Baltimore City Council divided over $15 minimum wage

The Baltimore Sun
Baltimore City Council members are split on a $15 minimum wage for the city.

Baltimore City Council members plan to begin work this week on legislation that would rapidly increase the city's minimum wage to $15 an hour — a proposal that has drawn heavy criticism from city agencies, economists and businesses.

Council members are split on the measure, which would increase the minimum wage to $15 by 2020. Mayor Stephanie Rawlings-Blake has not formally opposed the bill, but the city's Finance Department estimated it would cost the city more than $150 million over the next five years, and push the unemployment rate as high as 10.6 percent.

"This would return the City to the unemployment levels of the Great Recession, and virtually all of the jobs lost would be youth, young adults and unskilled jobs," the department reported.

Councilwoman Mary Pat Clarke introduced the bill in April amid a national movement to increase the minimum wage. The federal minimum wage is $7.25. New York, California, the District of Columbia, San Francisco and Seattle all have approved legislation to push the rate to $15 over time.

Maryland's minimum wage increased to $8.75 from $8.25 this month, the first of several yearly bumps approved by state lawmakers two years ago to bring the rate to $10.10 an hour by 2018.

David Cooper, an analyst for the liberal Economic Policy Institute, called attempts to predict the cost of the bill "pure speculation" and a "total shot in the dark."

Clarke called the Finance Department's analysis "worse than hypothetical" with "absolutely no basis."

"They're creating a dramatic number which is a way for this administration to oppose this legislation without saying so," she said.

Others have expressed concerns. William H. Cole IV, the director of the Baltimore Development Corp., wrote to the council that it "would most likely lead to increased prices for goods and services, reduced employment opportunities and possible relocation or closure of some businesses."

The Mayor's Office of Employment Development said its YouthWorks summer jobs program, which gave 8,000 city youth work this summer, would need an extra $2.65 million to maintain its size by 2020 if the bill was enacted.

The Greater Baltimore Committee, the Downtown Partnership of Baltimore and the Restaurant Association of Maryland all opposed the measure.

"Baltimore City doing this in isolation is a significant challenge and would be a competitive disadvantage for the city," said Donald C. Fry, president and CEO of the Greater Baltimore Committee.

A spokesman for Rawlings-Blake said she will sign the bill if it passes the council, but she would hope to coordinate increases with officials in neighboring counties.

"The mayor knows that any increase has a broader economic impact than on just one jurisdiction and hopes that the conversations around increases are coordinated regionally or even statewide," spokesman Anthony McCarthy wrote in an email.

In Baltimore, opponents say fundamental differences in the workforce compared to those of other cities make the increase problematic.

Only about a quarter of city residents 25 years or older have at least a bachelor's degree. The proportion in San Francisco, Seattle and the District of Columbia is upward of 50 percent.

"We have a very unskilled labor force," said Councilman Jim Kraft, who opposes the bill. "It's easy to get rid of those people, and easy to change those jobs from full-time jobs to part-time jobs."

The rate of the proposed increase in Baltimore would be greater than in other cities.

Clarke's proposal would raise the minimum wage an average of about 18 percent a year. In the District of Columbia, the wage is set to increase about 8 percent annually. In San Francisco, the increase averages 10 percent a year.

In Seattle, smaller businesses were allowed to increase their wages at a slower rate than larger ones.

"We aren't even talking apples and oranges here," Kraft said.

Economists on both sides say such a rapid increase is outside the range of what has been studied.

"It seems crazy," said David Neumark, director of the Center for Economics & Public Policy at the University of California, Irvine. "I have no problem calling it reckless."

The hike is dramatic but not unprecedented, Cooper said. Santa Fe, New Mexico, raised its minimum wage by 65 percent — from $5.15 to $8.50 an hour — in 2004.

Cooper said the concerns voiced then were similar to those raised about Baltimore's bill, but have not materialized in Santa Fe. The unemployment rate there fell by about a percentage point in the three years after the hike, according to the Bureau of Labor Statistics, and per capita income increased slightly during that same time period, according to the U.S. Department of Commerce.

Neumark, a research associate for the National Bureau of Economic Research, said minimum wages are "a very ineffective way of helping the poor."

"I think politicians want to be seen doing something on inequality, and inequality has gotten worse," Neumark said. "I don't know that we know how to help cities in very poor circumstances, but the minimum wage is kind of a cop-out."

Cooper said a minimum wage increase isn't supposed to act as an anti-poverty measure.

"Just because this policy is not going to eliminate Baltimore's poverty problem doesn't mean it's not a good thing to do," he said.

Clarke said she set the increase to $15 because it's close to the amount required to support a working person in Baltimore, and also fits the national Fight for $15 movement. She said the bill's passage could influence the state to increase the minimum again.

But the council is split. Members Jim Kraft, Carl Stokes, Rikki Spector, Helen Holton and Bill Henry told The Baltimore Sun they would vote against the bill in its current form. Brandon Scott, Robert Curran and Sharon Green Middleton said they leaned in favor of it without fully backing it.

Edward Reisinger said he was skeptical. Eric Costello, Jack Young, and Nick Mosby don't know how they will vote.

Pete Welch and Warren Branch did not respond to multiple requests for comment via phone and email.

The council's labor subcommittee is scheduled to begin reviewing the bill Tuesday in a work session. Curran, the committee chair, said he expects the bill to pass out of committee with amendments, and hopes for a full council vote by September.

Clarke said she is optimistic that the discussion will address "legitimate concerns," and persuade her colleagues to support the increase.

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