March 27, 2013

House Democrats pass bill to hike minimum wage

By Steve Mistler smistler@pressherald.com
State House Bureau

AUGUSTA — The House gave initial approval Wednesday to a bill that would increase the minimum wage to $9 an hour by 2016 and have it rise incrementally with inflation thereafter. 

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The bill, which failed to receive a single Republican vote, aligns with a national effort among Democrats initiated with President Obama’s State of the Union address. In his speech, the president called for raising the federal minimum wage to $9 an hour to increase the earning and purchasing power of low-income Americans and help lift them into the middle class.

Republicans have opposed the effort both nationally and in Maine, saying such measures are well-intentioned, but ineffective at reducing poverty and potentially harmful to small-business owners.

Both arguments were made Wednesday in the House before L.D. 611 advanced on a 86-58 party-line vote. Biddeford Rep. Alan Casavant was the only Democrat to oppose the measure.

The bill had passed along party lines in the Legislature’s Labor Committee as well. It was supported by worker advocates and labor unions and opposed by several small-business groups, including the organization representing Maine’s restaurant owners.

People who earn minimum wage in Maine – currently $7.50 an hour – typically work in the retail, service and hospitality industries, said David Clough, state director of the National Federation of Independent Business.

In Portland, most if not all restaurants pay their employees above minimum wage, said Steve DiMillo, whose family owns Maine’s largest restaurant, DiMillo’s Floating Restaurant in Portland. He said all of his hourly workers already make at least $9 an hour, so they wouldn’t be helped by the proposed increase.

In an interview, DiMillo said he is disappointed by the House vote because the bill would give raises to the restaurant’s highest-paid workers, the wait staff, who by law are paid half of the minimum wage, plus tips. When tips are added, they earn $17 to $27 an hour, he said.

A higher hourly wage for wait staff would increase his payroll by nearly $40,000 annually, DiMillo said. That means he’d have less money available for giving raises to lower-wage hourly workers in the kitchen.

“The hourly people – they’re the ones who won’t get a raise,” he said.

Maisie DeGoosh, 22, a barista at a Portland coffee shop, said she supports the bill because many people don’t appreciate how hard it is to work in a low-wage service job. Although DeGoosh now earns above the minimum wage, she previously worked for minimum wage at a different coffee shop.

“It doesn’t make much sense that people who work that hard shouldn’t be compensated for that,” she said.

The bill would phase in the wage increase, to $8 an hour in 2014, $8.50 in 2015 and $9 an hour in 2016. The inflation indexing would begin in 2017.

About 20,000 Maine workers were paid either at or below minimum wage in 2011, according to the state Department of Labor.

Maine is one of 18 states with a minimum wage above the current federal minimum of $7.25, according to U.S. Department of Labor statistics. However, 23 other states are weighing legislation to increase the minimum, according to a Feb. 13 assessment by the National Conference of State Legislatures.

Maine’s median hourly wage for all occupations was $15.63 in 2011, according to the U.S. Department of Labor .

Raising the minimum to $9 would yield a gross annual income of $18,720 for an individual working 40 hours for 52 weeks.

The legislation dovetails with efforts by congressional Democrats, some of whom want to take Obama’s directive a step further. Sen. Tom Harkin, D-Iowa, and Rep. George Miller, D-Calif., are co-sponsoring legislation that would raise the minimum wage to $10.10 an hour by 2016 and index it to inflation. But the bill is unlikely to go far in the Republican-controlled House.

Likewise, the Maine bill is likely to be opposed and potentially vetoed by Gov. Paul LePage. LePage has not taken a position on the bill, but his Republican counterparts in the House were unanimous in voting against it Wednesday.

Rep. Kenneth Fredette, R-Newport, the House minority leader, said the Maine bill would “hurt the people it was designed to help.” Republicans also want to help the poor, he said, but are focused on growing the economy. If successful, he said, wages would increase for everyone.

Fredette said the indexing element of the bill is also troubling because it would put wage increases on “autopilot.”

“That’s not governing,” he said.

Rep. Gay Grant, D-Gardiner, disagreed. She said she expects a veto by LePage, but says lawmakers should support the modest increase in the bill.

Democrats say raising the wage makes moral and economic sense.

Grant said it was important to “stand with working people” who are working more than one job and struggling to keep up with the rising cost of living.

Rep. Paul Gilbert, D-Jay, agreed, saying the bill wouldn’t solve the poverty problem but would “give these workers some help.”

Democrats and labor unions are the chief proponents for raising the minimum wage, arguing that it would help working-class Americans and stimulate the economy.

The liberal Economic Policy Institute recently projected that increasing the minimum wage to $9.50 an hour would result in $60 billion of new household spending in two years.

However, some economists have argued that raising the minimum wage during an economic recession will stunt business growth.

David Neumark, an economics professor at the University of California-Irvine, wrote in a 2009 column in The Wall Street Journal that increasing minimum wages actually reduces employment for young, low-skilled earners. 

Those workers are “struggling to find a toehold in the labor market,” and raising the minimum wage makes it harder for employers to hire them, Neumark wrote. 

Clough, of the National Federation of Independent Business, also criticized the vote.

“This proposal is completely divorced from economic reality,” he said. “How can small businesses absorb a substantial increase in their labor costs? They can’t reduce their taxes. They can’t reduce the cost of health care. They can’t reduce their fixed expenses.”

Raising the minimum wage appears to have support in national opinion polls. A USA TODAY/Pew Research Center poll conducted in early March found that 71 percent of Americans support Obama’s plan to raise the minimum wage. 

The Maine Department of Labor could not provide state-level data for the 20,000 people who earned minimum wage in 2011. However, federal data shows that minimum wage earners were concentrated in low-skill occupations that typically receive tips. Most earners were young, worked part time and had limited educational attainment.

According to federal statistics on minimum wage earners: 

  • 44 percent worked in food preparation and serving occupations.
  • 26 percent worked in sales-related occupations.
  • 69 percent worked a part-time schedule at their primary job.
  • 51 percent were under age 25, an age group that comprises just 20 percent of the hourly paid work force and 12 percent of all workers.
  • 24 percent were under age 20, an age group that comprises just 5 percent of the hourly paid work force and 3 percent of all workers.
  • 36 percent did not have a high school diploma.
  • 92 percent did not have a post-secondary degree.

The Maine minimum wage bill faces additional votes in the House and Senate, and if passed, then goes to the governor.

 

Staff Writer Tom Bell contributed to this report. 

Steve Mistler can be contacted at 620-7016 or at:
smistler@pressherald.com

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Today's poll: Minimum wage

Should Maine increase the minimum wage to $9 an hour?

Yes

No

View Results