The minimum wage boost [Editorial]

Efforts to raise Maryland's minimum wage received a big boost last week with the decisions in Montgomery and Prince George's counties to raise the minimum hourly pay to $11.50 in four years. Since about 1.9 million of Maryland's 5.8 million residents live in those two counties, that means about one-third of the state is already affected by the new standard whether the General Assembly takes action on the issue next year or not.

That's a substantial increase from the current statewide rate of $7.25 per hour, which is the same as the federal standard. The Montgomery County Council, the first legislative body to act, chose a gradual phase-in to ease the transition, raising the minimum wage to $8.40 next year, $9.55 in 2015, $10.75 in 2016 and the full $11.50 by October of 2017. The District of Columbia's governing council is expected to take similar action on Tuesday.


A nearly 60 percent increase in the minimum wage is unlikely to fly with state lawmakers in Annapolis, nor should it. The D.C. suburbs face a significantly higher cost of living than other parts of Maryland, and $11.50 in 2017 may be going too far too fast. Longtime advocates like Progressive Maryland have already recognized this political reality and are continuing to push for something more modest — $10.10 per hour phased in over two years — despite last week's votes.

While such a variance in standards may not be ideal (consider, for instance, the Howard County landscape contractor who can dispatch his workers to Olney or Rockville without having to pay them the wages his Montgomery-based competitors would), it is not unprecedented in other states, many of which have jumped on the minimum-wage bandwagon in recent years. That movement has been fueled by rising concerns about income disparity in this country and the unlikely prospect of a minimum wage hike getting through the GOP-controlled House of Representatives.


Still, it's an area with which Maryland's state and local governments must move with some caution, given the uncertainties surrounding federal spending in the next few years and the impact sequester cuts have already had on Maryland's economy. If the increase is too large, it can have a negative impact on hiring, and the benefit of higher wages is blunted if it means businesses are put in a competitive disadvantage.

There's also a risk in an election year that lawmakers will be too generous with other people's money. Raising the minimum wage plays well with the Democratic Party's liberal base — a point made clear by the party's gubernatorial candidates who have endorsed increases with considerable enthusiasm. Del. Heather Mizeur has offered the most ambitious proposal so far: $16.70 per hour (albeit phased in gradually between now and 2022).

That some in Annapolis are talking about tying the higher minimum wage to a tax cut for businesses, perhaps even a drop in the corporate tax rate, is worrisome, given Maryland's budget picture and the growing signs of a possible budget deficit. That's not to suggest a tax cut to spur business investment may not be prudent if it's done correctly, but not if it's a budget-buster or mere giveaway to get State House incumbents reelected in 2014.

At the core of this issue should be a real desire to allow people to pull themselves out of poverty through work. Even at $11.50, the minimum wage translates to an annual salary of $23,600, which is just about the poverty rate for a family of four. Had the federal government simply kept the minimum wage standard of 50 years ago — $1.25 an hour — and adjusted it for inflation, it would already be $9.54.

We reject the notion that the minimum wage is destructive to economic prosperity, as real-world experience (and significant academic research) has taught us otherwise. Indeed, we find arguments against it inconsistent with conservative belief in reducing dependence on taxpayer-financed anti-poverty programs. The more people are paid, the less likely they are to rely on benefits like food stamps or Medicaid for their family's basic essentials.

And make no mistake, this is not about high school or college students or part-time or summer jobs. (Certain teen-age, part-time workers are actually excluded from the new minimum wage standard.) Nationally, studies have shown that the majority of workers paid the minimum wage are 25 or older. You can be certain they are not going to sit on higher earnings; they are going to spend them, thereby offering their own modest boost to the economy.

As we have noted before, the minimum wage debate should be about finding the proverbial sweet spot, the point at which workers will be helped but employers not hurt. For the Washington area, that may well be $11.50 per hour, but for the rest of the state, it's probably closer to $10. Polls show a majority of Maryland voters would support such an increase, and given the actions in Rockville and Upper Marlboro, it's just a question of how high to go.

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