LEWISTON — Liz McArthur is a single mom with a 3-year-old daughter, a full-time nursing student and a part-time waitress at Marco’s restaurant where, weather-depending, this time of year customers and tips can be iffy.

The 27-year-old’s weekly paycheck is about to go up about $200 a month. McArthur figures she’ll have more money for groceries and day care.

Up the street, Kevin Pacheco owns four local Dunkin’ Donuts and a restaurant, and employs 100 people. His payroll is about to go up $6,000 to $7,000 a month.

Pacheco has already raised his prices an average 3 percent to cover some of that. He isn’t sure what he’ll do next.

As Maine rings in a new minimum wage on Saturday, increasing it from $7.50 to $9, experts said it’ll take time to measure the broad implications for the state’s economy.

At the pocketbook level, the impact to thousands of employees and business owners will be swift.

“I’m very happy with it, not just for me, either,” McArthur said. “My sister works at Marco’s as well. She’s in the dish room, doing dishes and she only makes $7.50 an hour right now. She’s super excited and I’m super excited for her.”

Pacheco said he’s trying to figure out “smarter and faster” changes that won’t ding quality or customer service.

“It’s likely we’ll be paying very close attention to labor and pricing in 2017 and make the necessary adjustments as needed,” he said.

On top of the 30 percent of his employees receiving a raise Saturday, he’s re-examining his employees’ entire compensation package out of respect for those among the 70 percent now earning just above the new minimum wage. 

“It’s not a fun time to be me,” Pacheco said.

The minimum wage increase, along with increases to come, passed by a comfortable margin in a referendum vote last November. Repealing parts of it is likely to be a hot topic in the Legislature this winter.

State economist Amanda Rector said Friday that her office is still working on a detailed economic impact analysis, but generally speaking, impact will vary by region.

“Most businesses in some parts of Maine — especially in the south — are already paying above the minimum anyway,” she said. They’ve stepped up wages to attract employees.

That’s less the case in regions like Washington, Aroostook, Franklin and Oxford counties.

Rector sees three options: increase prices, trim employees’ hours, reduce employees or eliminate benefits.

“If none of those measures are enough to offset the increased costs, the businesses may close or move out of state,” she said.

The Maine Department of Labor said Friday that it’s difficult to estimate how many workers will see a raise from either the minimum wage moving to $9 or the sub-minimum wage for tipped workers increasing from $3.75 to $5. It’s also difficult to estimate how many millions of dollars the increase will boost payrolls statewide.

Data on workers earning under $9 an hour is more than a year old, Glenn Mills, chief economist at DOL’s Center for Workforce Research, said. He also can’t know how many workers will see hours trimmed and how many will receive raises above $9.

The Maine AFL-CIO projects that more than 100,000 people will benefit — roughly 70,000 immediately and 30,000 who already earn $9 or more an hour and will see increases due to wage pressure.

“The reality is that the cost of basics like groceries and housing has gone up through the years; we just haven’t come close to keeping up,” Executive Director Matt Schlobohm said. “When low-wage workers have more dollars in their pockets, those dollars immediately go out into the local economy. People are immediately buying a little bit more bread, a little bit more milk, shoes for their kids, a little bit more oil in their heating tank.”

He’d like to see the new law left alone and those economics play out.

“The voters spoke very loudly and clearly on this: This measure won in every county of the state of Maine,” he said. “There are already little rumblings that people want to roll back various pieces of it.”

A Wal-Mart spokesman said the change won’t effect that company: Nearly two years ago, Wal-Mart bumped its own starting wage to $9 an hour nationwide. At its 25 stores in Maine, 7,300 associates and the average wage for full-time employees is $14.10 an hour. 

A spokesman for Hannaford on Friday said it doesn’t “discuss wage strategies for competitive reasons.”

“When this goes up in the future to $10 an hour (in 2018), I had one business tell me, ‘We’re going to have fewer people working for us,'” said Peter Gore, vice president of government relations at the Maine State Chamber. “‘Above $10 on an ongoing basis, we’re no longer profitable. It means we’re either going to consider selling our business now or we’re going to have to close.’

“Some people will read that and say, ‘That’s just rhetoric coming from the small-business community,’ but the reality is, you have higher wages, you have higher health care premiums . . . that’s a lot of added cost, there’s only so many different ways you can address that.”

Diane Johanson, director of government affairs at the Maine Tourism Association, said most of her 1,600 members have “told us, ‘We can absorb $9, even getting up to $10, we can do it. It’s beyond that $10 level that we really have a concern about.'”

Add in the uncertainty around the temporarily-stayed new federal overtime rule and there’s a lot of uncertainty for businesses right now, she said.

“We haven’t heard anything from our membership about raising their prices at this point with the exception of restaurants, particularly full-service restaurants,” Johanson said. “They operate on low profit margins. Most of them are about 3 to 5 percent so there’s not a lot of room to absorb some additional overhead costs for them.”

Ryan Wallace, head of the Maine Center for Business and Economic Research at the University of Southern Maine, said the pro and con are familiar arguments.

“Whenever the minimum wage gets brought up, it’s always a contentious debate: It’s going to destroy the economy and then there’s the side that says this is going to be such a boom for the economy,” Wallace said. “In general, I think it’ll probably be a good thing for minimum wage earners. There will certainly be some that will be able to absorb the increase and pass them on to customers; it’ll be up to customers whether they choose to pay the additional prices or not.”

Whether it was due to the new law or something else, Maine’s wages need to rise, he said. In 2015, the state’s weekly average wage was $804, compared to $1,011 in New Hampshire and $1,018 for the country as a whole, according to the U.S. Bureau of Labor Statistics.

“Over the long-term, in Maine, in a labor-tight environment, wages have to go up,” Wallace said. “If you need to find workers, you need to entice them to work for you.”

McArthur, the Lewiston waitress, filmed a video last fall in support of the minimum wage referendum with the Maine People’s Alliance. She said she’s lucky that her boyfriend covers many of their bills. She’s happy she’ll be able to contribute more.

“It makes a big difference all the way around,” she said. “I know prices are going to go up, for sure, to compensate. If people are making more than they should be able to pay more and the business owners will be making more to compensate the employees. I feel like people are super worried about something that is going to end up evening itself out all across the board.”

Pacheco said customer reaction this week to the new prices hasn’t been bad.

“There’s always a shock, especially for a regular, as they come to the window every day,” Pacheco said. “The initial impression is that we saw it coming. I think you’ll start to see it in the grocery stores, I think you’ll start to see this spread into many, many categories, even rents in the local market.”

“We’re looking at many other things (beside raising prices,)” he said. “We know we’re not going to get it all through the consumer. We’ll be eating a lot of this for the interim.”

kskelton@sunjournal.com 

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