Will Romney Flip on Minimum Wage?

July 24, 2007 — -- Automatic increases to the state minimum wage were a key part of Mitt Romney's campaign platform for governor -- No. 39 on the list of promises he offered Massachusetts voters in 2002.

Now that Romney is seeking the 2008 Republican nomination for president, he is shying away from minimum wage indexing at the federal level.

"You know, I haven't looked at the federal minimum-wage process," Romney told ABC News. "I'll look at that. I don't have a -- I haven't taken a position on that at this stage."

Romney spoke to ABC News just days before the federal minimum wage was set to rise for the first time in a decade.

The politics of automatic increases in the minimum wage are dicey for Romney: If he sticks with the position he staked out while running for governor of one of the most liberal states in the country, he runs the risk of alienating the pro-business groups that are critical to winning the GOP nomination. At the same time, if he abandons his previous support for minimum-wage indexing, he will renew questions as to whether his '08 positions stem from conviction or calculation.

"I think that indexing the minimum wage is a problem for Gov. Romney," said Pat Toomey, the president of the conservative Club for Growth. "Clearly he has taken a number of positions" in his presidential campaign "that are more conservative than he has in the past," Toomey said, referring to Romney's initial opposition to the Bush tax cuts. "The question free-market conservatives are asking is: How sincere is this conversion? How strongly does he believe in these things now?"

While campaigning for governor in 2002, Romney pledged to raise the state's minimum wage to $6.94 per hour. He also advocated linking future increases to inflation growth, a process called "indexing." His campaign was "so proud of its worker-friendly position," according to a 2006 story in the Sentinel & Enterprise, that it posted a "message to union members" on its campaign Web site, touting the candidate's support for wage indexing.

Of the many "promises made" listed in Romney's "Progress Report to the People of Massachusetts," "index the minimum wage" is one of three items checked "not yet." The booklet, which was published in 2005, was paid for by Romney's political committee. The minimum-wage promise remained unfulfilled when he left office in early 2007.

"The fact is the governor did propose an increase in the state minimum wage that was indexed to inflation, and when the Democrats passed a bigger increase, he vetoed it," said Romney senior adviser Eric Fehrnstrom. "The governor was also willing to have the state undertake periodic reviews of the wage rate that would take into account CPI [Consumer Price Index] and other economic factors."

Romney, who believes that large, sporadic increases in the minimum wage are bad for business and for people trying to come off welfare, explained his past support for indexing of the state minimum wage by saying that he wanted to foster predictability for employers.

"In our state, I felt it made more sense to index that so that businesses could see the change in cost over time in predictable ways rather than in large jumps from time to time," Romney told ABC News. "But I will look at the federal experience and see if I have any views on that. Of course, from time to time we increase the minimum wage. What's the best way to do that -- that's something that I'll take a closer look at."

The chief economist of the National Federation of Independent Businesses scoffed at Romney's predictability claim, underscoring the heartache Romney would feel from small businesses if he were to embrace indexing of the federal minimum wage.

"Well, my guess is that 99 percent of small-business owners out there would say, 'I don't know how that is going to help me,'" said Bill Bunkelberg, the chief economist of the NFIB and a professor at Temple University. "Indexing means that the minimum wage is going to go up every year making it harder and harder for young, unskilled people to enter the labor force and get some kind of training and experience."

While Romney can shore up his position with business groups by dropping his Massachusetts position on indexing, he risks being attacked by Democrats, and their allies in organized labor, for flip-flopping on yet another issue. Romney's change of heart on abortion rights has received the most attention but he has also switched positions on issues ranging from gay rights to immigration to campaign-finance regulation.

"This really does come down to the age-old question about politicians and whether they keep their promises. If it's something he promised to do in Massachusetts, there is no real reason, economically or otherwise, why it wouldn't make just as much sense to do it at the federal level," said Brad Woodhouse, president of Americans United for Change, a liberal advocacy group that backs a higher minimum wage. "If it was good enough for Massachusetts, it should be good enough for America."

ABC News' A'Melody Lee contributed to this report.