SENATE BILL REPORT

SB 5422

As Reported by Senate Committee On:

Commerce & Labor, February 11, 2015

Title: An act relating to establishing a temporary teen training wage.

Brief Description: Establishing a temporary teen training wage.

Sponsors: Senators Baumgartner, Braun and Angel.

Brief History:

Committee Activity: Commerce & Labor: 2/04/15, 2/11/15 [DP, DNP].

Majority Report: Do pass.

Signed by Senators Baumgartner, Chair; Braun, Vice Chair; King and Warnick.

Minority Report: Do not pass.

Signed by Senators Hasegawa, Ranking Minority Member; Conway and Keiser.

Staff: Susan Jones (786-7404)

Background: Initiative 688, approved by voters in 1998, requires the Department of Labor and Industries (L&I) to make annual increases to the state minimum wage for adult workers by the rate of inflation. L&I recalculates the minimum wage in September, which takes effect the following January. L&I has authority to establish the minimum wage for minors in rule. Teen workers age 16 or older must be paid at least the same minimum wage rate as adults, and workers under the age of 16 must be paid at least 85 percent of the minimum wage. The state minimum wage is $9.47 per hour. The federal minimum wage is $7.25 per hour.

Summary of Bill: Employers may pay teen training wages to new employees ages 16 to 19 years at 85 percent of the state or federal minimum wage, whichever is greater. Employees working under the teen training program may not be more than 10 percent of an employer's workforce. However, an employer with fewer than 20 employees may employ two teen training-wage employees at one time.

Appropriation: None.

Fiscal Note: Not requested.

Committee/Commission/Task Force Created: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony: PRO: There is high unemployment among teens. Some teens have lost their work ethic and the opportunity to gain essential work skills. Teens need to learn the skills of arriving at work on time, dressing appropriately, communicating with customers, and using basic math skills. This sets them up for success in life. Working also allows teens to earn money for college or trade school. In 2004 teen employment was about 44 percent and 2014 was about 34 percent. In a restaurant survey, 40 percent said they would like to hire teens if it was at a lower wage. This may help some businesses be more competitive if they are close to states with lower minimum wages. Businesses invest a lot in training and will not get rid of teens after the temporary training wage. Small businesses are having trouble finding qualified employees because younger workers are not getting skills as teens. Grocery stores are great for teen workers because there are flexible schedules and the employers will often work around teens' school activities; however, there are some tasks minors are legally prohibited from doing, affecting productivity and justifying a lower wage.

CON: Lowering the minimum wage for teens is the wrong approach. Declining teen employment is a national trend unrelated to the minimum wage. Teen unemployment does not inevitably lead to unemployment later on. Washington ranks seventh in teen unemployment but ranks thirtieth for young adult unemployment. Teen workers need to be paid fair compensation for their labor. Many teens are helping to support themselves and their families, and are paying for school.

Persons Testifying: PRO: Senator Baumgartner, prime sponsor; Bob Battles, Assn. of WA Business; Mark Johnson, WA Retail Assn.; Trent House, WA Restaurant Assn.; Patrick Connor, National Federation of Independent Business WA; Carolyn Logue, WA Food Industry Assn., South Sound Chamber of Commerce Legislative Coalition.

CON: Elissa Goss, WA State Labor Council; Marilyn Watkins, Economic Opportunity Institute.