With momentum building for higher hourly pay in Maryland, Rep. John Delaney, a co-sponsor of a federal minimum wage bill and a former CEO, urged Baltimore-area business leaders Thursday to have a voice in a measure he said is long overdue.
The business community's involvement in crafting a law will be key in limiting damage to businesses while lifting the standard of living for low-wage workers, the Maryland Democrat said during a round table discussion led by the Greater Baltimore Committee.
While Congress is unlikely to act soon on the federal proposal, he said, momentum has shifted to the states, 19 of which now have higher minimums than the federal $7.25 an hour. Maryland has not raised its $7.25 an hour minimum since 2009.
"We're one of the most expensive states in the country and we haven't raised our minimum wage," said the 6th Congressional District representative who has said he would spend his own money to work for a wage hike in the state. "This struck me as a problem."
Efforts to raise minimum pay in Maryland have failed in the past, with business interests such as the Maryland Chamber of Commerce arguing that most large employers now pay well over the minimum. Any increase, opponents say, would be especially burdensome on small businesses that haven't recovered from the recession.
It will be a big issue in the upcoming General Assembly, said Donald Fry, the GBC's CEO and president.
Businesses are concerned about being forced to raise not only minimum levels but wages across the board, and favor an incremental approach over an immediate jump, Fry said.
"Nobody has been planning for a significant jump," he said.
But the issue is gaining traction. Late last month, Montgomery and Prince George's counties, which include higher cost of living areas, raised the minimum wage in those jurisdictions, with phased-in increases that will rise to $11.50 an hour in October 2017. Gov. Martin O'Malley has called for a higher minimum wage, and all three Democratic gubernatorial candidates have voiced support as well.
GBC's position in the past has been that any increase should be addressed at the federal level, not handled in a patchwork fashion by the states. The group won't formulate a position until legislation is proposed.
The GBC organized Thursday's discussion, which included representatives of Northrop Grumman, T. Rowe Price, Under Armour, Duane Morris, the Abell Foundation and others, to get the perspective of an elected official who understands not only policy but the effect on business, Fry said.
Some taking part in the session said more emphasis should be placed on moving workers up from minimum wage jobs, as well as providing training for skilled trades that can lead to higher paying jobs.
"If you only do something about minimum wage, all you're doing is pushing the balloon," and "we're going to pay for its elsewhere," said Thomas A. Donahue, a Baltimore-based vice president of rail and transit for the engineering and construction firm CH2M Hill.
"We have to create opportunities for kids" who might not be college-bound, he added.
Kenneth W. DeFontes Jr., CEO and president of Baltimore Gas and Electric Co., told Delaney that any required increase in wages should end up resulting in higher employment and lower taxes.
"If we can figure out how to do it in [that way], that could get me as a business person more supportive," DeFontes said.
Delaney suggested one approach would be to tie the minimum wage to the poverty level, which would mean an increase of about $1 an hour.
Delaney, who founded and led CapitalSource bank and is the only former CEO of a publicly traded company in Congress, said he got involved in the minimum wage issue in part because of concerns over the state's competitiveness.
"We do have to worry about the significant growth of low-skilled jobs," leading to negative social effects, such as employees forced to work multiple jobs who then face longer commutes and more time away from children, he said. Putting more money in workers' pockets could lift some out of food stamps and other entitlement programs, he said.
"If you do it correctly, it should not have a negative effect on the economy," Delaney said. "If the business community continues to fight it, it's more likely to get misguided minimum wage policy."