February 8, 2011

Bill would increase minimum wage to $10 in three years

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By Megan Poinski
Megan@MarylandReporter.com

Minimum wage would increase to nearly $10 an hour through a bill that Majority Leader Robert Garagiola planned to introduce in the Senate on Monday.

The bill, which Garagiola had 15 co-sponsors by Monday afternoon, would incrementally increase minimum wage from its current $7.25 up to close to $10 by 2013, a 35% increase over three years. It also would boost pay for employees who earn tips from half to 70% of minimum wage, and would add overtime and inflation provisions for other employees.

Sen. Rob Garagiola

Senate Majority Leader Rob Garagiola

Garagiola said in a telephone press conference on Monday that there is a vast disparity in wages in the state. In today’s society, full-time workers who make $9.23 an hour – nearly $2 above the state’s minimum wage – qualify for food stamps and other government aid. This means, he said, that these employees are a burden on everyone. And he said that despite the slow recovery from a deep economic recession, a minimum wage increase will benefit everyone.

“My sense is that this proposal will not have a negative impact on the economy. It will be positive,” Garagiola said. “We will be putting money in workers’ hands, and they will be relying less on the social safety net programs we have.”

The $10 figure for minimum wage was derived through analyzing historical data, said Ryan Dennis, executive director of Progressive Maryland, which organized the news conference. When minimum wage was set at $1.60 in 1968, Dennis said, it had the same buying power as $10 in today’s society.

Two economists said that while some may bristle at increasing the minimum wage now, research has shown that minimum wage increases have little impact on the number of jobs, and far-reaching effects on the economy as a whole. Robert Lynch, chairman of Washington College’s Economics Department, estimated that this minimum wage increase would infuse close to $1 billion of new spending in Maryland over three years. Many of the people earning minimum wage are part of working families, Lynch said, and are highly likely to spend any additional money on food, clothing, rent and transportation.

Lynch also noted that businesses also reap financial benefits from minimum wage increases. It tends to lower the rate of absenteeism, improve morale, and decrease turnover.

With the economy slowly improving, Lynch said that now is the perfect time to increase minimum wage.

“The economic case for this increase at this time is compelling,” Lynch said.

This is the first bill to raise the state’s minimum wage since 2005. Garagiola said that he is not sure how it will fare, but he already has a third of the Senate signed on as co-sponsors. The House version of the bill will be proposed by Del. Aisha Braveboy, D-Prince George’s County, closer to the end of the week, Dennis said.

Dennis said that Progressive Maryland has been working hard on the grassroots level to push the minimum wage increase forward. He touted a poll stating that more than four out of five Marylanders support raising the minimum wage.

Chamber likely to oppose

The Maryland Chamber of Commerce is likely to oppose the measure, said Chamber President and CEO Kathleen Snyder. While she had not yet seen the bill, Snyder said that the Chamber will stand against anything that would increase the cost of doing business. Small businesses having a hard time paying their employees more may find themselves having to decide whether to cut their work forces or slash benefits.

“This is counterintuitive during a recession,” she said. “The sponsors have good intentions, but it’s completely unrealistic and impractical in view of how business is done.”

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  • Cptjsmith

    As a college student working part-time at Denton ARBYS I am well aware of my finances. After three years of faithful service I have recieved raises that brought my pay from $7.00 to $7.55, yet after my raises I am typically unable to afford food after subtracting the price of gas and insurance out of my pay. Currently my employer scheduals employees so that overtime is impossible to achieve, therefore, the problem of overtime being too much is simply not an issue. Business thrives on paying the least for services, but this leaves no money for the worker to spend, it merely maintains the profit of the business. Businesses make money by consumers(workers) spending, but without the money for even basics no consumer(worker) has the money to spend as freely as businesses would like. An increase in minimum wage would not only allow me to afford food but would also allow thousands of other workers(consumers) to afford even the basics. Higher pay, in turn, brings higher spending. Increasing the minimum wage is not only economically feasible but economical genius.