Maine’s minimum wage is set to go up to $10 an hour Jan. 1, even as Republican lawmakers push a proposal to slow future pay increases and allow young workers to be paid less.
Supporters of minimum wage boosts say the measures have helped thousands of low-wage earners and predict any proposal to roll back wage gains will fail.
More than 55 percent of voters in 2016 passed a referendum to increase the state minimum wage to $12 an hour by 2020, through incremental annual wage raises, but there is lingering opposition to the law especially in economically struggling, rural parts of the state where annual wage increases may hurt small businesses.
Although the state is experiencing historic low levels of unemployment, earnings vary considerably. Lower-paid workers, those in the bottom 25 percent of wage earners, earn a top wage of $9.44 per hour in Franklin County but $14.26 per hour in Sagadahoc County.
“About the only thing left in my district is little corner stores,” said Rep. Joel Stetkis, R-Canaan, who represents six rural communities in Somerset County and opposes the automatic increases. At least one small market owner has plans to reduce employee hours to compensate for the mandated wage hike, Stetkis said.
The state’s minimum wage rose from $7.50 an hour in 2016 to $9 this year.
“I think for most of us that work for a living, it is the paycheck at the end of the week that makes the difference, not the hourly wage,” he said. “As predicted, we are seeing people losing hours, losing their jobs,” a reference to predictions from opponents of the minimum wage referendum.
Stetkis has sponsored a bill, L.D. 1757, that would slow the rate of the wage increase from $1 per year to 50 cents, and eliminate future cost-of-living adjustments pegged to the rate of inflation. The bill sets the top minimum wage at $11 an hour in 2021. It is co-sponsored by six other Republican House members, mainly from rural districts in western and central Maine.
The bill would also establish a training wage that would allow employers to pay 18- to 20-year-old workers 80 percent of the state minimum wage, or the $7.25 federal minimum wage.
Maine’s 2017 minimum wage of $9 per hour falls in the middle of the pack nationally. Washington pays the highest minimum wage of $12 per hour, while 22 states offer $7.25 per hour — the federal minimum wage. New Hampshire is the only New England state that offers $7.25 per hour; on the upper end, Massachusetts offers $11 per hour.
While the Maine State Chamber of Commerce and other business groups say they support a minimum wage of $10, they argue future increases will have serious consequences for small and family-owned businesses.
“The really tough decisions will be made a year from now, when it goes to $11 an hour,” said Peter Gore, vice president for government affairs at the Maine State Chamber of Commerce. At that point, business owners may need to cut hours or reduce staff to compensate for added costs, he added. “Eleven dollars an hour is the breaking point — that is the pretty consistent message I have gotten from small businesses.”
Gore said businesses in southern Maine and the Portland area may be better positioned to weather a wage increase, but other areas may find it harder, he added.
“In rural areas, where the economy is not booming, it continues to be a really serious concern.”
Gore said he was not aware of the bill to slow down minimum wage increases, but the chamber would likely support it, particularly the training wage aspect.
“We won’t always be in a full-employment economy,” Gore said. “Looking down the road, businesses are saying, ‘I am not going to pay an 18-year-old $12 an hour.’”
Roughly half the respondents to a 2017 survey from the National Federation of Independent Businesses — or NFIB — said they had seen no impact from a $9 minimum wage, with the remaining half split between slight or moderate impact. The survey was taken by about 140 businesses, almost all with fewer than 50 employees and half in Cumberland and York counties.
However, 68 percent of respondents expected the impact of a $12 minimum to be moderate, and 58 percent said it would be harder to hire youth workers, whose inexperience would make it difficult to justify the $12 per hour wage.
“Future increases are going to have more of an impact,” especially as other wages rise to keep pace with the base minimum, said NFIB state director David Clough. “The effect is going to be gathering strength almost like an avalanche coming down a mountain.”
IMPACT IN PAYCHECKS
Despite apparent anxiety about its future impact, supporters of increasing the minimum wage doubt an attempt to roll back or undercut the law will be successful.
“I think every negative prediction has been proven wrong, every positive prediction has been proven right. I think we will see that again next year,” said Mike Tipping, communications director for the Maine People’s Alliance, which organized in support of the law.
“I don’t think any bill to cut the wage is going to go anywhere,” Tipping added. “The arguments of those who oppose the minimum wage have just been proven false.”
In a news release last week, the liberal-leaning Maine Center for Economic Policy said the minimum wage increase would affect about 59,000 Mainers, about one out of every 10 workers in the state. The new minimum wage translates to an increase of $79.6 million in pay next year, or about $1,349 for each minimum wage worker in the state, according to the center. Rising wages will end up benefiting other workers, as businesses increase salaries for other workers to adjust pay scales to the new wage floor, the center estimated.
“This attempt to cut Mainers’ wages is an insult to the dignity of their work and undermines their ability to provide a stable living for their families, while so-called ‘training wages’ and ‘youth wages’ needlessly stack the deck against young Mainers, many of whom are saving and working their way through college,” policy analyst Sarah Austin said in a written statement.
In 2016, about 2 percent of the workforce, or 12,000 people, were paid the then-minimum wage of $7.50 an hour, according to a report from the Center for Workforce Research and Information at the Maine Department of Labor. Of those, two-thirds were women, more than half worked jobs in which tips were common, most were under 30 years old, had no education beyond high school and worked a part-time schedule, according to the report.
The number of minimum-wage workers was almost halved between 2010 and 2016 and the number of low-wage earners also fell during the same period, according to the report. Over those seven years, the number of workers earning less than $9 an hour fell by almost half, from 66,000 in 2010 to 35,000 in 2016, when about 10 percent of the workforce earned that wage.
State economist Glenn Mills predicts 2017 will follow the same pattern because of minimum-wage increases and intense competition for workers.
“In 2017 there were almost assuredly a lower share of people earning less than $10 an hour because of the tight labor market,” Mills said.
Maine’s unemployment rate has been below 4 percent for 26 consecutive months, creating intense competition for workers.
OTHER COSTS, AVAILABLE LABOR
For some employers, especially in southern Maine’s hospitality sector, the biggest concern isn’t minimum wage — it is finding enough workers. The median wage for food service workers, typically some of the lowest-paid occupations, in 2016 was $10.26 an hour in Cumberland County and $11.33 an hour in York County. Median wages for sales workers, including cashiers and retail clerks, another low-wage occupation, were $10.32 in Cumberland County and $12 in York County.
“I think that for most of the industry, the labor shortage is so acute that people are paying above minimum wage anyhow,” said Steve Hewins, president and CEO of the Maine Restaurant Association and Maine Innkeepers Association.
Some coastal hotels and restaurants had to reduce hours or close parts of their businesses last summer because they were unable to find enough workers to fill kitchen and housekeeping jobs.
Restaurant owners’ and servers’ major problem with the minimum wage law was that it gradually eliminated the tip credit, which allows restaurants to pay servers half the minimum wage as long as servers make up the difference in tips. Lawmakers restored the tip credit after months of debate on the issue last year.
“I think people have accepted it,” Hewins said, referring to the minimum-wage law. “If we didn’t have the tip credit that would have been a huge concern. That said, the quick-service people have more of an issue with this — fast-food places, McDonald’s, Dunkin’ Donuts, that don’t have the tip credit.”
Quincy Hentzel, CEO of the Greater Portland Regional Chamber of Commerce, said she hadn’t heard directly from members about the wage hike. The minimum wage in Portland will increase to $10.68 on Jan. 1, because of a city ordinance that went into effect in 2016.
“I wouldn’t say our members have been actively asking us to lower the minimum wage. They are not looking at the minimum wage in a silo itself; they are looking at it in terms of the rising cost of businesses in general,” Hentzel said.
“If you take increases in health care costs in conjunction with the minimum wage, that is significant,” he said.
Schedule of wage increases
In 2016, voters passed a referendum to increase Maine’s $7.50 minimum wage according to this schedule:
- 2017: $9/hour
- 2018: $10/hour
- 2019: $11/hour
- 2020: $12/hour
Thereafter the increase is pegged to inflation.