A Kentucky judge this week upheld a planned minimum wage increase in Louisville and called the corporate argument against increased pay “without merit.”
The Louisville mayor and Metro Council in 2014 reached an agreement to raise the city’s minimum wage to $9 an hour over a three-year period. The city had previously used the state minimum wage level, which is set at $7.25 an hour. This year, three Kentucky companies filed a civil suit to block the increase, saying the city did not have the authority to raise wages above state levels.
The companies argued that the wage increase would force them to forgo hiring new employees and would deter other businesses from relocating to Louisville.
But in a four-page ruling, Jefferson County Circuit Judge Judith McDonald-Burkman wrote that those arguments are unfounded.
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“It is no different than an employer’s duty to withhold occupation taxes for its employees, rates which vary from county to county in Kentucky,” she wrote.
The companies have appealed McDonald-Burkman’s ruling, but the law will take effect while the appeal is decided.
Since 2014, a handful of cities across the United States have passed ordinances raising wages above state levels, including Seattle, San Francisco, and Los Angeles, which have all passed $15 increases.
During the debate over the Los Angeles increase, a study by the Economic Roundtable found that the proposed increase would “put $5.9 billion more into the pockets of 723,000 working people, which will generate $6.4 billion in increased sales.”
“That means that every dollar increase in the minimum wage generates $1.12 in economic stimulus,” wrote Yvonne Yen Liu, one of the group’s researchers, in a blog post explaining the study. “Businesses will hire more in response to the greater demand, creating … new jobs.”
Research also suggests that wage increases are an economic boon on the state level. A 2014 Center for Economic and Policy Research study that reviewed Bureau of Labor Statistics data found that “employment growth was higher in states where the minimum wage went up.”
Those findings “provide evidence against theoretical negative employment effects of minimum-wage increases,” according to the center.
Kentucky Gov. Steve Beshear (R) issued an executive order in June raising the minimum wage for employees of the state government’s executive branch.