Baltimore's minimum wage gamble

Baltimore $15 minimum wage: There is no precedent for what the council is trying to do.

The debate over whether to raise Baltimore's minimum wage to $15 an hour by 2022 is hardly over, despite the measure's initial approval at a City Council meeting Monday. It advanced to a third reading by a 7-4 vote with three abstentions and one absence, meaning a majority of the council is either opposed or ambivalent about the idea. Because enacting legislation requires the affirmative vote of a majority of the council to be enacted — meaning eight yes votes — there is substantial doubt about the outcome when a final vote is taken on Monday, particularly since one of the council members who abstained, Carl Stokes, said today that he will not support the measure. Although we have generally been supportive of higher minimum wages, we urge the council to reject this proposal.

The idea of a $15 an hour minimum wage is clearly gaining traction nationally, even as the movement redefines what the minimum wage means. Several cities (including nearby Washington, D.C.) have committed to requiring wages at that level during the next few years, and two states — New York and California — are moving in that direction as well. Democratic presidential nominee Hillary Clinton has committed to supporting a national $15 an hour wage floor. But there are solid reasons for Baltimore to let the debate play out elsewhere rather than being in the vanguard of the movement.

Academic literature on the effects of minimum wage increases offers mixed conclusions, and it is hotly debated. Conservatives cite some studies that predict higher prices and fewer jobs after minimum wage increases, and progressives point to others showing minimal ill effects but substantial increases in the standard of living for those at the lower end of the economic scale, with positive ripple effects throughout the economy.

But whichever set of research you find most persuasive, there is not good evidence at all about what happens when an individual city suffering from high unemployment and poverty and low workforce participation mandates a minimum wage this far above the rate in its surrounding jurisdictions.

The most cited research debunking the idea that a minimum wage increase in one jurisdiction hurts workers there is a 1993 paper by Princeton economists David Card and Alan B. Krueger documenting what happened at fast food restaurants in New Jersey compared to those in eastern Pennsylvania when the Garden State increased its minimum wage in 1992. They found, contrary to the conventional wisdom, a relatively modest rise in prices and a 13 percent increase in employment in affected New Jersey stores relative to those in Pennsylvania.

But there's are big differences between what happened in New Jersey in 1992 and what Baltimore is contemplating now. For one, New Jersey enacted its policy on a state-wide level, and for another, its increase placed the minimum wage there about 19 percent above the national rate (and above that in Pennsylvania). Baltimore's proposal would set the minimum wage 107 percent above the current federal minimum and 49 percent above what Maryland's statewide minimum wage will be by then. An increase to $11.50 an hour, which City Council President Bernard C. "Jack" Young suggested and which Montgomery and Prince George's counties have already committed to, is much more in line with the 1992 New Jersey-Pennsylvania differential.

Proponents of Councilwoman Mary Pat Clarke's legislation may argue that its passage would encourage action on the state level. That's what happened in California, where San Francisco, Los Angeles and the University of California system led the way. New York followed a slightly different path, but the impetus for the increase there started in New York City, where the $15 wage will take effect sooner than in the rest of the state. But our governor is not Jerry Brown or Andrew Cuomo; it's Larry Hogan, a business-oriented Republican who opposed raising Maryland's minimum wage to $10.10 an hour. We can only imagine what he'd say about $15.

Make no mistake, we agree that too many working families in Baltimore are living in poverty. Raising the economic prospects of the city's residents needs to be a top priority of the City Council and mayor. But mandating a wage increase of this magnitude without any realistic prospect for reciprocal action in the suburbs is a massive gamble that Baltimore can't afford to lose.

For reasons that escape us, the normally sober and responsible Mayor Stephanie Rawlings-Blake has said that although she would prefer to see the minimum wage handled at the state level, she would sign this bill. For the council, this is no chance for a freebie vote to please organized labor or any of the legislation's other well-meaning supporters. There is no backstop of a veto threat. The council majority who did not vote for this bill needs to stand firm.

Copyright © 2018, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad
43°