The Democratically-controlled Maryland legislature just passed a minimum-wage increase to $15 per hour. While some advocates and workers are cheering now, they ignore potential devastating job losses on the horizon.
Supporters of this bill reason that the lowest-wage workers will benefit from more money and spend more in the local economy. But here’s what should concern them: Those same minimum-wage workers and other workers will suffer when their paychecks get cut, they lose benefits like paid time off, or they receive pink slips.
The bill raising the minimum wage passed through both Houses by veto-proof majorities and awaits action by Republican Governor Larry Hogan, who opposes a minimum wage increase that high (especially since it's higher than other states in the region).
According to reporting, Maryland’s minimum wage would start to rise beginning January 1 from the current $10.10 per hour to $15 per hour by Jan. 1, 2025, for companies with 15 or more workers. Smaller companies have another year and a half (by July 1, 2026), to reach $15 per hour.
We know that minimum-wage increases may immediately boost the pay of those who earn the least, but they also trigger negative impacts on those same workers and others as employers respond to the increase in labor costs.
A state director at the National Federation of Independent Business in Maryland provides some real-life examples of how Maryland employers anticipate responding to the $15 minimum-wage hike:
- Cutting benefits. A CFO at a woman-owned business providing traffic control services in Glen Burnie, MD faces a half-a-million-dollar cost increase once this minimum wage increase is implemented. They can’t raise prices because they are funded by preset government contracts, so their only option would be to reduce employee benefits.
- Cutting workers. A marina owner in Southern Maryland, which employs full-time and season employees, thinks he will have to cut by half the number of seasonal employees he hires and raise prices.
New York’s plight with a $15 minimum wage presents the third consequence of such a high increase:
- Cutting hours. A restaurateur, who employs 300-600 employees across half a dozen restaurants, explains that he has scaled back worker hours, no longer staffed hostess booths during lunch, and increased menu prices.
Minimum-wage-hike advocates may think the easy solution is to Increase prices, but owners can raise their prices only so high before they lose customers.
The face of low wages is not who we often hear about. It's not single moms working fulltime to make ends meet, but rather teens and young adults working part-time jobs for cash or to build skills. They make up about half of all minimum wage workers.
So, a wage increase to $15 an hour is harmful to young people who work entry-level jobs to gain skills and experience that they can use in the future. If minimum-wage jobs become to costly and employers stp hiring as well as eliminate them, young people will be hurt most.
We want workers to see their wages rise – and that is happening in this tight jobs market – but an arbitrary $15 an hour minimum wage could spell trouble for the many workers who lose out on opportunities or must settle for smaller paychecks.