Ed. Note: Today’s post is by guest author and Baltimore resident Gabriel Sikowitz. You can follow him on Twitter @GabrielSikowitz.
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This past week the Baltimore City Council sent a bill authorizing a $15 minimum wage back to committee. It will almost surely be brought up with the new Council. At the current minimum wage of $8.25, a full time job at or on the minimum wage cannot feed a family and it cannot provide for rent in the vast majority of Baltimore’s neighborhoods.
Workers who make the minimum wage are not youths and college students looking to make extra money. Nearly 43% of minimum wage earners in Baltimore provide for kids or are married. Nearly 30% of minimum wage earners are parents. A fight for $15 an hour is a fight for families that can work with dignity and fewer hours.
One of the most consistent arguments against a minimum wage is that it will increase unemployment. This is false. Modest increases in the minimum wage boosts wages, while having little effect in the unemployment rate. There is always anecdotal evidence of businesses that close or move or claim they will. However, economists agree that increases in the minimum wage do not increase unemployment.
The Baltimore City Council recently sent the proposal for the $15 minimum wage back to committee, all but assuring that it will come up with the new council. The current minimum wage for Baltimore City is $8.25 an hour and the tipped wage is $3.63. This bill does not raise the wage overnight to $15 an hour but it will phase (in) over the course of four years. The bill also limits the amount of money that employers can withhold and strengthens the Wage Commission’s ability to fight wage theft.
As I stated earlier, the minimum wage wouldn’t immediately jump to $15 an hour, it would be phased in over the next four years. While the bill was sent back to committee, the new council is most likely to support bringing it up again for debate and it would look very similar. The present bill would phase the wage in like this:
July 1, 2016, $8.75;
January 1, 2017, $10.00;
July 1, 2017, $10.50;
July 1, 2018, $12.00;
July 1, 2019, $13.50;
July 1, 2020, $15.00;
After the fourth year (2020) the wage would be tied to the Consumer Price Index and any increases would be tied to increases in the index. Tipped wage earners would also benefit from a similar boost. Their current wage is $3.63 an hour. It would then slowly increase until it hits $15 an hour.
January 1, 2017, $4.50;
July 1, 2017, $5.25;
July 1, 2018, $6.00;
July 1, 2019, $7.50;
July 1, 2020, $9.00;
July 1, 2021, $10.50;
July 1, 2022, $12.00;
July 1, 2023, $14.00;
July 1, 2024, $15.00;
After the fourth year (2024) the tipped wage would be tied to the Consumer Price Index and any increases would be tied to increases in the index. It should be noted that the tipping is not a universal custom and in some countries it is frowned upon if not an alien custom.
As with all pieces of legislation different departments have the ability to comment on the bill. The Baltimore Development Corporation officially took no position, however it strongly implied its opposition. The BDC suggests that because Baltimore has a higher minimum wage, people from surrounding counties will seek work in Baltimore City in direct competition with Baltimore workers. The BDC also provided a survey of businesses. The survey found that there is not a strong opposition to raising the minimum wage in Baltimore amongst business owners. Roughly 39% of respondents are opposed to the minimum wage, 25% support the increase and 36% took no position. Below is what employers would say the impact of an increase would be on them.
The Case for $15 in Baltimore:
In 1964 Baltimore felt that neither the state nor the federal minimum wage was high enough for workers to enjoy a minimal standard of living, in doing so it became one of the first city minimum wage laws. Since then the state and federal government have increased the minimum wage, however workers have seen their wages stagnate.
The current minimum wage in Baltimore is the same as most of the rest of the state, which is $8.25 an hour. If one works eight hours a day, five days a week for 52 weeks a year that comes out to $17,160 a year pre-tax. That’s great news if you are a single person household, but bad if you are a family of three. The Federal poverty level for a family of three is $20,160 a year.
$15 Varies across the country and $15 can get you further in Ottumwa, Iowa than in Baltimore, indeed it will go further in Harford County than it will here in Baltimore City. It is more expensive to live here than it is in other jurisdictions. Our wages should reflect that. Last year it was estimated that while Maryland’s minimum wage was $8.25 the purchasing power of that was $7.44, slightly above what the minimum wage was last changed at the Federal level in 2009 to $7.25 an hour.
The Tax Foundation published a report earlier this month on how much $100 is worth across the country. This is a result in purchasing power differences. Cities and suburbs are more expensive places to live than rural and exurban areas. In the Baltimore metro area $100 has the purchasing power of $92.89, while in Cumberland $100 has the purchasing power of $113.10. It should be noted that the Tax Foundation describes itself as non-partisan but some view it as pro-business.
The Economic Policy Institute broke down what an increased minimum wage would mean in Baltimore. The demographics make it clear that minimum wage earners in Baltimore are working families and not part-time workers. An increase in the minimum wage would be a boost for almost 98,000 working people; almost 27% of all workers in Baltimore City. This would not be a boost for teenagers, 95.7% of all minimum wage workers are 20 or older and almost 80% are 25 and up. Women make up 55.3% of workers who earn the minimum wage almost a ¼ of working mothers and 1/3 of single mothers would get a bump in their paycheck. Any increase in the minimum wage would disproportionately benefit racial minorities, 54.2% of workers who earn the minimum wage are African-American, 8.3% are Hispanic, and 5.1% are Asian. Workers who would see gains in their incomes make up roughly 54.6% of their families’ income. 20% Of workers who earn the minimum wage are a family’s sole provider. This increase would have a disproportionate impact on people who work full time. 73.8% of those who’d benefit are full time workers, and only 7.7% are part time workers who work 20 hours or less.
The minimum wage is not a living wage in Baltimore City. The people who earn it aren’t teenagers looking for extra money or college students picking up a couple of shifts between classes. They are working men and women, many of whom have families. We cannot continue to have a wage that keeps people in poverty who work full time. We cannot have families who have one or both parents work full time and still just get by. A $15 minimum wage will lift people from earning poverty wages to earning closer to a living wage.