Many Portland businesses have raised prices or reduced staff and hours of operation in the hopes of holding on long enough to see the end of emergency declarations that triggered an $18 citywide emergency minimum wage that is now the nation’s highest.

Some low-wage workers welcome the new $18-per-hour emergency wage as recognition of the hard and dangerous jobs they are doing amid the coronavirus pandemic. A number of employers have refused to pay it thus far and are awaiting a decision in a lawsuit over when the wage hike should go into effect.

Rosemont Market and Bakery owner John Naylor said he pays the emergency wage at all seven market locations, including in Cape Elizabeth, Falmouth and Yarmouth, which are not subject to the emergency wage ordinance.

“We treat our staff like family,” Naylor said. “What were we going to do, pay some people $18 and some $15 an hour?”

The local chain added a surcharge onto customer bills to cover its added $30,000 a month in payroll costs. It was the only way to pay the wage and keep everyone on staff, Naylor said.

“That is big – for a small company that works on small margins, that is a knockout punch,” Naylor said. “Thanks to our customers being OK with it, we’ve been able to keep people employed.”

In November, 60 percent of Portland voters approved a referendum to raise the city’s hourly minimum wage from $12 to $15 by 2024. Annual step increases are set to begin next year.

But the referendum also requires paying minimum wage employees time-and-a-half pay during a city or state emergency, such as the one declared for the coronavirus pandemic. According to referendum supporters and some business groups, that means Portland employers had to start paying their workers a minimum of $18 an hour when it went into effect in December.

City officials are not enforcing the emergency wage because under their interpretation, the newly passed ordinance doesn’t require it until January 2022, when the first step increase takes effect. The Portland Regional Chamber of Commerce and five businesses have sued for a court to decide the effective date of the emergency wage and potentially declare the referendum unconstitutional.

Major employers in the city such as Northern Light Mercy Hospital have refused to pay the emergency wage until a court ruling is issued, said Ed Gilman, a spokesman for Northern Light Health, which owns the hospital.

“While we will abide by whatever court ruling is ultimately handed down, we have serious concerns,” Gilman said. “Having individual cities and towns establish rates of pay in our various locations would result in an administrative and financial nightmare.”

Agencies that assist people with intellectual and developmental disabilities serve around 700 people in Portland, and the overwhelming majority are paying their workers the emergency wage, said Laura Cordes, executive director for the Maine Association for Community Service Providers.

But those organizations rely on state reimbursement to pay workers, and the formula for calculating reimbursement rates hasn’t changed in years and does not cover the emergency wage, Cordes said. The Maine Department of Health and Human Services will follow City Hall’s interpretation of the minimum wage ordinance, a spokeswoman said.

“More than half of the dozen organizations that support residents in Portland report that they are likely or very likely to relocate or end services simply because the state system which they rely on is not designed to afford emergency wage increases,” Cordes said in a statement.

Ada Bonnevie stands in Longfellow Square in Portland on Thursday. Bonnevie was recently laid off from her job as a server at Boda in Portland and is a supporter of the city’s new hazard pay. She worked throughout the pandemic at Boda, and before the $18-per-hour emergency wage was enacted, Bonnevie said her employers made sure staff was earning hazard pay rates. Brianna Soukup/Staff Photographer

For some workers, the added wage has been a huge help during the pandemic-induced economic crisis, as well as an acknowledgement they are being put in harm’s way.

Ada Bonnevie has worked throughout most of the pandemic as a server at Thai restaurant Boda on Congress Street. At the beginning, customers tipped generously and were polite, but that degraded as the pandemic wore on, Bonnevie said. The $18 wage is a recognition of the danger and stress she experienced at the same time she had to pay her other costs, she said.

“Any extra money right now is good, especially given that only certain debts are being withheld, no one has done anything to help with housing costs or private student loans,” Bonnevie said. “I have an autoimmune disease; I have this added fear about getting sick (and) not not being able to recover.”

Bonnevie said she was laid off in late December when Boda switched to takeout only. Even as she struggles to claim unemployment benefits, Bonnevie stands by her vote for the higher wage and doesn’t believe it will have the devastating impacts opponents predicted.

But a server for another Congress Street restaurant had a different experience. Ever since the higher wage went into effect, her hours have been cut in half, lunch service has been suspended and co-workers have been laid off.

The emergency wage has gone into effect “exactly when things (started) to slow down; businesses that limped along are looking at their three to four slowest months of the year. Having to do this on top of it is crazy,” she said. The woman asked not to be identified because she worried about repercussions for her employer.

Opponents of the emergency wage predicted it would trigger a wave of layoffs, higher prices and business closures.

“I think the impact of the hazard wage unfortunately is playing out as we feared,” said Portland chamber CEO Quincy Hentzel in an email last month. “We have seen businesses lay off workers or reduce staff hours, some are closing temporarily while others are closing for good. I would be hard-pressed to find a business that was able to absorb this increased cost … with no changes to staff, hours or prices.”

At least 23,500 Portland workers could see pay increases under the ordinance, according to an analysis last year from the Maine Center for Economic Policy.

Claims for unemployment benefits spiked in Maine through December, but there are no data to indicate the city’s emergency wage alone is responsible.

“With claims being elevated across the entire state this time of year due to typical seasonal layoffs and other factors such as COVID-19, and also because claimants do not always live in the same city or town they work in, it would take substantial data analysis to see how many claims are specifically from Portland workplaces,” said Maine Department of Labor Communications Director Jessica Picard.

Some small businesses are following the new ordinance, concerned that they could be compelled by a court to retroactively pay the difference owed to workers if they don’t pay it voluntarily. But a sudden wage increase has made one of the hardest economic periods on record even harder, especially for Portland’s mammoth food and beverage industry.

David Turin, the chef-owner of David’s Restaurants, has not cut hours or raised prices but said his restaurants are surviving on government grants. Brianna Soukup/Staff Photographer

Some employers, such as Otto, Salvage, Local 188 and Black Cow, have raised prices to compensate for the wage hike.

Others, such as Urban Farm Fermentory and Gruit Brewing Co. in Bayside, are paying the wage, but to a workforce that’s one-quarter of the size it was before the pandemic. The six workers that remain were making $15 an hour before the emergency wage, said owner Eli Cayer.

“The hazard wage is not a giant leap from where we were at,” Cayer said. “That said, we are barely afloat. I don’t know any other way around it; we need folks to be able to do their jobs.”

David Turin, owner of David’s Restaurant in Monument Square, said he’s a longtime supporter of higher wages but that the emergency provision comes at the worst possible time for his and other restaurants.

“I’ve been beating the drum for increased minimum wage for years, and now we get something we can’t swallow,” Turin said. “We are paying it, but I’m not proudly paying it. I’m pissed off about it.”

Turin didn’t raise prices or lay off staff, but he’s already running a lean shop with low sales and reduced seating because of coronavirus precautions. Government support, including Paycheck Protection Program loans and a $36,000 state grant, is the only way the restaurant survives, Turin said.

“Without these grants, we would have had to close,” he said. “Right now, we are kind of living grant to grant. As long as we can get some to offset the labor, we are just using the grant money faster.”

Portland Food Co-op is paying the wage without raising prices or laying off staff, but that has cut costs everywhere else, said General Manager John Crane. The longer Maine and Portland remain in a state of emergency, the more it could force the grocery provider into a tougher position.

“Our ability to pay over the long term is going to make us take hard decisions,” Crane said. “If we had the ability to pay this type of wage to folks, we would have already been doing it right now.”

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