$15 an hour?
Our view: A a major boost to the minimum wage may sound like a lifesaver for Baltimore, but it could hurt the very workers it is supposed to help
The $15 minimum wage laws recently enacted in California and New York have given quite a boost to local efforts to raise basic salaries. Given those high-profile campaigns — and the strong support from union backers — it comes as no surprise that the Baltimore City Council will soon be pondering a similar mandate.
Under the proposal offered by Councilwoman Mary Pat Clarke, the minimum wage paid by Baltimore employers would rise to $15 per hour by 2020. It was no coincidence that the measure was unveiled shortly before the one-year anniversary of Freddie Gray’s death and at a time when poverty and income inequality is much on the minds of city residents. Even presidential candidates have gotten into the act, the problems associated with economic disparty having already served as a major talking point for Democrats and Republicans alike.
We have long backed a fair minimum wage. On the federal level, it’s a rule that dates to the Great Depression and a desire not to see companies take advantage of those entering (or perhaps in hard times returning to) the job market. And we have often complained when the minimum wage has failed to keep pace with inflation — as the current federal minimum wage of $7.25 per hour is falling short of the historical standard even now. Maryland’s choice to eventually impose a state-level minimum wage of $10.10 per hour by July 1, 2018 won our backing as well. Currently, the state minimum is $8.25 per hour and is set to increase to $8.75 in two months.
But raising the minimum wage by a great deal more than that so quickly (essentially 50 percent more in two years) and only for one jurisdiction in the state is not a decision to be taken lightly. While the goal of raising living standards, helping families afford decent housing and other essentials is laudable, there are potential unintended consequences that could arise.
Baltimore is not Seattle, a city that last year decided to gradually raise its minimum wage to $15 per hour. Currently, the minimum wage in the Emerald City is up to $13 per hour (for larger employers) with little ill effect. The region’s unemployment rate stands at 4.8 percent, and the job base has grown and the consumer price index is little changed. San Francisco is in a similarly happy circumstance after voters approved the $15 minimum wage in 2014 (it rises to $13 on July 1) with an unemployment rate even lower than Seattle’s.
What neither city has is the kind of poverty and minority unemployment that plagues Baltimore where the unemployment rate is consistently about two points higher than in surrounding counties. Worse, among African-Americans living in Baltimore, the jobless rate is generally double that of whites. Raise the minimum wage, and the shortage of jobs available to black youth may only get worse, putting more pressure for them to enter the underground economy.
It’s one thing to raise the minimum wage on a state or regional basis; it’s quite another to do it in a city where employers with many entry-level jobs — restaurants or retailers, for instance — can easily relocate on the other side of the city line. Baltimore isn’t as prosperous as Seattle or San Francisco, and its image has suffered in the wake of Freddie Gray. This isn’t a good time to make it harder to do business in Baltimore.
Here’s a better solution. Why not allow the state-mandated wage increases to go forward and watch what happens elsewhere as higher rates kick in? Much like those states experimenting with legalized marijuana, Baltimore can take its cue from the grand experiment of a $15 minimum wage. Minimum wages are gradually rising to $10.10 per hour in Baltimore and elsewhere across Maryland anyway; perhaps the case for the $15 wage will only become stronger as that change plays out. Meanwhile, Baltimore will be in a better position to recruit new businesses — and the jobs that come with them — without an extra regulatory burden.
Granted, we think Baltimore is a better place — its workforce healthier and more reliable and its families more likely to remain intact — when employers pay a living wage, but that doesn’t mean government must use its regulatory cudgel to impose it. The city’s requirement that its contractors provide a living wage to their workers may prove the better approach, setting the example for others to copy. To paraphrase Maryland’s Republican governor, Baltimore needs to indicate it’s “open for business” to attract investment, and jumping on board the nation’s highest minimum wage standard probably isn’t the best way to do that.