The House of Delegates voted Friday to raise Maryland's minimum wage to $10.10 an hour over the next three years, setting up a potential fight over whether to guarantee future increases by tying the rate to inflation.
Delegates voted 89-46 for the increase after an hourlong debate — the first time the House has approved raising the base pay since 2006.
Supporters argued that the wealthiest state in the nation could afford to boost the living standards of its poorest workers, while opponents warned that the move would hurt small businesses and cost jobs among the people that the legislation is meant to help.
The vote is a victory for Gov. Martin O'Malley, who made the $10.10 minimum wage a priority this year. But the measure was scaled back in key ways, removing provisions the Democrat had proposed to index future increases to inflation and to raise the base pay of workers who also earn tips.
O'Malley, who is still hopeful of restoring those provisions, issued a statement thanking delegates for their vote.
"Nobody who works full time should have to raise their family in poverty," O'Malley said, contending that raising the minimum wage also boosts the economy by giving workers more money to spend.
The measure now goes to the Senate, which has yet to act on its version of the bill.
Senate President Thomas V. Mike Miller has suggested that compromise might be needed to accommodate competing interests. He has raised concerns, including that senators are unlikely to agree to a single minimum wage across the state. Some argue that different areas have different costs of living.
Sen. Thomas M. Middleton, a Charles County Democrat and Finance Committee chairman, said this week that his panel would take a look at indexing and other approaches when it begins to work on the legislation next week.
Twenty-one states and the District of Columbia have higher minimum wages than Maryland's, which at $7.25 is the same as the federal minimum wage. President Barack Obama has called for an increase in the federal minimum to $10.10 an hour, but Congress has not acted and is not likely to, given the partisan rancor there.
"The House of Delegates is trying to do what Congress should be doing," said Del. Dereck E. Davis, a Prince George's County Democrat and chairman of the Economic Matters Committee.
Davis, whose committee heard the bill, said economic research supports both sides of the debate. He said some economists contend that raising the minimum wage reduces hiring of low-paid workers, but others who have studied wage increases in other states say that no jobs were lost.
By some estimates, nearly a half-million workers stand to get raises either directly or indirectly if the Maryland measure passes, as some making more than the minimum would see their pay raised as a result.
"To those deciding between keeping the lights on and putting food on the table," Davis said, "help is on the way."
But Davis' committee did strip out provisions in O'Malley's bill that would have widened its scope, refusing to let the minimum wage increase automatically with inflation in future years and balking at raising the base pay of tipped workers.
The bill would freeze tipped workers' hourly wage at the current rate of $3.63, half the current minimum wage of $7.25. Restaurant owners lobbied to be exempted from having to raise their workers' base pay, and Davis noted that between hourly pay and tips, Maryland restaurant workers already earn 90 cents more an hour than their counterparts in any neighboring state.
According to the National Restaurant Association, tipped employees nationally make a median hourly wage of between $16 and $22 when tips are factored in.
O'Malley wants to raise the base pay for tipped workers to 70 percent of the minimum wage.
Sean Malone, lobbyist for the Maryland Restaurant Coalition, a group of full-service eateries, said his clients were pleased with how the House dealt with tip wages.
Even though the base wage would remain frozen, Malone said restaurant owners still would have to increase pay to some workers who either don't get tips or don't get enough to make the minimum wage. He estimated the cost for each of his restaurant clients at $21,000 to $22,000 a year. While that doesn't sound like much, he said, the restaurants do not have large profit margins.
Even though the legislation was scaled back, Republicans and some rural Democrats still argued that the measure went too far, because minimum wages in neighboring states are lower than Maryland's. While previous increases to the minimum wage might not have had noticeably detrimental impacts, they warned, harm would be unavoidable from an increase of nearly 40 percent.
"Maryland, after we do this, will be a less competitive state," said Del. Warren E. Miller, a Howard County Republican. "Companies will not locate here; companies will leave if they can." Employers who can't move will lay off workers or raise prices to try to make up for added labor costs, he said.
Advocates for raising the minimum wage praised the House vote, while saying they hope the stripped-out provisions will be restored in the Senate.
"Because of their action today, we're one step closer to seeing the wages raised for nearly half a million hardworking Marylanders,'' said Matthew Hanson, campaign director for Raise Maryland.
Jessica Cooper, state director for the National Federation of Independent Business, expressed disappointment with the House vote, calling it a "job killer," particularly for the young and inexperienced.
"When you raise the wage, especially such a large jump, it's going to affect the whole payroll," she said, "not just the minimum wage. We're hoping the Senate realizes this."
The House unanimously approved a second bill aimed at helping the state's poorest workers by increasing slightly the "earned income" credit they could get on state income taxes. One in eight Maryland households claimed a refundable credit on their 2010 taxes, receiving about $500 on average, according to legislative analysts. The measure now goes to the Senate.