BERLIN — A pair of state lawmakers and a grassroots organization this week announced proposed legislation to increase the minimum wage in Maryland, but the jury is still out on what the proposal could mean on the local front.
On Tuesday, Senator Robert Gariagiola (D-Montgomery) and Delegate Aisha Braveboy (D-Prince George’s) joined the advocacy group Raise Maryland for a rally in Annapolis announcing proposed legislation aimed at increasing Maryland’s current minimum wage from the current $7.25 to $10 by 2015. Under the proposed legislation, the state’s minimum wage would be increased to $8.25 per hour this year before hitting $9 in 2014 and $10 in 2015. Starting in 2016, the minimum wage would be indexed, or adjusted, annually to keep up with inflation and the rising cost of living.
In addition, the proposed bill would raise the minimum wage for tipped employees, which make up a large segment of the resort area’s workforce, from the current 50 percent, or $3.63 per hour, to 70 percent. Several states already have higher minimum wages for tipped employees and a handful even require tipped employees to be paid the full 100 percent of the minimum wage.
While increasing the minimum wage for all employees, including a modest increase for tipped employees, is clearly a favorite among the workforce in Maryland, it could have serious implications for the business community still struggling in a staggering economy, particularly small businesses in seasonal or resort communities that walk the thin line between success and failure.
“I haven’t seen the bill, but it bears keeping a close eye on,” said Senator Jim Mathias (D-38), who represents Worcester County and the lower shore. “The economy is still very soft and small businesses are still challenged. Because of the seasonal nature of our local economy and the turnover of our workforce, there could be serious implications with this.”
Delegate Mike McDermott (R-38B) also voiced concern this week with the proposed minimum wage hike. McDermott pointed to the fragile balance between making it and closing up shop for many businesses in his district.
“Using Ocean City as an example, in tough times, we don’t want to drive up the cost of doing business any more than it already has,” he said. “Raising the minimum wage substantially will drive up the pay scale for the rest of the skilled employees with more experience and longer tenures.”
McDermott said the current minimum wage is probably appropriate for many entry-level jobs, particularly in the resort area and across the lower shore. He said higher payroll costs associated with the proposed wage hike might force business owners to higher fewer employees or even lay off some.
“Ocean City is very dependent on what I would call not necessarily skilled labor,” he said. “If employers higher fewer employees, the product or the level of service might suffer. For first-timers in the job market, earning $8 an hour is better than not having a job. Get in the door at $8 an hour and work your way up, or try for a better job.”
However, Raise Maryland believes an increase in the minimum wage will have the opposite effect and actually help the still sluggish economy. For example, the state’s current minimum wage at $7.25 per hour represents an annual salary of just $15,000 per year for a full-time worker, a salary that is not sustainable for most workers struggling as the cost of living continues to go up.
Raise Maryland cites an Economic Policy Institute report that asserts over 530,000 workers in the state, or roughly one out of every five, will benefit from the proposed increase to $10 per hour. Raise Maryland predicts the proposed increase will inject an estimated $392 million into the state’s economy and create roughly 3,400 jobs.