By Mike O’Halloran
State Director, National Federal of Independent Business
If Maryland raises its minimum wage to a $15 an hour, a woman-owned company providing traffic control services in Glen Burnie will have to figure out how to cover the half of a million dollars needed to cover the increase.
That small business, started by the founder in her basement 24-years ago, now has 116 employees providing road construction traffic control, cones, and related services. Only 32 of the company’s workers make between their starting wage of $13 and $15. But the owners say they would have to bump up all employees’ wages because most have worked their way up from the bottom and would feel devalued if they didn’t get a raise too.
The CFO explains that they can’t raise prices to cover the half-million-dollar cost of a $15 minimum wage because government contracts are set for years, but the money must come from somewhere. She says the only option would be to reduce employee benefits.
Currently, workers receive a 401K match, vacation time, dental and vision coverage, and the employer provides 70% of the cost of health care. By cutting the entire contribution to health insurance, the small business could just cover the half-million dollar cost of the increased wages.
Ironically, the total value of every employee’s wage and benefits package wouldn’t change at all despite higher wages. And workers would be the ones saddled with rising health care costs in the future.
A different predicament
There is a different predicament facing the owner of a marina in Southern Maryland if the $15 wage becomes law. That firm employs 15 full-time employees and hires about eight others during boating season.
Only the seasonal dock hands, entry-level boatyard employees, marina store clerks, and pool bartenders, make between $10.10 and $15 an hour, although the bartenders also get tips.
This employer would have to slash by half the number of seasonal employees he hires, which would make his customers unhappy when they can’t get help with their luggage or must wait in line at the fuel pump. He probably would also have to raise prices. Employee benefits may need to be reduced.
All these tough financial decisions worry the mom and pop owners because sales of power and sail fiberglass boats dropped by 8 percent last year, and the marina business is flat. There are many such marinas dotting Maryland’s waterways that would feel a similar impact from a $15 minimum wage. Unfortunately, those they employ are likely to feel it too.
There are 581,000 small businesses in Maryland, and they hire more than half of the state’s workforce. The impact of a $15 minimum wage will not only ripple through the construction and marine industries—but fall hard on restaurants, retail shops, daycares, and many, many more small businesses from Western Maryland to the Shore, and from Southern Maryland to the Mason-Dixon line.
As an advocate for thousands of these small businesses in Maryland I wanted to share their stories and to explain, that while a $15 may sound like a good idea on the surface, it isn’t as good or simple as it sound. In reality, it will hurt many employers and their employees.
Mike O’Halloran is the state director of NFIB in Maryland, an association that represents thousands of small and independent businesses in Maryland