Bid to raise Maryland minimum wage to $15 raises a ruckus

ANNAPOLIS — Even before this year’s General Assembly convened, legislative leaders targeted raising Maryland’s minimum wage. Last month, the leadership of both the Senate and the House made it official, including raising the minimum wage to $15 per hour as one of their legislative priorities.

Measures now under consideration in both the Senate and the House would raise the minimum wage, now $10.10 per hour, incrementally until it reaches $15 in 2024. After that, the minimum wage would be tied to the consumer price index.

The argument is simple: The current minimum is not a living wage, proponents say.

“For far too long, working families in Maryland have been struggling to cover the costs of their basic necessity,” the bill’s House sponsor, Del. Diana Fennell, D-Prince George’s, told the House Economic Matters Committee earlier this month. “A $15 hour minimum wage would give over 600,000 working people a raise, and help raise them from poverty.

“They’re not just food workers,” she added. “They’re health care workers, security guards, farm workers, teacher’s aides, airport workers — to list a few.”

Women and people of color, she said, are “over-represented” in low-wage professions. Raising the minimum “would help reduce both racial and gender gaps,” she said.

And she cited a recent Gonzales Poll showing 61 percent of Marylanders supporting a $15 minimum.

Prince George’s County Executive Angela Alsobrooks noted to the committee that stagnant wages and income inequities “continue to be a strong point of consternation for so many working families.” From 2009 to 2015, she said, the top 1 percent of Maryland families “made 26 times more than the bottom 99 percent of workers.”

She argued that loosening the pursestrings for lower wage earners would “strengthen consumer demand and create an economy that works for everyone, and not just a wealthy few.”

But opponents say raising Maryland’s minimum wage to $15, which would put it among the highest state minimums in the nation, would come at a price. Paying a minimum of $15 an hour might sound good, they say, but small businesses can’t afford it. It could mean eliminating jobs altogether, owners say — and it’s impossible to pay a $15 minimum for a job that no longer exists.

Unintended consequences?

“Eighty-four jobs in Washington County, Md., gone,” Teri Leiter, owner of Leiter’s Fine Catering in Williamsport, told the Economic Matters Committee. “A three-generation, family-owned catering company, gone … this is what will happen if you pass this bill.”

Leiter said 55 of her employees work at minimum wage. Most of them use their paychecks as a second income, she said, and include students and retirees “that just want a little extra.”

The minimum wage increase would cost her company nearly 50 percent more for labor, she said; those currently making more than minimum wage would have to be compensated at higher levels, too. Bottom line? Another $151,000 for wages.

“We just cannot absorb this,” she said. “Small business cannot absorb it.”

She’d have to consider closing her business or moving it three miles to West Virginia, she said, or 15 miles to Pennsylvania, where the minimum wage is lower.

West Virginia’s minimum wage is $8.75 per hour; Pennsylvania’s is the same as the federal standard, $7.25 per hour.

Currently, the country’s highest minimum wage is in Washington, D.C., at $13.25, according to the National Conference of State Legislatures. Wages there are set to rise incrementally to $15 by July 1, 2020. California’s minimum wage is set to reach $15 by Jan. 1, 2022, and Massachusetts will raise its minimum to $15 by Jan. 1, 2023. New Jersey will raise its minimum wage to $15 by Jan. 1, 2024, and after next year, New York will adjust its minimum annually until it reaches $15.

But more than half the states have minimum wages below $10, with no immediate plans to raise them above that point. Five more have no state minimum wage requirement at all.

While the minimum is on the rise in the nation’s capital, no state bordering Maryland has a minimum wage approaching Maryland’s current $10.10 per hour. Delaware’s minimum will rise from $8.75 to $9.25 on Oct. 1.

And in that discrepancy lies the rub for Western Maryland. “This bill is gonna be devastating to Western Maryland,” Gary Hayes, chairman-elect of the Washington County Chamber of Commerce, told the committee. “Our proximity to West Virginia and Pennsylvania is just far too close, and it’s too easy for a business to just move. … three miles west or south or north, and they’re in another state. Totally different jurisdiction, different set of playing rules. We are not playing fairly with the communities around us; they’ve got a competitive advantage over us.”

Hayes, who owns a Spherion Staffing Services franchise, said five of his client businesses had already moved to Pennsylvania or West Virginia. He suggested the lawmakers “carve out” Western Maryland and the Eastern Shore from legislation to further raise the minimum wage.

But Del. William Wivell, R-Washington, told Herald-Mail Media that he’s skeptical that an amendment to regionalize the bill would fly.

“It can always be offered, but I think the chances of it being successful are probably somewhat slim,” he said. He noted that Del. Neil Parrott, R-Washington, has filed a bill to allow counties to determine their own minimum wages, “which would seem to make more sense.”

Sen. George Edwards, R-Washington, was a little more succinct.

“One size doesn’t fit all,” he said.

Most Western Maryland businesses oppose the bill, he said. “I’m sure everybody would like to get as much as they can get, but I see it as a starting salary, not a minimum wage. It’s the starting pay; you start and then you move your way up.” Students who get their first jobs at fast-food restaurants, for example, “don’t anticipate making that their full-time future work,” he said.

It’s the kind of job where young people “learn to work, you learn work ethic,” he added.

Edwards said some businesses had already told him the change might make them consider leaving Maryland.

“If the metropolitan area wants to (raise the minimum wage), fine — let them do it. But one size doesn’t fit all, and hopefully they would understand that.”

But Sen. Andrew Serafini, R-Washington, said he’s also skeptical that lawmakers would go for a regional approach to raising the minimum — and because of a similar dilemma: Lawmakers from urban counties might conclude that “I don’t want to be at $15 if others aren’t,” he said.

While he’s seen “some admission that it would be fair” to let counties on the borders or with lower costs of living off the hook, he said, voting for it would be another matter. “There’s an intellectual agreement” that it would be more fair, he said, but that might be as far as it would go. And “it’s a nightmare to keep track” of different rates, he added.

Other costs

Washington County Commissioner Cort Meinelschmidt visited local lawmakers two days before the hearing on the House bill, specifically to talk about what raising the minimum wage would cost the county government.

“For Washington County, the minimum wage — if we increase that to $15 — it actually costs the county $30 million annually,” he said. That includes $22 million in wages, $6.1 million in pension costs and about $2 million in taxes, he said.

Adding to the cost is that raising hourly wages for lifeguards, for example, from $11 to $15, means the county would have to raise wages for all the levels of employees above those entry-level positions, too.

Legislative analysts say state government costs would soar, too — by $85.1 million in the coming fiscal year to $428.6 million in Fiscal Year 2024.

Come visit us

Chamber President Paul Frey attempted to be “solution-focused” in his remarks on the bill. He told the committee about initiatives in the county to improve education and training opportunities to prepare young people for careers that pay well above the current minimum wage.

“We’re doing all those things in partnership without even talking about minimum wage,” he said. “We’re doing that with the private sector, the public sector, the school system, our colleges and our community members.”

He invited the delegates to talk with him about what can be done “without raising the minimum wage to have a positive effect on the community.

“I have a bold idea that will take a lot of courage and leadership from this body,” he added. “I would suggest you postpone this legislation for a year. Let’s work together — come to Washington County and see what we’re doing.”

He’ll get another chance to make that plea next week — the Senate version of the bill will be heard Thursday in the Senate Finance Committee.