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Unintended Consequences of a $15 Minimum Wage?

There has been a recent push in large cities and some States to increase the minimum wage to $15 an hour. New York City, Los Angeles, San Francisco and most recently Baltimore and the District of Columbia have all mandated that their local minimum wage will increase to $15 sometime between 2018 and 2022. Will Montgomery County be next?

   The current minimum wage required for work performed in Montgomery County stands at $10.75 an hour and is scheduled to increase again in July 2017 to $11.50. The Montgomery County Council is reviewing an additional increase that will top out at $15 an hour by the year 2020. The Gaithersburg-Germantown Chamber of Commerce has joined with several other Chambers in the County and asked the Council to slow down and make sure that they have all the information necessary to make this decision.

   The primary impetus for raising the minimum wage to $15 is to help low-wage, low-skilled workers make a living wage. I think we can all agree that it is expensive to raise a family in this Montgomery County. However, at this point, we really don’t know what the full impact of a $15 minimum wage will have on the very population that it is targeting.

   A direct quote from the Council staff reviewing this issue states that, “It is uncertain whether increasing the minimum wage would either increase or decrease employment among low-wage workers.”  Raising the minimum wage to $15 is not a clear victory for all. Business owners will have to decide how to best absorb the additional cost. Some workers will get a wage increase, whereas some workers may lose hours, they may lose benefits or they may lose their jobs entirely.

   We feel that the County should pause to make sure that there are no unintended consequences of raising the minimum wage too high, too fast such as causing a reduction in staff or benefits. We’ve also asked for a more complete understanding of the impact of raising the minimum wage on the increased personnel cost for the County itself. After this year’s property tax increase, it is important to have an accurate estimate of the budgetary impact of any further wage increases.

   We have heard from our businesses on this legislation and many of them will be greatly impacted. Without exaggeration, some of them will need to reduce staff and or benefits, some might leave the County, and unfortunately some will go out of business.  These people are working very hard to build a business, create jobs, and raise a family. Perhaps “$15 by 2020” is too much, too soon.

 

Marilyn Balcombe is the president & CEO of the Gaithersburg-Germantown Chamber of Commerce.

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