Incremental increase went into effect Jan. 1
(Jan. 10, 2020) Despite steady opposition from business interests across the state, the $11 minimum wage is now in effect for both small and large businesses. The minimum wage will increase every year until it reaches $15 an hour in 2025 for most employers. The Maryland General Assembly passed the “Fight for Fifteen” bill last March by overriding Gov. Larry Hogan’s veto.
This bill could have a bigger impact on Worcester County and Ocean City, given that the area has a high concentration of seasonal, minimum wage employees.
Melanie Pursel, director of the Greater Ocean City Chamber of Commerce, said that though the transition phases are helpful, the rising wages will still negatively affect the Eastern Shore, especially seasonal businesses.
“They have such a short window of when they can make their profit for the year,” Pursel said. “They’re hiring an immense amount of people for a short period of time, so you look at somebody who’s year-round, they have a longer period of time to equalize that level of pay that they’re increasing, whereas anybody that’s a seasonal business, it’s a little bit more difficult.”
She added that some businesses might have to cut back on the number of employees, the number of hours employees work or the services it provides. Numerous local officials argued against the legislation and proposed a geographic amendment.
“Minimum wage was not meant to be a living wage,” Pursel said. “Minimum wage was meant to be entry level, getting your feet wet, learning work ethic, learning how to work with others and show up for work.”
Although those opposed to a higher minimum wage were not successful in the pursuit of an amendment, they were successful in maintaining a tipped wage for servers and bartenders. Currently, all servers must have a base pay of $3.63 and then make up the rest with tips. If the server does not reach $11 an hour with base pay and tips, then the employer must make up the difference with a tip credit.
Pursel said that the tipped wage allows for servers to make much more than the minimum wage, some up to $50,000 a year.
“We want to maintain the tipped wage because we feel that encourages and incentives the industry and servers to provide more exemplary service because they’re incentivized to make a tip,” Pursel said.
She acknowledged that the minimum wage could be beneficial in other areas because it puts more spending money in entry level worker’s pockets, but that in Worcester County, that might not be the case.
“Although they might be making more money, they may be getting less hours,” Pursel said. “So when you look at the net gain, overall for a community, I don’t really see, especially a community like Worcester County, I don’t see an overall net gain.”
To prepare for the phases, Pursel advised private businesses and public sectors to take a look at their budgets and workforces to determine how it can provide the rising minimum wage while also maintaining excellent customer service and safety.
There are numerous exceptions for administrative or executive positions, resident or day camp workers, those under age 16 working a maximum of 20 hours a week, outside salespeople, commission earners, food processors, or individuals in livestock production.
Businesses with fewer than 15 employees are expected to raise the minimum wage 60 cents annually to reach $15 by 2026. Businesses with at least 15 employees will raise it 75 cents annually, and then $1 the last year, to reach $15 by 2025.