State legislators revive bill which failed to pass in ‘18
(Jan. 25, 2019) Maryland’s “Fight for Fifteen” Minimum Wage Bill, which failed to clear committee hearings last year, has been revived for the 2019 General Assembly session by lawmakers intent on boosting the state’s bottom pay rate to $15 per hour by 2023.
Critics, however, argue that House Bill 166/Fight for Fifteen, introduced by sponsor Del. Diana Fennell (D-47, Prince George’s) before the House Economic Matters Committee on Wednesday, would economically devastate small business operators and tip-based employees, which could prove especially impactful in this area.
Sen. Cory McCray (D-45, Baltimore City) previewed the resurrected “Fight for $15” campaign during a press conference in Annapolis last Monday. Echoing the legislative push last year, HB 166 would raise the minimum wage to $11 per hour later this year, and then add $1 each year until reaching $15 in 2023.
Greater Ocean City Chamber of Commerce President & CEO Melanie Pursel, while highlighting the economic diversity among state jurisdictions, noted the concern within the service industry regarding pay increases.
“We don’t want to be discriminatory, but we want to be practical … and not have it impact business enough … to cut back on hiring and hours,” she said. “What we’re afraid of is it’s actually going to be a job loser.”
In 2014, the General Assembly approved legislation that raised the state minimum wage rate from $7.25 to $8 an hour, effective Jan. 2015, then to $8.25 in July 2015, followed by $8.75 in July 2016 and $9.25 in July 2017, before reaching the current $10.10 scale last July.
The state’s current minimum wage regulations exempt employees earning at least $30 monthly in tips who are paid a $3.63 hourly rate that must combine to equal at least the $10.10 scale; amusement and recreational businesses employees who are paid the higher sum of either 85 percent of the minimum wage or $7.25; and employees under 20 years of age who must earn at least 85 percent of minimum wage rates during their first six months on the job.
Revisions incorporated in the Clean 15 bill include increasing pay rates for tip earners to the $15 minimum by 2027, equal pay for workers under the age of 20, and removing current exemptions disqualifying rural agricultural workers from earning the state minimum.
The National Employment Law Project, a nonpartisan, nonprofit organization, released a statement following McCray’s announcement advocating for the Clean 15 bill.
NELP Executive Director Christine Owens, whose organization researches and advocates on issues impacting low-wage and unemployed workers, argued the state’s current minimum wage rate fails to meet cost-of-living standards, which vary regionally and impact workers in every county.
Owens estimated the $15 rate would benefit 22 percent of the states workforce, or roughly 573,000 people, who would receive average raises of $4,600 by 2023.
According to the Economic Policy Institute’s Family Budget Calculator, a single full-time worker in the Baltimore metro area had to earn $38,698 during 2017, or approximately $18.60 per hour, to remain financially afloat. The figured scaled lower in Garrett County, where $33,322 or about $16 per year is required.
Statewide, according to Owens, adults without children struggle to survive when earning below the $15 hourly rate. She also noted tipped workers are nearly two times as likely to live in poverty and are disproportionally female.
Taking a different bent was Melvin Thompson, Restaurant Association of Maryland senior vice president, whose organization is strongly opposed to the wage bill.
“The restaurant industry is extremely labor-intensive and requires four times more labor per $1 million in sales than … most other industry sectors in the state,” he said. “With a narrow average profit margin of 4 percent for our industry, every $1,000 in increased costs requires at least $25,000 in increased sales just to break even.”
Thompson said in light of Maryland’s current $10.10 scale, along with increased labor costs associated with state-mandated paid sick leave benefits approved last year, the proposed pay rate changes could experience opposite outcomes of the intended economic boon.
“Passage of yet another minimum wage increase would be bad public policy and will force businesses to reduce work hours and eliminate jobs,” he said.
Thompson also questioned conventional wisdom that price increases could be passed onto consumers.
“If we could raise our prices to fully offset higher labor costs without consequences, we would have done so already,” he said. “Customers balk at higher prices that come with no additional value.”
Thompson said wait staffs often earn above the proposed minimum rate and could suffer disproportionally.
“Tipped employees are among the highest wage earners in full-service restaurants, often earning more than $15 an hour,” he said. “Tipped employees will likely earn less as employers replace tipping with a service charge and pay servers a flat hourly wage of $15 instead.”
Susan Jones, executive director of the Ocean City Hotel-Motel-Restaurant Association, said the Clean 15 bill could prove damaging for certain segments.
“It’s nerve-racking that these ideas and issues are being put forth, because they will be devastating to the economy of the business operator,” she said. “People will lose jobs if the minimum wage goes to that amount.”
After the $15 rate is achieved in 2023, the bill would permit annual adjustments to keep pace with cost of living increases, which is already law in 16 states and the District of Columbia. Additionally, individual counties would be allowed to increase the minimum wage local.
Based on early indicators, Pursel said bill sponsors sound amicable to including regional provisions to avoid a flat $15 rate statewide.
“They would look at the economic landscape of each county,” she said. “The sentiment seems to be that an increase is going to go through, so we’re just trying to make it as palatable as possible for our small seasonal businesses.”