Out and About (Sort of): Pause Before Raising Wages by Howard Freedlander

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As the Maryland General Assembly addresses legislation proposing a hike in the current minimum wage of $10.10 to $15 an hour, I recommend caution as well as compassion. Like most things in the political arena, a decision aimed at boosting take-home pay and relieving poverty is not simple or straightforward.

Since I wrote last week that I planned to devote this week’s column to examination and analysis of the minimum wage by this non-economist, I’ve read extensive emails sent me by a friend and economist and spoken with business and non-profit executives. A housing specialist also offered input.

I am torn.

Every working person should make enough money to live not impoverished, able to pay expenses. Everyone should feel compensated fairly and valued. Everyone should feel proud of one’s output, unburdened by a supervisor’s unrealistic expectations.

Employers, particularly those who own small businesses or manage social-service non-profits, face a quandary when state government decides to raise the minimum wage. Eager to pay their employees a fair wage, they now may face a mandate. They also must confront simple economics: can they afford to employ as many people at a higher hourly rate and make a desired profit or continue providing services?

If the answer is no, then employers must lay off employees. They may have no other alternative. The result is undesirable: former workers either must find another job or seek unemployment insurance.

Employers might cut benefits. That too is hurtful.

Nonprofits providing necessary services to poor individuals are in a squeeze when compelled to pay higher wages. The needy clients cannot pay higher fees, prompted by higher-paid service-providers.

Having spent considerable time in Annapolis, I well realize that opponents of bills such as ones dealing with mandated minimum wages or benefits always claim that the world will fall apart should legislation viewed as onerous be approved and signed by the governor. I also know that these cries of alarm are sometimes rhetorical devices.

This time around, I suggest that minimum-wage opponents receive a fair hearing. Their voices need to be heard and regarded. Further, I suggest that if the General Assembly find the politics irresistible to increase the minimum wage from $10.10 to $15, it do so in phases.

Private and non-profit sectors need time to adjust to a new wage reality.

And one more thing: I believe that the minimum wage be set differently for, say Baltimore County, than it is for, say, Dorchester County. This is reasonable. The cost of living differs. The volume of business and ability to pay employees is markedly different in Towson than it is in Cambridge.

Leaders of Maryland counties must have a respected voice. Decentralized decision-making may be unreasonable; input, though, is vital.

An unavoidable consequence of raising the minimum wage in a small business typically calls for hiking the hourly rates of those folks earning greater than the existing minimum wage. This is just a reality. Personnel expenses thus continue to rise for a small business owner.

Complexity underscores the minimum wage debate. It’s just so tempting to raise pay and enable people and their families to live more comfortably. To argue otherwise seems so heartless. It seems the right thing to do in a churning economy.

I ask Senate President Mike Miller and Speaker of the House Mike Busch to consider the inevitable byproducts of a compassionate and politically pleasing legislative initiative. I wish I could jump on the bandwagon without any reservation.

I would like to be led by my heart. It’s just not rational.

Before I bring this column to a merciful close, I believe that raising the minimum wage should not be a stand-alone action. The legislature should combine an increase with additional incentives to build affordable and safe housing and provide job training and affordable day care. It simply makes sense if the state wishes to upgrade the income and output of workers in a holistic way.

At the risk of being redundant, I urge readers to pay heed to the Maryland General Assembly. What it does matters.

Columnist Howard Freedlander retired in 2011 as Deputy State Treasurer of the State of Maryland.  Previously, he was the executive officer of the Maryland National Guard. He  also served as community editor for Chesapeake Publishing, lastly at the Queen Anne’s Record-Observer.  In retirement, Howard serves on the boards of several non-profits on the Eastern Shore, Annapolis and Philadelphia.

Letters to Editor

  1. Richard Merrill says:

    Many years ago when I worked for a large corporation (one of the largest back then) everyone in the union had a pay rate that was pinned to the minimum wage by a multiplier. A one dollar minimum wage increase would mean a raise of $2 or $3 for other hourly people in the union. I was salaried so I wasn’t linked quite so tightly. However, when the union negotiated a new contract (every third year) all the salaried folks got bump raises as well. I don’t know if this is still all true today, but if it is true you can expect all the union members to be quietly enthusiastic about the new minimum wage. And even some of the salaried people too.

  2. Concerning raising our minimum wage, there’s more than a chance that following our hearts is rational in this case.
    We’re advised that the populism we are seeing globally is due in large part to higher levels of income disparity. And, unfortunately, the most extreme level of income inequality in the industrialized world is found here in the United States.
    On the positive side, while raising minimum wages has raised concerns, it is our experience that unemployment levels do not rise. As a matter of fact, we have found that a prosperous middle class is the foundation of a strong economy.
    Let’s get started.

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