In a move with a bit of legislative drama, Maryland legislators last month voted to gradually increase the minimum wage to $15 per hour. Maryland’s minimum wage in 2019 is $10.10 an hour.
Companies with more than 15 workers will have to pay the higher entry-level wage by 2025. Companies with 14 or fewer employees must start paying the wage by July 1, 2026.
A violation of Maryland’s wage and hour law is a misdemeanor with a fine of up to $1,000.
The first increase is scheduled for Jan. 1, 2020. That will bring the minimum wage to $11 an hour for all employers. The next increase comes Jan. 1, 2021, raising the entry-level wage to $11.75 an hour for businesses with 15 or more employees and to $11.60 for businesses with 14 or fewer employees.
The law, “Fight for Fifteen,” does provide that, if the economy nosedives, a wage increase can be set aside. The minimum wage will increase each year on January 1. However, a minimum wage increase can be suspended if the seasonally adjusted total employment is negative, according to the legislative analysis of the bill.
A violation of Maryland’s wage and hour law is a misdemeanor with a fine of up to $1,000. In addition, if an employer pays less than the minimum wage, an employee can bring an action to recover back wages, liquidated damages and legal fees.
The federal minimum wage is $7.25 an hour.
The increase was rejected by Republican Governor Larry Hogan. Hogan vetoed the bill when it landed on his desk. In a letter to General Assembly leaders, Hogan said the measure would cost jobs and negatively impact the Maryland economy.
Noting that the minimum wage in Maryland had increased 40% since he took office in 2014, Hogan said Maryland’s $10.10 an hour was the highest in the region. The minimum wage for Virginia and Pennsylvania is $7.25 – the same as the federal minimum wage, while Delaware and West Virginia have a minimum wage of $8.75.
Hogan said the rate hike would make Maryland a “more expensive place to do business.” “Small businesses faced with the choice between a $7.25 wage in Virginia or $15 in Maryland will be forced to create jobs in the lower cost location and possibly reduce jobs or eliminate operations in Maryland,” Hogan wrote.
He also said that a recent study indicated that the $15 minimum wage would lead to a reduction of 99,000 jobs in private sector employment and would reduce the state’s economic output by more than $61 billion over the next decade.
Instead, Hogan offered a compromise, proposing that the minimum wage increases to $12.10 by 2022 and an increase above that amount can only happen if the surrounding states reach a combined average of 80% of Maryland’s wage.
However, the bill had passed the Democratic-controlled General Assembly with veto-proof majorities, so, when the Governor’s veto was sent to the legislature, the House voted 98-39 to override the gubernatorial rejection of the measure and the Senate’s veto override vote was 30-15.
In addition to Gov. Hogan, the National Federal of Independent Businesses and Maryland’s Chamber of Commerce also fought against the bill’s passage into law.
In an opinion piece in the Annapolis, Md.-based Capital Gazette written when the bill was under consideration by Maryland’s General Assembly, the state director for the National Federation of Independent Businesses, Mike O’Halloran, said the minimum wage is not supposed to be a living wage and that every time the entry-level pay goes up, employers also pay more in payroll costs, workers’ comp insurance, and benefits – causing significant negative impact to the state’s small businesses.
Larry Richardson, vice president of government affairs for the Maryland Chamber of Commerce, told the Baltimore Business Journal, before the bill was vetoed, that the measure would cost jobs and also argued that raising the minimum wage would disproportionately affect small businesses.
Neither O’Halloran nor Richardson returned a call for comment by press time.
Maryland is the sixth state to approve the $15 an hour entry-level wage. California, Illinois, Massachusetts, New Jersey, and New York passed laws to phase in the $15 minimum wage, as has the District of Columbia, according to the legislative analysis of the Maryland bill.
This year has seen a number of changes to the minimum wage in several states. Eighteen states began 2019 with higher minimum wages, according to the National Conference of State Legislatures. Eight states — Alaska, Florida, Minnesota, Montana, New Jersey, Ohio, South Dakota and Vermont — automatically increased their rates based on the cost of living, while 10 states — Arizona, Arkansas, California, Colorado, Maine, Massachusetts, Missouri, New York, Rhode Island, and Washington — increased their rates due to previously approved legislation or ballot initiatives, NCSL says.
Other states that will see rate increases during the 2019 calendar year include D.C., Delaware, Michigan and Oregon, NCSL notes.
Federal action on minimum wage increases
There are a small handful of bills advocating for a federal minimum wage hike currently circulating on Capitol Hill. A Democratic-backed bill, the “Raise the Wage Act,” that proposes to raise the federal minimum wage to $15 in about five years, with an immediate increase to $8.55, has gotten the furthest in the legislative process. The measure cleared the House Committee on Education and Labor on March 6 on a 28-20 party-line vote. The bill has 205 co-sponsors in the House. A mirror bill is in the Senate. The Senate bill has yet to be scheduled for a subcommittee or committee vote.