OC Expects $1M Budget Hit Eventually With Minimum Wage Hike

OCEAN CITY — The Town of Ocean City is now grappling with the minimum wage increase approved by the General Assembly as it moves through the budget process.

During the General Assembly session that ended this week, state lawmakers approved a bill gradually increasing the minimum wage in Maryland to $15 per hour by 2025. Gov. Larry Hogan last week vetoed the legislation, but the veto was overridden by the House and Senate.

The current minimum wage in Maryland is $10.10 per hour and that will increase to an even $11 per hour on July 1. Over the next four years, the minimum wage will be increased on a graduated scale until it reaches $15. The deadline to reach the $15 rate is stretched out until 2028 for businesses with fewer than 15 employees, a measure included in the bill to insulate small businesses somewhat from the rather onerous increase.

However, as the resort’s largest employer, the Town of Ocean City will likely bear the brunt of the minimum wage increase the most at least locally. During budget work sessions this week, Budget Manager Jennie Knapp said the fiscal year 2020 spending plan anticipated the wage hike and included the next step in the lower end of the town’s pay scale, but there will be challenges as the minimum wage escalates in future years as outlined in the legislation.

“We haven’t figured out what we’re going to do,” she said. “It’s going to be a lot of money. It’s probably going to be $1 million going forward.”

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The minimum wage increase will largely affect the town’s seasonal and temporary part-time employees. Ocean City takes on nearly 800 seasonal employees each summer and that sector is where the town will likely feel the increase the most. The challenge will be nudging up the wage increase across the pay scale for year-round, full-time employees, according to Knapp.

“Taking the minimum wage to $11 is not a problem for this year,” she said. “It is going to have an impact throughout the pay scale. We’re going to have to figure out a way to make it equitable across the pay scale.”

Last year, Ocean City anticipated a minimum wage hike and nudged the lower end of its pay scale up 2 percent. However, with the bill passed into law, the increase is going to come at a quicker pace.

“This year, we were able to absorb that 2-percent increase, but it’s going to have a ripple effect,” said Knapp. “We won’t be able to keep absorbing that. It’s going to be a 9-percent increase per year.”

Councilman Mark Paddack said the resort’s private sector is facing the same challenges. For example, if an entry level dishwasher position at a resort restaurant pays $15 per hour, then the line cooks and other employees that maybe have been with a company for 10 years will likely have to see their wages increase in kind.

Paddack said business owners can raise their prices incrementally to offset the cost of the higher payroll, but there is a ceiling for that and a comfort level at which the consumer is willing to pay. The other alternative, which both the private sector and the municipal government will have to embrace, is doing more with less.

“The impact of the minimum wage increase on our business sector is they’re just going to have to cut back on employees,” he said. “They can’t continue to raise their prices. This legislation is being shoved down our throats by a liberal legislature in Annapolis. I imagine as a council we’re going to have to cut back on employees.”

About The Author: Shawn Soper

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Shawn Soper has been with The Dispatch since 2000. He began as a staff writer covering various local government beats and general stories. His current positions include managing editor and sports editor. Growing up in Baltimore before moving to Ocean City full time three decades ago, Soper graduated from Loch Raven High School in 1981 and from Towson University in 1985 with degrees in mass communications with a journalism concentration and history.