Howard business leaders split on proposed minimum wage increase

Brian England and Pete Mangione both own businesses that have been Howard County institutions for three decades. They both say they care deeply about employees.

But when it comes to whether or not state legislators should raise the minimum wage, they — like many other business leaders in Maryland — don't see eye to eye.

A state bill seeking to raise the minimum wage in Maryland for the first time since 2009, from $7.25 an hour to $10.10 an hour by 2016, has backing from Gov. Martin O'Malley and a majority of Democrats in the House and Senate.

And a recent Baltimore Sun poll shows the proposal has broad support throughout the state, with a majority of respondents — even in the most conservative areas, such as the Eastern Shore and Western Maryland — saying they would like to see an increase in the minimum wage.

Business owners, who will have the task of readjusting budgets to meet any new requirements that are passed, are more divided.

Some say that increasing wages will place an unsustainable strain on their finances, forcing them to hire fewer employees or, in more extreme cases, shut down an entire business. Others say today's employees deserve more than the current minimum wage, which earns a full-time worker $15,080 a year — $650 under the federal poverty line for a family of two.

England, the owner of British American Auto Care in Columbia, falls squarely in the second camp.

When he started his business 35 years ago, he decided that he would pay workers well above minimum wage.

"I always liked to make things better, and I always saw a lot of injustice in the way things were done," he said of his experience working as a mechanic before opening British American Auto Care. "So I said, 'I want to do it the way I want to do it and show that you can still make a living.' "

England has 18 employees — six part-time and 12 full-time. Jobs at his business include office staff, courtesy van drivers and mechanics. He said the lowest-paid position at British American, an apprenticeship, starts at $8 an hour and includes health care coverage, which England requires all his employees to have.

He said he thought his habit of "looking after" workers encouraged them to stick around. Four of his employees have been at the company for 25 years or more.

Jeffrey Sessa, a mechanic who has worked at British American for 2 1/2 years, said the working conditions are the reason he has stayed.

"This is one of my better jobs that I've had," he said. "In my trade, mechanics don't stay in one place for very long."

England is one of more than 150 Maryland business owners to sign on to the Maryland Business For a Fair Minimum Wage statement, a letter supporting a minimum wage increase to at least $10 an hour by 2016, with annual adjustments for inflation after that.

"Raising Maryland's minimum wage makes good business sense," the statement argues. "Workers are also customers. Minimum wage increases boost sales at local businesses as workers buy needed goods and services they could not afford before. And nothing drives job creation more than consumer demand."

The statement also argues that lower employee turnover rates, increased productivity, product quality and customer satisfaction will follow a minimum wage hike, as well as "reduce the strain on our social safety net caused by inadequate wages."

The heads of LPL Financial and Lasting Light Yoga and Reiki, both Columbia businesses, as well as Joy Creations, in Ellicott City, also signed the statement.

But other local business owners said they simply can't afford to raise wages as much as the current legislation suggests without making some sacrifices.

Pete Mangione, whose family has owned Turf Valley in Ellicott City for the past 36 years, said a minimum wage hike "is going to hurt so many small businesses."

He said most of his employees earn more than the minimum wage. Those who are paid $7.25 an hour, a little less than 10 percent of his employees, are younger workers in high school and college, many of whom are just entering the workforce, according to Mangione.

"I know one of the arguments that's made is you can't raise a family on the minimum wage, and I certainly agree with that," he said.

But, he said, "the numbers that are being tossed out are just frightening for a business.

"I'm hiring less and less kids now," he added. "If the minimum wage goes up it'll be even less."

Mangione said adding an age exemption to the minimum wage bill that would allow younger employees to continue to be paid at the current minimum wage might ease some of his concerns.

"Maybe in some other places where heads of households are making minimum wage, it's a different story," he said. "I can only speak for my business."

Dave Norman, president of DavCo Restaurants LLC, a Wendy's franchisee in the Mid-Atlantic region, said many of his employees were young and worked seasonally.

A full-time minimum wage employee currently costs about $28,000 a year after benefits are factored in, he told the General Assembly's Senate Finance Committee on Monday, Feb. 17. If the minimum wage bill is passed, that cost would rise to $33,280 by 2016, he said.

Norman said DavCo would likely have to close 10 Wendy's restaurants if the minimum wage is increased as proposed. In Howard County, DavCo owns two Wendy's restaurants in Columbia, one in Clarksville, one in Savage and one in Elkridge.

But Lt. Gov. Anthony Brown, who also testified Monday, said the composite minimum wage earner is not a young, first-time employee, but a 33-year-old woman.

"It really is, in many cases, that single mom who's earning the minimum wage," he said.

Restaurant owners with tipped waitstaff have also expressed concern about a component of the minimum wage legislation that would lower the tip credit owners can deduct from their hourly pay rates.

Currently, waiters and waitresses are required to make at least 50 percent of the minimum wage, or about $3.63 an hour, from their employer. The rest of their wages are composed of tips from customers.

O'Malley's minimum wage bill would lower the employer tip credit to 30 percent, meaning restaurant owners would have to pay 70 percent of the minimum wage to tipped employees. By the time the minimum wage hits $10.10 in 2016, servers would be boosted to a base pay of $7.07, plus tips.

Randy Marriner, who owns Victoria Gastro Pub in Columbia, said the tip credit component of the minimum wage bill "has unintended consequences that are huge for the restaurant industry."

Marriner sits on the board of the Restaurant Association of Maryland, which has been lobbying against the tip credit change.

"I think the tip credit should stay pretty much where it is for tipped employees because our tipped employees make a fine living," he said, noting that servers at his restaurant typically make more than $15 an hour after tips.

"We are good employers and we want our employees to do well, and we're not trying to get over on anybody over anything," Marriner said. "The tip credit needs to be frozen where it is so restaurants aren't unjustly hit with additional expenses that they have no way to recover."

Some of Howard County's politicians have been vocal on the proposed minimum wage increase.

U.S. Rep. Elijah Cummings, a Democrat who represents most of Howard in Congress, called a minimum wage raise "an opportunity to change the trajectory of the destinies of a lot of people.

"Every working person must have enough money to survive," he said.

On the campaign trail with Brown, Democratic County Executive Ken Ulman has made raising the minimum wage a common topic in stump speeches.

Republican Allan Kittleman, who is running to take over Ulman's seat and who currently sits on the Senate Finance Committee, expressed concerns for business owners like Mangione.

"I see minimum wage sometimes as a starting wage and not a living wage," he said.

Democrat Courtney Watson, a County Council member also running for the county executive seat, said she was in favor of increasing the minimum wage.

As for creating age exemptions, she said she believes "in equal pay for equal work.

"There should be no age discrimination in applying a minimum wage," she said.

Unlike in Prince George's and Montgomery counties, where council members voted late last year to raise the minimum wage incrementally to $11.50 by 2017, Watson and Council President Calvin Ball said Howard would likely watch to see what state lawmakers decided to do before considering taking up the minimum wage at the county level.

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