Maryland would become the first state in the nation to require that government contractors pay workers a "living wage" - nearly twice the minimum wage in some cases - if the General Assembly approves a compromise forged by Gov. Martin O'Malley and legislative leaders.
The agreement, which revives a measure that had stalled because of opposition in the Senate, would allow O'Malley to make good on a campaign promise. Through negotiations in recent days and Tuesday night, legislative leaders agreed to advance a bill that would create a two-tiered system for urban and rural workers.
The bill would require that state government contractors pay workers at least $11.30 an hour in urban areas, such as Baltimore, and $8.50 in rural areas, including Western Maryland and the Eastern Shore. With less than a week left in this year's legislative session, lawmakers said they would move the bill quickly to the floors of the Senate and House of Delegates.
"Chalk one up for the governor," said House Speaker Michael E. Busch, an Anne Arundel County Democrat. "It's important for workers in one of the wealthiest states in the nation to be able to pay their bills."
But business groups including the Maryland Chamber of Commerce opposed the idea and criticized the compromise as ill-conceived. Opponents also said that this would be the worst time to enact such legislation because the state faces a roughly $1.5 billion budget shortfall for the fiscal year that begins in July 2008.
"It makes no sense to artificially inflate the cost of state contracts when the state has a $1.5 billion hole," said Ronald W. Wineholt, the chamber's vice president of government affairs. "The bill simply makes no sense. These wage levels are just pulled out of the air. There's no justification for them. In the marketplace, the wage levels are justified by the value of the product that's produced."
Unions and community groups have pushed for living wage legislation for years as a way to lift families out of poverty; an estimated 50,000 workers would benefit. Advocates argue that a family wouldn't be able to make ends meet under the state's recently raised minimum wage of $6.15 an hour, or $12,800 a year for a full-time worker. A worker making $11.30 an hour would make $23,500 a year.
"This means Maryland is leading the way in ensuring that tax dollars are no longer used to create poverty in the state," said Del. Thomas Hucker, a Montgomery County Democrat. Hucker lobbied for a living-wage bill on behalf of the nonprofit Progressive Maryland before his election.
"If we contract with companies, we ask them not to discriminate and not to pollute the Chesapeake Bay," he added. "Why should we not ask them to create middle-class jobs?"
Critics contend that O'Malley, in pushing for the living-wage bill, is answering to unions that contributed hundreds of thousands of dollars to his campaign last year and that worked to get voters to the polls for the Democrat and former Baltimore mayor.
"The real agenda here is bumping up the union wages," said Robert O.C. Worcester, president of Maryland Business for Responsive Government. "They're the ones that brought him to the dance, and politics being what it is, you reward the ones who bring you to the dance."
O'Malley promised to back living-wage legislation during his State of the State speech in January; he had invited the president of the AFL-CIO, John Sweeney, to join him at the dais. Since then, O'Malley has had numerous conversations throughout the session with lawmakers about the bill, spokesman Rick Abbruzzese said.
"The governor is committed to improving the quality of life for working families in our state," Abbruzzese said.
The living-wage movement was born in Baltimore, which became the first jurisdiction in the United States to enact such a requirement for its contractors in 1994. Since then, Montgomery and Prince George's counties have adopted similar laws, as have more than 120 local jurisdictions around the country, including Boston and Los Angeles.
According to a recent poll by Gonzales Research & Marketing Strategies, more than 70 percent of Maryland voters said they would favor a living-wage law. That's up from 63 percent in December 2003, shortly before then-Republican Gov. Robert L. Ehrlich Jr. vetoed such a bill in 2004.
But even the bill's sponsors this year had said that prospects for passage appeared dim because Senate President Thomas V. Mike Miller opposed the House bill. It originally would have required contractors to pay $11.95 an hour, and Miller said that the amount was too high for some rural areas and could prevent businesses there from taking contracts and lead to the loss of jobs.
Miller, a Democrat who represents Calvert and Prince George's counties, said yesterday that he would back the compromise.
"One size does not fit all," he said. "This would reflect the diversity of the state."
The bill would now require the higher living wage in Baltimore City and the counties of Baltimore, Montgomery, Prince George's, Howard, and Anne Arundel. The lower $8.50 hourly wage would be in effect for all other counties. Legislators and the governor's office determined the lower hourly wage by using data on the cost of living in different areas.
The living-wage requirement would apply only to contracts worth more than $100,000, and it would not apply to nonprofit groups, such as those that provide social services to the state, or to universities or colleges in paying their workers. Also, workers younger than 17 would not be eligible.
According to the Department of Legislative Services, which provides fiscal analysis on bills, costs for state contracts could increase by less than 1 percent under the wage law. In the last fiscal year, the state had $4.6 billion in contracts.
Republicans said the compromise amounted to punishing workers in rural areas. "It sets up a have and have-not system in the state," said Del. Warren E. Miller of Howard County. "This sends a clear message that if you're a business owner in Maryland, watch out."
Others said the bill was flawed from the beginning.
"The reason the state subcontracts work out is to save money and time and to get the job done in an efficient manner," said Del. James King, an Anne Arundel County Republican. "We're essentially taking away one of the main reasons the state contracts out."
Legislative leaders said they would work to allay concerns, but they have a very tight timetable. The House Economic Matters Committee plans to take up the bill today and send it to the floor for a possible vote. Senate action would follow.
Sen. Thomas M. Middleton, a Charles County Democrat and chairman of the Finance Committee, predicted the measure would pass, given that it has support from O'Malley, Miller and Busch.
"If you have the giants lined up," Middleton said, "it's amazing how fast things can fly."
Making a 'living wage'
In general, a living wage is defined as enough for workers to meet basic needs and to lift families out of poverty. For a family of four, the national poverty threshold is $20,650 a year. That translates into nearly $10 an hour for one full-time worker. The Maryland minimum wage is $6.15 an hour.
Pros and cons
Here are some pros and cons of a "living wage" bill being considered by the General Assembly that would require state contractors to pay workers a living wage:
An estimated 50,000 workers would get higher wages
Increases contract costs as the state faces a roughly $1.5 billion budget shortfall
Could lead to job losses as contractors hire fewer workers