September 8, 2013

Rascovar Commentary: O’Malley joins call for minimum wage hike, but not corporate tax cut

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Barry RascovarBy Barry Rascovar

For MarylandReporter.com

O'Malley gives thumbs at Democratic Governors Association.

Martin O’Malley now backs hike in minimum wage.

Throughout his two terms as governor, Martin O’Malley has portrayed himself in words and deeds as a champion of Maryland’s working class. He’s a neo-New Dealer who sees his political future through the lens of becoming known as “the working family’s governor.”

Now O’Malley has joined the Democratic stampede to support a major jump in the state’s minimum wage. He has also made it clear he won’t be sponsoring any bills to lower Maryland’s corporate income tax as a sop to the business community.

Neither move is unexpected.

Jumping on the bandwagon

The drum roll from liberal Democrats for a higher minimum wage is building rapidly. It’s natural to jump on this bandwagon as state legislators start campaigning for reelection.

For O’Malley, it’s also a no-brainer. He’s looking to run for higher office nationwide. What better way to impress liberal Democrats who will vote in presidential primaries in 2016 than to show your admiration and support for working men and women?

With an improving economy in Maryland, O’Malley and legislative leaders know that boosting the minimum wage may not be the giant job-killer opponents claim. Besides, hiking the wages of lower-income folks will be a big hit with them at the ballot box.

Still, there’s no denying many low-wage employers will make cuts in staffing to compensate for paying higher wages. That’s an economic truth O’Malley & Co. don’t want to face.

It’s also true that raising the state minimum wage by $2.75 or more from the current hourly rate of $7.25 could crush many small business owners. They can’t afford to see their payroll expenses rise nearly 40 percent.

Another verity is that minimum-wage jobs are not supposed to be career positions. They are not designed for people seeking to raise a family on that meager income.

The real purpose of minimum wages

Historically, minimum wage positions were filled by young people seeking to start their careers by showing solid work ethics at these part-time jobs. It’s a building block for people. It’s not supposed to be a lifetime position, only a part-time way to add to your resume, provide supplemental funds for your family, or add extra money to pay your way through college.

Still, a series of small jumps in Maryland’s minimum wage does make sense, especially if Republicans in Congress continue to block any effort to do the same thing nationally. It must be a balancing act, though, to make sure the wage increases don’t jeopardize jobs.

One way to offset this blow to business is to work out a deal for lowering corporate taxes. O’Malley, though, isn’t interested.

In an appearance before a state business group, the governor once again showed his disdain for addressing the problems businesses face in Maryland, which has one of the highest corporate tax rates in the region.

Attorney General Doug Gansler (Photo by Safe Medicines)

Attorney General Doug Gansler (photo by Safe Medicines)

A package deal?

Legislators seem a bit more amenable to discussing a cut in the corporate levy. And why not? Maryland is at a competitive disadvantage with the higher business tax rate.

Attorney General Doug Gansler, who is running for governor, already has voiced his support for phasing in a corporate tax reduction that might help the state attract job-creating companies and for raising the minimum wage.

If, indeed, tax revenues continue to grow, there will be ample funds to start shrinking the levy on corporations as part of a package deal that includes a higher minimum wage.

Eventually, even O’Malley might have to set his animosity toward businesses aside long enough to support such a package. It’s a small price to pay for easing the path to passage for a higher minimum wage.

  • hungrypirana

    Minimum-wage hikes: a good way to speed up automation. Expect machines that don’t need health insurance to prepare french fries. And where orders are taken by voice recognition at the cost price of electricity.

  • abby_adams

    Higher wages=more tax revenue for Annapolis to blow so how will those in the middle & lower classes ever get ahead? More feel good proposals from the POTUS wanna be!

    • Jennifer

      Higher wages from minimum wage hardly pushes a worker into a higher tax bracket. FICA will get a boost but Annapolis will not see more taxes from the low wage worker.

  • Cacaw Law

    Honestly, if you go from the current minimum wage and raise the pay by $2 and suddenly the job disappears because it’s cheap to automate it, then maybe that job should disappear in the first place. The economy would hopefully evolve to offer jobs that let people you know… eat tonight. The mimimum wage is honestly disgusting. I know I’ll have to pay more because of inflation because I make a fair share more than the mimimum wage, but I’m willing to go through that if it means other people don’t have to suffer.