OCEAN CITY- With the opening of the 2014 Maryland General Assembly session just about a month away, there have been discussions already about some of the potential issues that will directly impact the local area including an anticipated bill that would, if passed, raised the minimum wage across the state.
Last year, a bill introduced in the General Assembly would have raised the minimum wage in Maryland from the current $7.25 per hour to $10 per hour by 2015. Under that proposed legislation, the minimum wage would have been increased to $8.25 in 2013, $9 per hour in 2014 and $10 by 2015. Starting in 2016, the minimum wage would have been indexed, or adjusted annually to keep up with inflation and the rising cost of living.
Despite some early momentum, including a major rally in Annapolis led by the advocacy group Raise Maryland, the bill died in the Senate Finance Committee by an 8-3 vote and never saw the light of day as the session expired. Over the last several months, however, the issue has gained new momentum, including an endorsement from Governor Martin O’Malley, and will almost certainly be reintroduced in the upcoming 2014 General Assembly session.
Some counties in Maryland, including the populous jurisdictions in the center of the state including Prince George’s and Montgomery, for example are undertaking efforts to raise their minimum wage on the county level. Any legislation adopted by the General Assembly would apply across the entire state including the Worcester and the Lower Shore, where there has been little political support for the wage hike.
The issue was broached this week at the Ocean City Economic Development Committee (EDC) meeting as resort business leaders identified the potential wage hike as an issue to keep a close eye on this year. Senator Jim Mathias (D-38) told EDC members he did not vote for the legislation last year and would likely retain his position on the issue in the upcoming session.
Mathias explained despite some indications the economy is recovering, most small businesses are still hurting and a mandated wage increase for employees could have a detrimental effect. He also pointed out the uncertainties of the Affordable Care Act on small businesses.
“The business world is still very unsettled right now,” he said. “Many of our small businesses are walking a thin line of success and they’re now dealing with these health care issues, so I think it’s time to back off a little on the proposed minimum wage increase.”
In addition, any proposed bill would likely 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.
Delegate Mike McDermott, who is now seeking the District 38 Senate seat, also did not support the proposed legislation last year. McDermott pointed to the fragile balance between making it and closing up shop for many businesses in his district. 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 minimum wage hike might force business owners to hire fewer employees or even lay off current employees.
Of course, raising the minimum wage for entry level positions would force business owners to raise their pay scales for talented and tenured employees up the line, putting further demands on the bottom line. For example, if an entry level dishwasher in a restaurant would have to be paid $10 per hour, then the skilled line cooks and chefs further up the pay scale would have to see their wages increased in kind.
Proponents of the proposed legislation cite an improve quality of life for employees across the state, and a greater influx of disposable income to drive up the economy. 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.
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