Minimum Wage’s Extensive Impact

Minimum Wage’s Extensive Impact

Throughout the budget process for local governments this spring, a consistent concern surfaced. While they don’t know exactly how much it will cost, officials know the state’s minimum wage increase will have a major impact on the individual governments’ expenditures in the next fiscal year and beyond.

In Ocean City, once the full minimum wage increase to $15 an hour is reached in six years, a budget hit of $1 million could be realized, according to an early estimation. All local governments will also be hit with incremental increases in expenses each year until the ceiling of $15 an hour is met. When governments face unexpected large increases in spending, there are few options to raise revenue. The easiest way to bring in more money is through property taxes. Therefore, it’s safe to assume the state’s increase to the minimum wage from the current $10.10 to $11 on Jan. 1, 2020 to $15 by Jan. 1, 2025 will result in governments at some point raising taxes to meet the larger salary expenses.

Area businesses are basically in the same position. For employers with over 15 staff members, the phase-in toward $15 an hour will be six years. For microbusinesses with less than 15 employees, there is a seven-year phase-in period.

It’s difficult to quantify the exact impact on private enterprise. The six-year phase-in will help, but businesses will merely have to work through their seasons and then evaluate their rising expenses at the end of each year. As they figure out the impact on the bottom line, the increase will likely lead to higher prices for consumers at their favorite restaurants and retail stores unless businesses accept losses to their annual net.

The reality here is the required hourly minimum wage will likely be increased once again when the $15 rate is met. The majority of the Maryland General Assembly firmly believes the current minimum wage is not a “living wage.” Officials will likely feel the same way in 2025 about $15. It will just continue to go up in a liberal state like Maryland.

To help employers understand the details and ramifications of the changes included in the legislation approved earlier this year, the Ocean City Chamber of Commerce will offer a seminar on Wednesday, June 5 featuring a labor attorney’s explanation on the law changes and the impact on hiring practices. The seminar will begin at 9 a.m. at the new Aloft Hotel. Visit the chamber’s website to register.

About The Author: Steven Green

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The writer has been with The Dispatch in various capacities since 1995, including serving as editor and publisher since 2004. His previous titles were managing editor, staff writer, sports editor, sales account manager and copy editor. Growing up in Salisbury before moving to Berlin, Green graduated from Worcester Preparatory School in 1993 and graduated from Loyola University Baltimore in 1997 with degrees in Communications (journalism concentration) and Political Science.