Bill sets up pay grades for urban, rural areas

The Baltimore Sun

Companies with state service contracts would be required to pay workers a "living wage" under first-in-the-nation legislation that the General Assembly approved yesterday and sent to Gov. Martin O'Malley, who championed the idea on the campaign trail.

Lawmakers gave final passage to the bill on the last day of the session, less than one week after legislative leaders and O'Malley hashed out an agreement to make the proposal palatable to some opponents. The bill, as revised, sets up two pay grades for the workers - at least $11.30 an hour in the Baltimore-Washington corridor and $8.50 an hour in rural areas.

"It doesn't make them rich," said Sen. Thomas M. Middleton, a Charles County Democrat and chairman of the Senate Finance Committee. "We're just lifting them a little bit more out ... of poverty."

The Senate took up the bill yesterday after the House of Delegates passed its version last week. Senate President Thomas V. Mike Miller backed the compromise measure and used parliamentary rules to limit debate in his chamber and ensure quick passage. He had opposed the original bill imposing a statewide wage, calling it too high for rural contractors to pay.

The Senate passed the measure, 31-16, and the House ratified the Senate bill by a 91-49 margin.

O'Malley is expected to sign the legislation, making Maryland the first state with such a law. It follows more than 120 local jurisdictions with similar statutes, including Baltimore and Boston. A handful of other states are also considering statewide legislation.

The bill does not apply to state-funded construction projects where workers are paid the prevailing wage for each locality. It also exempts small employers with fewer than 10 employees so long as the contract is not in excess of $500,000 and nonprofit entities. Both exceptions were added by legislators over the weekend.

Republicans and business groups, such as the Maryland Chamber of Commerce, opposed the bill, saying the hastily crafted legislation would deliver a political win for O'Malley but would cost the state millions of dollar at a time when it is facing a roughly $1.5 billion budget shortfall.

Fiscal analysts were unable to estimate how much contract costs would increase in Maryland once the law takes effect but cited studies showing a living-wage requirement in other localities added less than 1 percent in costs. Proponents argue that by raising wages for an estimated 50,000 workers, the state would save money in entitlement programs such as Medicaid.

"I'm very disappointed that we don't have any idea how much this is going to cost us," said Sen. J. Lowell Stoltzfus, an Eastern Shore Republican, who said he supported a previous increase in the minimum wage to $6.15 an hour but voted against the living-wage bill. "This is putting it up too high, too fast."

Workers in Baltimore City and the counties of Baltimore, Montgomery, Prince George's, Howard and Anne Arundel would get the higher rate if more than half the value of the services is performed in those areas.

Despite some of the changes to the bill, including the exemption for small businesses, Ronald W. Wineholt, a lobbyist with the Maryland Chamber of Commerce, said the bill would add "significant" costs and inefficiencies to state government - at a time when O'Malley has pledged to find cost savings by making government more efficient. He also said it would cause unfair competition among regions and between nonprofit and for-profit businesses.

"The bill is unwise because it undermines the purpose of competitive bidding: getting the best service for the lowest price," Wineholt said.

The General Assembly passed a living-wage bill three years ago, but it was vetoed by former Gov. Robert L. Ehrlich Jr., who raised concerns about one wage standard being applied statewide. Republicans said that the latest version is still flawed, and some rural lawmakers were upset that their workers would get paid less.

"There are a lot of ramifications of the bill that are not fully clear," said Sen. E.J. Pipkin, an Eastern Shore Republican. He pointed out that some health insurers have nonprofit and for-profit divisions, which could give some companies a competitive advantages and raise the cost of health care.

Labor unions, which backed O'Malley, a Democrat, against the Republican incumbent, Ehrlich, in last year's election, had made passage of the living-wage bill a priority. Fred D. Mason, president of the Maryland State and District of Columbia AFL-CIO, said they were fighting for all working families, as union workers in Maryland already make an average of about $20 an hour.

"This should not be seen as a payoff for unions, but it is certainly a good step in the right direction," Mason said. "We belive that all workers should make enough money to support their families."

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