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March 19, 2019

Labor, small businesses differ on minimum wage bills

Photo / Maureen Milliken The Maine Legislature heard from both sides on seven proposed minimum wage bills Monday.

The Maine AFL-CIO urged lawmakers Monday to reject several bills that would lower the minimum wage, particularly ones that would create a separate, lower, wage for teenagers, while a group representing small businesses said a lower wage is better for business.

The Committee on Labor and Housing Monday heard public testimony on seven bills that that would change minimum wage law. Six of the bills would lower it. Under current law, the Maine minimum wage is $11 an hour and will go up to $12 an hour on Jan. 1. On Jan. 2021, and every Jan. 1 after that, it must be increased in line with the cost of living.

While the hearing testimony wasn’t available on the legislative website by press time Tuesday, both the AFL-CIO and National Federation of Independent Businesses issued news releases outlining their positions.

“Maine AFL-CIO opposes in the strongest terms measures that would create a subminimum wage for young adults,” the AFL-CIO said in a Tuesday news release. The labor organization specified three bills, LD 612, LD 739 and LD 808, which have lower wages for younger workers.

“Having tiered wages ultimately results in exploitation. Paying young workers less than adult workers tends to undermine adult workers’ wages,” said Barney McClelland of Yarmouth, a retired IBEW member and secretary of the Southern Maine Labor Council. “Time would be better spent fixing problems with big box stores hiring low-wage workers with an expectation of using public resources to subsidize their low wages, rather than cutting wages for young workers.”

The organization also opposed bills that would have a lower minimum wage for employees at small businesses and in most of the state, aside from a large portion of Cumberland County, (LD 830, LD 1098), because the law should not discriminate workers based on where they work, the release said.

Also proposed is LD 425, which would lower the minimum wage to $10 an hour and eliminate the cost-of-living increase.

The AFL-CIO, which represents more than 40,000 Maine workers in more than 50 unions, said the current minimum wage law “lifted 10,000 Maine children out of poverty,” citing the Maine Center for Economic Policy.

“No one who works full-time should live in poverty. That’s why Mainers voted overwhelmingly to raise wages,” said Maine AFL-CIO Executive Director Matt Schlobohm in the release. “The cost of food, gas, housing and rent has gone up for years, but wages haven’t kept pace. The minimum wage increase has put money in workers’ pockets that goes directly back into the local economy.

"We’ve seen firefighters, first responders, CNAs, nursing home workers and thousands of other workers get a direct raise from the minimum wage increase. The law is working. Legislators should be focused on raising wages, not cutting them," he said in his testimony.

The organization quoted President Franklin Delano Roosevelt, who signed the law establishing a federal minimum wage: “No business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By living wages, I mean more than a bare subsistence level — I mean the wages of a decent living.

Small businesses cite challenges

In a release Monday, in anticipation of the hearing, the National Federation of Independent Businesses, which said it represents thousands of small businesses in Maine, urged “a slower phase-in of the next minimum wage increase to $12 in January 2020 so that those companies can better adjust to the steep series of increases.”

It said the $12 minimum wage, which would go into effect next year, “translates to a 33% increase since 2017, or $6,700 in added wages and payroll taxes for each minimum wage job.”

The organization’s members were surveyed about the increase, and they responded that they’ve had to raise prices, tighten payroll and cut entry level, jobs, said David Clough, state director of NFIB in Maine. “These family businesses and entrepreneurs are having to make tough choices with the state’s rising labor costs, and it will only get worse when the $12 minimum wage kicks in early next year.”

Small-business owners surveyed said the higher wage next year would mean “they were forced to additionally raise the wages of those making more than the minimum so more experienced employees wouldn’t feel devalued.”

They said that the increase will prevent them from hiring inexperienced or unskilled workers in the future, and are instead asking more experienced employees to take on additional duties, the release said.

“The problem is it will be very difficult for people trying to get their first job as those entry-level positions disappear,” said Clough. “There is only so much money coming into a small business, and when you can’t afford the increased wages, you either have to raise prices or cut hours and jobs.”

Members also said that, beyond higher payroll costs, the also have higher FICA taxes and workers compensation premiums.

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