House joins Senate, votes to increase Md. minimum wage

Business groups say hike will hurt employers and employees

Much to the dismay of business groups, labor advocates won a victory yesterday in the House of Delegates with the passage of a $1 minimum wage increase. The passage of HB 391, sponsored by House Economic Matters Committee Chairman Del. Dereck Davis, D-Prince George’s, follows the Senate’s approval earlier this month of a similar measure, SB 89, proposed by Senate President Thomas V. Mike Miller Jr., D-Prince George’s and Calvert. Both bills would set the state minimum wage at $6.15. “We’re disappointed that the legislation passed,” said Maryland Chamber of Commerce Spokesman William Burns. “The minimum wage is a feel-good issue and we question how much good it’s going to do, and we fear the unintended consequences.”

Those consequences, which members of the business community relayed to legislators during hearings on the bills, could prove hurtful to small businesses, he said. “By increasing the minimum wage, it increases the likelihood that businesses will have to make difficult decisions, like cutting jobs and trimming benefits,” Burns said. In an attempt to assuage those fears, an amendment added to the Senate bill would allow employers that provide some health coverage to deduct the amount spent on the health insurance from the wages they pay workers, down to $5.15. A similar amendment to the House bill failed on the House floor earlier this week. “I personally voted against that amendment on the Senate side,” said Miller. “I believe it weakened the bill and made it less palatable. I’m confident the Senate will concur in the House actions and we’ll have a bill on the governor’s desk as soon as possible.” House Speaker Michael Busch, D-Anne Arundel, agreed and said the amendment does not make sense. “It sets no threshold for the amount of contribution to health care. Most people getting minimum wage don’t get health benefits. It’s kind of like an empty vessel,” he said. Indeed, arguments on the House floor this week included claims that employers could simply pay for $1 of health insurance, and avoid paying the new required minimum wage. But even if the amended version of the bill were to pass, other concerns expressed by business representatives included lost jobs and a ripple effect argument, which assumes once the lowest level of workers gets a raise, higher levels will also want increases. Possibly the most common argument to the measure is that state government should not dictate wages; instead it should be left to the free market. “Many of the chamber’s members already pay wages above the federal minimum wage because of the marketplace. In order to attract employees, they must,” Heather Hamilton, the chamber’s vice president of government affairs, told the House Economic Matters Committee during hearings earlier this month. Meanwhile, Tom Saquella, president of the Maryland Retailers Association, said Maryland will now face the issue every year. “Now that we’ve separated from the federal minimum wage, I expect we’ll see bills next year increasing it to somewhere over $7. There are already some members who are talking about that,” he said. But Busch said he doubts the claims that businesses will be significantly hurt. “Most pay more than $5.15, to their credit. If you’re going to have a minimum wage, you want one that’s fair in the region,” he said, noting that both Delaware and the District of Columbia have rates above the federal minimum wage. “I think the economy of Maryland predicates that if you’re going to have a minimum wage, it ought to be higher than $5.15. The economic climate here is different than in Montana or North Dakota,” he said. Fourteen states, seven on the East Coast, have a minimum wage that exceeds the federal rate, which was last increased in 1997. Once a final bill is agreed upon by both chambers, the bill will go to Governor Robert L. Ehrlich Jr.’s desk, which could be the measure’s toughest hurtle. Ehrlich spokesperson Shareese DeLeaver said Ehrlich has “serious concerns” about any bill that would impact small businesses. “He believes it is a federal issue and should be handled at the federal level,” she said.

The House measure passed 84 to 50, with most delegates voting along party lines.