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.
By Andrew Dunn
Jul 17, 2016 | 6:45 PM
While Baltimore City businesses may have to pass on the increase to customers by boosting costs, he wouldn't have to do that in Arbutus. As a result, he believes more customers could come to Arbutus for a cheaper deal.
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.
Economists have mixed opinions on whether businesses in neighboring areas would be harmed and most agree higher wages will have the greatest impact on service-sector businesses, including small shops, restaurants and hotels.
Baltimore City Councilwoman Mary Pat Clarke introduced the higher-wage 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.
Council members are split on the measure, which would set the minimum wage at $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.
"It's a rapid jump to $15," said Keith Scott, president and CEO of the Baltimore County Chamber of Commerce, which has more than 500 member businesses.
It is not likely that many businesses will move outside the city's borders to try to avoid a wage increase, according to testimony given by Economic Policy Insitute senior economic analyst David Cooper before the Baltimore City Council Labor Committee this year. Many of the industries affected by the change — including retail, accommodation and food services, hospitals and childcare — are not mobile enough to be able to move to areas with lower wage standards.
"In these industries, the primary advantage is proximity to customers," he said in the prepared testimony. "That is why in choosing to locate in Baltimore, businesses have likely already made the calculation that being inside the city is worth paying higher rents (which tend to be a much larger portion of operating costs than labor) in order to access the city's consumer base."
Scott, of the county chamber of commerce, said small business owners could think about moving to Baltimore County, but while many businesses that hire minimum wage workers are in the service industry, there may not be a need for more of those businesses, such as gas stations or convenience stores.
While the business group was against minimum wage increases on the state level, it has no stance on the potential changes on the city level.
"You've got to look at the minimum wage and make sure you raise it in a way businesses can handle it," he said.
Cathy Schneider, president of the Greater Catonsville Chamber of Commerce and owner of Edible Arrangements franchises in Catonsville and Elkridge, said it's too early to tell what a minimum wage increase in the city could mean for Baltimore County.
Raising the rate may mean that city employers may look for more qualfied and experienced employees to pay at $15 an hour, she said, resulting in less experienced people seeking jobs in the county.
But a raise in the rate brings concern to her, from a personal perspective.
"For a small business owner, $15 is a lot to give," she said. "When you're a franchise like me, when the costs are dictated to you, that would kill me."