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Time to raise stagnant wages for lowest-paid workers [Commentary]

By Valerie Ervin

6:00 AM EST, January 6, 2014

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On Jan. 1 of this year, over 2.5 million low-paid workers throughout the country got a raise. Unfortunately, none of these workers lives in Maryland.

Thanks to minimum wage increases that took effect on New Year's Day in 13 states, including Arizona, Colorado, Connecticut, Florida, Missouri, Montana, New Jersey, New York, Ohio, Oregon, Rhode Island, Vermont and Washington — a diverse group of red, blue and purple states — those who do the hard work of cleaning office buildings, serving food and providing care for the elderly received a modest pay raise.

During the 2013 Maryland General Assembly, legislators had the chance to join these 13 states by passing legislation to raise the state's minimum wage — currently stuck at the federal level of $7.25 per hour, or $15,000 for a full-time year-round worker. This legislation would have also established automatic annual increases so that the state's minimum wage would keep pace with the rising cost of living. By failing to act to raise the wage floor, lawmakers effectively cut the pay of Maryland workers as the value of the minimum wage continues to fall.

When lawmakers return to Annapolis this week for the new legislative session, they might reflect on the opportunity that our state missed by failing to pass a minimum wage increase last year. Had they enacted an increase, almost 500,000 of Maryland's low-wage workers would have gotten a raise, pumping millions in new spending into the state's economy.

How did workers in these other states get a raise? Four of these states — New Jersey, New York, Connecticut and Rhode Island — approved minimum wage increases last year, while the remaining nine of these minimum wage increases are the result of indexing, which calls for automatic minimum wage increases each year guaranteeing that the minimum wage doesn't lose value over time.

According to the nonpartisan Economic Policy Institute, the 13 minimum wage increases taking effect on Jan. 1 of this year will put an extra $975 million in the pockets of the lowest-paid workers in these states, generating over $600 million in new economic growth as these workers spend their increased earnings in the local economy.

As stagnant wages and sluggish job growth continue to cloud the post-recession recovery, these minimum wage increases will help protect the purchasing power of low-paid workers' paychecks, which in turn will boost consumer spending and promote economic growth.

Maryland cannot afford to allow the minimum wage to remain stagnant any longer. According to a report by the National Employment Law Project, 58 percent of all jobs created in the post-recession recovery have been low-wage occupations, and the Bureau of Labor Statistics estimates that six of the 10 occupations with the fastest-projected growth over the next 10 years will be low-wage jobs. Continuing to neglect the minimum wage at the same time that a growing share of workers find themselves relying on low-wage work to make ends meet is a recipe for disaster for Maryland workers and families.

Still, those who oppose any increase in the minimum wage will claim that business cannot afford modestly higher wages for the employees, even as the economic evidence makes clear that businesses that pay fair wages ultimately benefit from reduced turnover and higher worker productivity, as their employees are spared from the struggle of balancing two jobs in order to make ends meet.

In fact, the real strain on economic growth in today's economy stems from the decision made by many national fast food chains and big box retailers to inflate their profits by paying rock-bottom wages, siphoning money out of local communities and impoverishing the customer base needed to sustain economic growth.

The purchasing power of Maryland's minimum wage actually peaked 40 years ago, and would be worth roughly $10.70 in today's dollars. Legislative inaction, however, has allowed the real value of the state's minimum wage to erode as the cost of living continues to rise.

For Maryland's lowest-paid workers — and for businesses across the state that would benefit from increased spending — raising the minimum wage remains an urgent priority. In the new year, it's time for the state legislature to make raising the minimum wage an urgent priority as well.

Valerie Ervin is the executive director of the Center for Working Families and a former member of the Montgomery County Council. Her email is valeriecwf@gmail.com.


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