By Sen. Roger Sherman
One of the more popular phrases when debating issues in Augusta these days is “unintended consequences,” a reference to legislation that’s passed with the best of intentions but has negative, unforeseen ramifications. While this phrase may be overused a bit, nowhere is it more appropriate than in the current debate over raising the minimum wage.
No one wants to work for minimum wage. But the fact is, not many people do. According to Maine labor statistics, only about 20,000 Mainers were employed at or below minimum wage in 2011 and 2012.That’s about three percent of the total workforce in Maine. Only 10 percent of people under the age of 25 make minimum wage, and just 1.2 percent of those over age 30 work for that rate.
Two-thirds of them work part time, and a majority of them are employed in the retail or hospitality industry where their low salaries are supplemented by tips.
Furthermore, those who hold positions with minimum wage salaries don’t tend to stay there long. Currently, Maine’s minimum wage is $7.50 per hour, which is 25 cents higher than the federal minimum wage. A bill before the Legislature would raise the rate incrementally — 50 cents more a year, until 2016, when the minimum wage would be $9 per hour. After that, the rate would be increased yearly based on changes in the Consumer Price Index (CPI).
While this might provide a temporary boost to low wage earners who won’t be in these positions for long, it would have a long-term negative impact on businesses that will result in job loss and increased costs that will be passed on to consumers.
Unilaterally raising the minimum wage would also potentially hurt those very employees it is intended to help. Minimum wage jobs are an entry point into the workforce; and as we’ve seen from the numbers above, workers don’t tend to stay at that rate for long. But by tying the hands of business owners by forcing them to comply with a new wage floor, those employers will be more reluctant to hire new workers due to increased business costs. If they do choose to hire workers at a higher rate, those increased costs will be passed on to their customers.
Other potential consequences include employers dropping or putting on hold benefits for employees and reducing their hours in order to balance their books.
Supporters of the minimum wage increase tell us that this is simply a modest step designed to keep up with the times. In fact, what is being proposed would be the largest minimum wage increase in recent history.
Raising the minimum wage would also send the wrong message to those who are considering starting businesses in Maine and to those that are already here. According to the Maine Economic Growth Council’s 2013 Measures of Growth Report, Maine has the 10th highest cost of doing business in the nation. For the third year running, Forbes Magazine has once again named Maine the worst state in the country to do business. Increasing business costs is not the way to reverse this trend.
On a party line vote, the Maine Senate this week voted in favor of the minimum wage increase. The House of Representatives has also passed it. The bill will soon head to the Governor’s Office, where its fate is unclear. My hope is that we won’t send the wrong message by placing this additional burden on Maine businesses.
Sen. Sherman represents Maine Senate District 34 which includes southern and central Aroostook County, including Fort Fairfield, Houlton and Presque Isle. He serves on the Legislature’s Agriculture, Conservation and Forestry Committee.
