Governor Larry Hogan Vetoes $15 Minimum Wage Bill

Governor Larry Hogan Vetoes $15 Minimum Wage Bill
 Legislation Could Cost Jobs, Push Businesses Out of State

1. Governor Hogan Offered A Compromise Proposal On The Minimum Wage - The General Assembly Refused To Take The Governor’s Ideas Into Consideration

Governor Hogan: "I would like to offer a compromise to move this discussion forward. Despite my reservations about a dramatic increase in the minimum wage, I could support a reasonable, phased increase of the minimum wage by $2 to $12.10 by the year 2022 if it were amended to include the following provisions…” (Letter, Governor Hogan To Presiding Officers Re: Minimum Wage Compromise, Office Of The Governor, 3/8/19)

• The Governor’s Compromise Proposal Included A “Trigger” That Would Make Increases Above $12.10 Contingent Upon Increases To The Minimum Wage In Surrounding States. “That is why I would like to see the legislature attach a trigger to this legislation that would make any further increases above $12.10 effective only if our surrounding states reach a combined average of 80% of our wage.” (Letter, Governor Hogan To Presiding Officers Re: Minimum Wage Compromise, Office Of The Governor, 3/8/19)

• The Governor Called For Legislation To Take Into Account Regional Differences. “Therefore, I would propose that we differentiate the minimum wage increase to account for these geographical differences. New York and Oregon currently do this, and so should we. We should work out an objective system that would recognize local economic conditions, but which would be simple to implement and regulate; businesses already navigate complex and burdensome regulatory requirements across the country. A regional minimum wage in Maryland should not be a bureaucratic or administrative nightmare for companies that want to do business across our state. Towards this end, your legislation should also consider additional provisions to account for the differences in temporary and seasonal workers.” (Letter, Governor Hogan To Presiding Officers Re: Minimum Wage Compromise, Office Of The Governor, 3/8/19)

• The Governor Suggested That A Compromise Proposal Should Include An Increase In The Earned Income Tax Credit. “I believe that a fair and more effective way to help those who are struggling to get by without losing jobs would be to increase the state Earned Income Tax Credit to 60% of the federal wage.” (Letter, Governor Hogan To Presiding Officers Re: Minimum Wage Compromise, Office Of The Governor, 3/8/19)

2. Maryland Has One Of The Highest Minimum Wages In The Country; Has Increased Every Year Under Governor Hogan

• Maryland’s minimum wage of $10.10 is the twelfth highest in the nation. (“State Minimum Wages,” National Conference Of State Legislatures, 1/7/19)  

• By far, Maryland’s minimum wage is the highest of any state in the region:

• Delaware: $8.75
• Pennsylvania: $7.25
• Virginia: $7.25
• West Virginia: $8.75 (“State Minimum Wages,” National Conference Of State Legislatures, 1/7/19)  

• When Governor Hogan was elected, Maryland’s minimum wage was $7.25. (“History Of Minimum Wage In Maryland - Employment Standards Services (ESS),” Maryland Department Of Labor, Licensing & Regulation, Accessed: 3/27/19)

• Since being elected, Maryland’s minimum wage has increased every year that the governor has been in office. (“History Of Minimum Wage In Maryland - Employment Standards Services (ESS),” Maryland Department Of Labor, Licensing & Regulation, Accessed: 3/27/19)  

• During this time period, Maryland’s minimum wage has increased from $7.25 to $10.10, this represents an increase of nearly 40%.

3. Numerous Studies: A $15 Minimum Wage Would Wreak Havoc On Maryland’s Economy

National Federation Of Independent Business

Job Loss:

• $15 Minimum Wage Would Result In The Loss Of At Least 99,000 Private Sector Jobs. “... the NFIB Research Center estimates that over a ten-year period beginning in 2019, the proposed minimum wage schedules would reduce Maryland private sector employment by over 99,000 jobs…” (Michael J. Chow, “Economic Impact Analysis Of Senate Bill 543: The Effects On Maryland Small Businesses And Their Employees,” NFIB, 2/8/18)

• 56 Percent (55,000 Jobs), Of The Projected Job Loses Are Jobs That Are A Part Of The Small Business Sector Of The Economy. (Michael J. Chow, “Economic Impact Analysis Of Senate Bill 543: The Effects On Maryland Small Businesses And Their Employees,” NFIB, 2/8/18)

• More Than 22,000 Jobs Are Forecasted To Be Lost At Businesses Employing Fewer Than 20 Employees. (Michael J. Chow, “Economic Impact Analysis Of Senate Bill 543: The Effects On Maryland Small Businesses And Their Employees,” NFIB, 2/8/18)

• A $15 Minimum Wage Would Mean That There Would Be Over 13,500 Fewer Jobs In Each Of The Retail, Food Services, And Drinking Industries. (Michael J. Chow, “Economic Impact Analysis Of Senate Bill 543: The Effects On Maryland Small Businesses And Their Employees,” NFIB, 2/8/18)

Statewide Economic Activity:

• A $15 Minimum Wage Plan Would Result In A Reduction Of $61 Billion In Economic Output. “...result in a cumulative reduction in Maryland real output of over $61 billion over the ten-year forecast window…” (Michael J. Chow, “Economic Impact Analysis Of Senate Bill 543: The Effects On Maryland Small Businesses And Their Employees,” NFIB, 2/8/18)

Tax Increases:

• Employers Are Expected To Pay More In Payroll Taxes As A Result Of A Minimum Wage Increase To $15. (Michael J. Chow, “Economic Impact Analysis Of Senate Bill 543: The Effects On Maryland Small Businesses And Their Employees,” NFIB, 2/8/18)

• A $15 Minimum Wage Would Add Significant Employer Costs In The Form Of Additional Payroll Taxes That Must Be Paid On Wage Differentials. (Michael J. Chow, “Economic Impact Analysis Of Senate Bill 543: The Effects On Maryland Small Businesses And Their Employees,” NFIB, 2/8/18)

American Action Forum

• A $15 Minimum Wage Could Cost The State 94,600 Jobs. (Ben Gitis, “The Job Implications Of A $15 Minimum Wage In Maryland,” American Action Forum, 3/22/19)

• This Is Equivalent To Eliminating Nearly 50 Percent Of The State’s Projected Job Growth Between 2016 And 2026. (Ben Gitis, “The Job Implications Of A $15 Minimum Wage In Maryland,” American Action Forum, 3/22/19)  

The Heritage Foundation

• A $15 Minimum Wage Would Result In The Loss Of 115,000 Jobs In Maryland. (James Sherk,”How $15-Per-Hour Minimum Starting Wages Would Affect Each State,” Heritage, 8/17/16)

Regional Impact Of A $15 Minimum Wage

• A Study Commissioned By The Restaurant Association Of Maryland Found That Increasing The Minimum Wage To $15 Would Eliminate Over 3,500 Jobs In Baltimore City. “City-wide, Drs. Even and Macpherson find that increasing the minimum wage to $15 would eliminate 3,546 jobs—of which roughly 2,000 jobs are held by women. The bulk of the job losses would be concentrated among individuals with a high school degree or less, and among people who work in the retail or leisure & hospitality industries.” (“The Impact Of A $15 Minimum Wage In Baltimore, Maryland,” Restaurant Association Of Maryland, 6/2016)   

• The Washington Post Editorial Board Stated That A Minimum Wage Increase To $15 In Montgomery County Would Lead To 20,000 Lost Jobs And Disproportionately Impact Young And Minority Workers. “Labor unions, whose clout in the county is considerable, are pressing hard for the higher minimum, which would be the first of that amount in any suburban locality in the United States. No doubt it would be a boon for some minimum-wage workers, who fill about 1 in 5 private-sector jobs in the county and struggle with the county’s high cost of living. But the trade-off — the potential loss of 20,000 or more jobs — would disproportionately hurt youth and minority workers.” (Editorial, “Montgomery County Considers Risking Thousands Of Jobs,” The Washington Post, 9/28/17)  

• Nicole Christian, President & CEO, Garrett County Chamber Of Commerce: “We know that our local employers are extremely concerned about a potential $15 per hour minimum wage and how it could impact Western Maryland.” (Press Release, “Western Maryland Partners Release Results Of Minimum Wage Survey: $15/Hour Wage Will Hurt Communities,” Frostburg State University, 1/1/19)

• Study Commissioned By Frostburg State University Found That 77% Of Western Maryland Organizations, Including For-Profit And Non-Profit Employers Believe That Increasing The Minimum Wage To $15 Would Have More Negative Consequences On Rural Counties Than Urban Counties In Maryland. (Press Release, “Western Maryland Partners Release Results Of Minimum Wage Survey: $15/Hour Wage Will Hurt Communities,” Frostburg State University, 1/1/19)

• The Same Study Concluded That  83% Of These Organization Believe That A$15 Minimum Wage Would Lead To Increased Worker Lay-Offs; 81% of Respondents Stated That A $15 Minimum Wage Would Lead To A Reduction In The Start Of New Businesses.(Press Release, “Western Maryland Partners Release Results Of Minimum Wage Survey: $15/Hour Wage Will Hurt Communities,” Frostburg State University, 1/1/19)

4. An Increase In The Minimum Wage To $15 May Potentially Have A Negative Impact On Crime And Members Of Vulnerable Populations Who Are Employed, Including Ex-Offenders And Homeless Individuals

• Despite Claims That Increasing The Minimum Wage Could Reduce Crime, Extensive Research Has Shown The Opposite To Be True. A $15 Minimum Wage In Maryland Could Potentially Lead To A 10 Percent Increase In Youth Property Crime Arrests. “The idea that mandating higher wages for low-skilled jobs will cut crime got a boost from President Barack Obama’s Council of Economic Advisers back in 2016… A recent report distributed by the National Bureau of Economic Research, one of the world’s most prestigious research outlets, examined minimum wage hikes at the federal, state and local levels over 1998-2016, and concluded that every 10 percent hike in the minimum wage increased property crime arrests for 16-24 year-olds by 2 percent. The authors found no significant effects — favorable or unfavorable — of minimum wage hikes on violent or drug crime rates. If this study stands up to careful scrutiny, it suggests Maryland’s contemplated 49 percent hike in the minimum wage (from its current $10.10) could lead to a 10 percent increase in youth property crime arrests. In other words, we might be about to make the ‘mass incarceration’ problem worse while doing nothing to reduce the city’s homicide rate.’” (Stephen J.K. Walters, “Raising Minimum Wage Won’t Solve Baltimore’s Crime Problems,” The Baltimore Sun, 3/19/19)

• Ex-Offenders, Veterans, Homeless Individuals, And Those In Recovery Have Voiced Their Opposition To A $15 Minimum Wage Increase, Fearing That Their Jobs Could Be Lost Due To Unintended Consequences. “For example, Mobern Lighting, a ‘labor intensive, low-tech manufacturer/assembler that relies on human hands to produce its products,’ currently employs slightly over 100 Marylanders at its assembly plant in Howard County. They state that… ‘In the event the minimum wage is increased to $15 per hour, we expect 80 percent or more of today’s production staff to be let go and their job shifted to Texas.’ This increase can actually end up hurting the very ones it purports to help… A number of Mobern Lighting’s employees also provided written testimony against this increase, describing themselves, in a sign-on letter submitted to the General Assembly, as members of the underserved workforce communities. ‘We are ex-offenders, veterans, the homeless, those in recovery, disadvantaged youths, and those with special needs. We all presently work at Mobern.’ These employees noted that they are able to earn a rate of pay above the current minimum wage rate of $10.10 and have good benefits. They also said, ‘perhaps more important, we work in an environment and culture that is friendly and sensitive to the challenges we face in our daily lives. If we ask for help or accommodations, we receive them. Mobern also works with our counselors, case managers, health care providers, probation officers and lawyers in support of our individual efforts to make things better in our lives through having gainful employment and addressing in real time the personal challenges we face. Most of us would struggle (at the risk of reverting back to old and bad behaviors) in our daily lives if we lose our jobs due to the unintended consequences of raising the minimum hourly wage to $15.’” (Letter, Maryland Chamber Of Commerce To Governor Hogan Re: HB 166/SB289, 3/22/19)