AUGUSTA – A bill that would raise Maine’s minimum wage to $6.65 per hour in October is raising concern among Maine’s business community.

“Two years ago the Legislature raised the minimum wage above the federal standard,” said Peter Gore, lobbyist for the Maine State Chamber of Commerce. “At that time the Maine State Chamber didn’t oppose it. Now the feeling out there is ‘wait a minute, the state minimum wage is already substantially above the federal standard’.”

The federal minimum wage is $5.15 per hour. The bill, L.D. 673, would raise Maine’s minimum wage from its current $6.25 per hour to $6.65 per hour in October and then to $7 per hour in October 2005. Maine now pays the ninth highest minimum wage in the country.

Gore said he will oppose the measure once it reaches the floor for debate. The bill, submitted by Sen. Pam Hatch, D-Skowhegan, was voted out of the Labor Committee Dec. 12 with a partisan, 8-3 endorsement. Because the vote was split, a House debate is likely.

Gore said increasing Maine’s minimum wage only adds to the full range of the costs of doing business in this state. In addition to increased payroll costs, especially among the businesses that rely on minimum wage jobs such as the tourism and retail industries, higher wages mean higher workers compensation costs, benefits and related expenses.

“Our economy just doesn’t warrant that,” he said.

According to the Maine Department of Labor, about 17,000 of Maine’s hourly workers earned minimum wage or below in 2002. If you back out the 13,000 workers who makes less than minimum wage and earn tips, that leaves about 4,000 workers earning minimum wage – about 1.1 percent of Maine’s hourly work force.

It may directly affect the paychecks of only a small fraction of Maine’s labor force, but Gore and other business advocates are concerned about the creep effect of raising minimum wage. David Clough, state director of the National Federation of Independent Business, represents about 5,500 small business owners in Maine and is opposed to the increase.

He said if a business were paying a worker $7.50 and hour, and that worker had been with the company for a year and a half, then minimum wage increased to $7 per hour, any new hires would have to come in at the rate it took the senior employee longer to attain.

“He’ll think, ‘Gee, I deserve a little something more’,” he said.

“It has a bigger effect the closer to minimum wage level a worker earns,” Clough said, noting its impact would be especially felt in rural areas of Maine.

More importantly, the increase would add to the burden of doing business in Maine. Clough said a Department of Labor report released last week predicted a $40 million increase in state unemployment tax for 2005 and the possibility of an additional $17 million in 2006. Adding to that expected increases in insurance, benefits and unemployment costs, makes for a grim outlook for small businesses.

“We’re hoping the Legislature takes to heart the governor’s message about the need to improve the business climate and economic conditions here,” said Clough. “I hope they think long and hard before they increase any more costs.”

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