lost their jobs because of the coronavirus pandemic, and industry lobbyists warn that number could reach 70 percent by the first quarter of 2021.

"Florida’s unemployment rate saw its second significant decline in August since May’s historic peak of the pandemic, dropping to 7.4 last month from July’s 11.4 percent," said Sims. "Back in May, unemployment in the state reached a whopping 14.5 percent."

As of November, the U.S. Bureau of Labor Statistics was reporting an unemployment rate of in Florida of 10.145 percent.

As Florida Gov. Ron DeSantis gave his OK for businesses to reopen and employers to hire back workers, industry officials are still waiting for the anticipated economic rebound to follow. Service and hospitality workers, however, remain in the unemployment lines.

"Low-income households are still feeling the pressure, having to choose between basic needs like rent, mortgage, health care and putting meals on their table," Sims said, noting that one in six adults in Florida are facing hunger.

The minimum wage increase, she said, will at least give workers a buffer from paycheck to paycheck.

Amendment 2, however, isn't universally embraced, particularly by Florida small businesses who depend on minimum wage work forces.

The Florida Chamber Foundation, the Florida Small Business Development Center Network and the University of West Florida Haas Center partnered to conduct a Small Business COVID Impact Survey in October. More than 4,800 individuals completed the survey, covering 95 percent of Florida’s counties and representing all industry sectors.

Researchers investigated the contributions of businesses with fewer than 100 employees on the state’s economy and found that 60 percent of net new job gains in Florida since 2012 have come from small businesses with less than 100 employees, confirming the important role small businesses play in the state’s economy.

At the same time, the study illustrated the uncertainty that exists among Florida's 2.7 million small businesses about their ability to rebound from the coronavirus pandemic with 60.8 percent revealing they are extremely concerned about the economy and 45.4 percent expressing doubts about their ability to stay open.

More than half of businesses either voluntarily closed or were forced to close their doors, with more than 30 percent reporting their operations were still suspended during the time of the survey.

With 85.1 percent of business leaders surveyed indicating lost revenue, a majority of businesses have taken advantage of relief programs and received PPP loans, but these businesses say additional support is needed to stay open.

Florida Chamber Foundation is continuing to track the growth of businesses with fewer than 100 employees through a new scorecard it established. Visit TheFloridaScorecard.org and click on the Innovation & Economic Development icon at the top.

Patch received dozens of letters from business organizations including the Associated Builders and Contractors of Florida, Associated Industries of Florida, the Florida Roofing and Sheet Metal Contractors Association Inc., Florida Chamber of Commerce, Florida Home Builders Association, Florida Restaurant and Lodging Association, Florida Petroleum Marketers Association, Florida Farm Bureau, Florida Retail Federation and National Federation of Independent Business urging Patch to oppose Amendment 2.

“Amendment 2 is bad for Florida’s workforce," said Lisa Pate, executive director of the FRSA, told Patch.“This amendment does not belong in our state’s constitution.”

Pate said the amendment would hurt, not help, Floridians get back to work, adding further strain on Florida's fragile economic recovery.

“Florida’s free-market conditions and skill set should be the driving factors that dictate wages, not government mandates," she said. "Our contractors, manufacturers, suppliers and consultants are hurting enough from the pandemic. Raising Florida’s minimum wage now and through our state’s constitution is not the time or the place for this type of change.”

To prove its point, the Florida Restaurant and Lodging Association launched a tipped wage calculator on its website revealing the cost Amendment 2 will have on Florida businesses.

The association is Florida’s nonprofit hospitality industry trade association, representing more than 10,000 independent hoteliers and restaurateurs, household name franchises, theme parks and suppliers. Its mission is to protect and promote Florida’s $111.7 billion hospitality industry which represents 1.5 million employees.

"This calculator depicts the drastic effects of Ballot Amendment 2, revealing that payroll costs with the mandatory minimum wage could increase as high as 77 percent," said Carol Dover, president and CEO of the Florida Restaurant and Lodging Association. "With such an exorbitant hike in payroll costs, this ballot amendment will force small businesses that are already struggling to close, destroying local economies and killing additional jobs."

Prior to the pandemic, Dover said Florida’s restaurant, lodging and tourism industry generated more than $112 billion in annual economic impact and provided jobs for more than 1.5 million Florida families.

With Florida's dependence on tourism and the hospitality industry, which employs hundreds of thousands of mimimum wage job earners, Dover said Amendment 2 has only added fire to an industry that's already been torpedoed.

“This tipped wage calculator will show Floridians the cold, hard numbers that will affect their bottom line and ultimately determine whether or not their business will survive," she said.

“An economic impact study revealed that Florida will lose at least 158,0000 jobs for workers across the state with the passive of the ballot initiative," Dover said. “Ballot Amendment 2 is a job killer, one that will leave the hospitality industry on life support. We cannot afford to lose the small, family-owned businesses that make Florida unique and are responsible for the majority of jobs created in this state.”

A recent economic analysis by Miami University and Trinity University reported that the coronavirus has already destroyed about 336,000 direct and hotel-supported jobs and led to hundreds of thousands of job losses and billions in sales.

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