While Maryland implements the next incremental increase in the statewide minimum wage Saturday, business leaders remain wary of its effects and discussion of a $15 minimum wage.
The state’s minimum wage will increase from $8.75 to $9.25 an hour as it incrementally rises to $10.10 next year.
Montgomery County will also increase its minimum wage from $10.75 to $11.50 an hour. Prince George’s County will raise its rates from $10.75 to $11.50 in October.
So far, the increase has not been the job killer opponents predicted when it passed in 2014. The state’s unemployment rate has steadily dropped to its current level of 4.2 percent even as the minimum wage has risen three times. But workers have seen the bigger effect.
“That’s a pretty big increase for you personally,” said Jeremy Schwartz, an assistant professor of economics at Loyola University’s Sellinger School of Business. “Based on past research we have some mixed evidence on the unemployment effects, so this increase is not going to matter much.”
The incremental increases have helped businesses plan every year, said Donald C. Fry, president and CEO of the Greater Baltimore Committee.
“By having that incremental increase, they have been able to adjust to impacts and plan,” he said.
The predictability and certainty of the raises mean businesses could plan for this year’s increase, and they should already be counting on the increase to $10.10 next year. It’s also limited the effect on the economy.
“The incremental increases are so minor that the effect is probably going to be pretty small,” Schwartz said.
But the increase could affect the potential for upward mobility for minimum wage workers, said Gigi Godwin, president and CEO of the Montgomery County Chamber of Commerce.
“I think as a community, and larger as an economy, one of the concerns we have is how do we get young people or new arrivals to the country onto the first rung of the ladder?” she asked. “You don’t want to make that harder to do, especially at a time when technology is booming and so many kinds of jobs are at risk because of technology.”
Godwin argued those minimum wage jobs could either disappear through automation or become dead-end jobs with no hope for advancement. But she didn’t want to predict an outcome for the economy.
“I’m not so sure that these (minimum wage) changes are going to have all of the positive results,” she said. “But it does drive up the cost, and I just don’t know in the long run if that’s growing the economy or not.”
The higher wages in Montgomery and Prince George’s County could cause problems for some statewide companies.
“We are seeing people are either leaving those jurisdictions or it’s creating multi-jurisdictional issues for companies like the grocery stores,” said Christine Ross, president and CEO of the Maryland Chamber of Commerce.
The $15 discussion
When Maryland passed the $10.10 minimum wage in 2014, it joined Connecticut as just the second state in the country to go that high. But before the state even reaches that threshold, the conversation has moved to $15 an hour.
Seattle has moved to a $15 minimum wage while the states of California, New York and Oregon, along with Washington, D.C., have approved increases to $15.
In Maryland, chief executives in Baltimore City and Montgomery County vetoed legislation that would have increased the minimum wage to $15. State lawmakers also discussed raising the rate to $15 last spring.
It has businesses concerned that the state could be on the verge of losing companies.
“Whenever you make it more difficult to do business here, we’re not very far from many other options,” Ross said. “I think that we should be more measured and that we should think about the ramifications.”
Fry agreed, pointing to the states nearby with lower minimum wages.
“I think when you look at the state and you realize there’s hardly a place in the state of Maryland where you can’t take a drive for 45 minutes to an hour at most and not be in an adjoining state, that’s certainly something that you have to look at,” he said.