Portland city councilors on Thursday began reviewing a proposal to increase the minimum wage in the city to $9.50 an hour next year, a shift likely to benefit thousands of workers. However, critics warn that it could hurt businesses already struggling with small profit margins.

Mayor Michael Brennan presented his minimum wage plan to a City Council committee in the first step of a process that is expected to resume in November and continue into December, at least. Finance Committee members requested more data on wages, but otherwise had few questions for Brennan, who says he is pushing the issue locally because state and federal lawmakers have failed to act.

“I think this would be a positive step for the city of Portland, and virtually everything we are proposing here follows what other cities that have increased the minimum wage have done,” said Brennan, who organized a advisory panel that examined the issue this past spring and summer.

Brennan is seeking to increase the city’s minimum wage in several steps, beginning with a jump from $7.50 to $9.50 an hour on Jan. 1. Those increases would be followed by an increase to $10.10 an hour on Jan. 1, 2016, and then to $10.68 an hour on Jan. 1, 2017. The wage level would then rise annually through cost-of-living adjustments.

Brennan said the his proposal is consistent with recommendations from some economists that the minimum wage should fall between 50 percent and 60 percent of the median wage. Portland’s median wage is roughly $17 an hour, Brennan said.

If enacted, the proposal would make Portland the first city in Maine – but among a growing number nationwide – opting to enact local wage increases in the absence of state or federal action. The federal minimum wage last increased to $7.25 an hour in July 2009; Maine’s minimum rose to $7.50 per hour three months later.

It is unclear how many workers in Portland would receive pay hikes under Brennan’s proposal because of the lack of comprehensive data for full- and part-time workers at the city level. Federal data suggest that the number of minimum wage earners is relatively small, however.

A full-time worker earning the current state minimum of $7.50 an hour would earn $15,600 a year. According to the U.S. Census Bureau, just 5 percent of Portland residents working year-round in full-time jobs earned less than $15,000 in 2012, while 17.4 percent earned $15,000 to $24,999. Those figures do not include part-time workers and would not reflect employees who work in the city but live elsewhere.

While the proposal is guaranteed to face opposition from some in Portland’s business community, tensions with restaurant owners appear to lessen after Brennan made clear that he does not want to eliminate the “tip credit.”

The law currently allows businesses to pay waiters, bartenders and others service workers 50 percent of the minimum wage on the assumption that tips will cover the rest, although those businesses are obliged to cover the difference when tips fall short. During a public forum held by Brennan’s advisory committee last month, numerous restaurant owners said most of their food servers earn $20 to $30 an hour – or more – under the current system.

Brennan reiterated Thursday night that his proposal would maintain the credit, meaning tipped employees would have to be paid at least $4.75 an hour beginning next year.

Steve DiMillo, whose family owns DiMillo’s floating restaurant on the Portland waterfront, said Brennan’s assurances addressed some of his concerns. But DiMillo said raising the minimum wage to $9.50 would likely result in “wage creep,” where an employee who now earns $10.50 will also expect a raise.

Greg Dugal, president and CEO of the Maine Restaurant Association and the Maine Innkeepers Association, said the proposed increase was “too much, too big and too fast.” The mayor’s plan will also create a disparity between Portland and neighboring communities, he said.

The minimum wage has emerged as a top political issue nationwide.

Democrats in Congress regard the minimum wage as a winning political issue in the 2014 election cycle as they push for a federal rate of $10.10 an hour. Republicans frequently cite a February report from the nonpartisan Congressional Budget Office predicting as many as 500,000 job losses as they push back against the Democratic proposal.


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