Advocates: Pausing Minimum Wage Hike Would Hurt Workers and the Economy

Ricarra Jones of the group Maryland Fight for 15, speaks at an Annapolis news conference last year, surrounded by state lawmakers who supported a $15 an hour minimum wage. Photo by Danielle E. Gaines

The General Assembly last year approved a gradual minimum wage increase to $15 , but in the midst of the economic downturn caused by COVID-19, some influential business groups have called for a two-year freeze.

But freezing Maryland’s minimum wage increases in the middle of the pandemic would hurt the economy and disproportionately impact people of color and essential workers, advocates say.

Leaders of the liberal Maryland Center for Economic Policy said Thursday new research shows that even a one-year freeze on minimum wage increases would result in thousands of dollars in lost wages for essential workers.  The proposed two-year freeze would result in lost wages to the tune of $14,000 by 2026 for typical workers, according to the group’s recently released report.

“We’re already working from a lower baseline, and freezing the minimum wage would harm those workers further,” Christopher Meyer, a research analyst for the Center for Economic Policy, said at a Thursday virtual news conference.

Meyer pointed out that people of color make up a disproportionate number of low wage workers, and would suffer the most from a wage freeze. He added that a freeze would decrease consumer spending in the midst of what is already an economic crisis, leading to further downturn.

The Maryland Chamber of Commerce and the National Federation of Independent Business-Maryland recently proposed the wage freeze last month as the economy suffered from stay-at-home orders and business closures due to the COVID-19 pandemic.

“The economic impact of COVID-19 is unprecedented,” the Chamber said in a May news release. “All indicators point to a recession, if not a full-blown depression. Overcoming the economic implications of COVID-19 will require an extraordinary response.”

The business groups proposed a slew of tax reductions and government funding to help businesses get through the pandemic. Some employers have also asked Gov. Lawrence J. Hogan Jr. (R) to allow businesses to withhold paid sick leave for reasons unrelated to COVID-19 outbreak for the rest of the year.

The Center on Economic Policy describes the proposed two-year delay in wage increases as “legally-dubious” in the report. A one-year freeze is allowed under current law, and the power to  do so rests in the hands of the Maryland Board of Public Works.

Some workers were outraged by the proposed wage freeze. Many essential workers are already struggling, said Michelle Holden, a security guard who works in downtown Baltimore.

“When you’re not paid enough, you’re always playing catch up, always behind,” Holden said. “$15 is not a lot to ask for.”

Legislators who passed the minimum wage increase – and later overrode a veto by Hogan –– have also called on state officials to forgo the freeze. In a May 28 letter, 13 Maryland House Democratic leaders, including Speaker Adrienne A. Jones (D-Baltimore County), told members of the Board of Public Works — Hogan, Comptroller Peter V.R. Franchot (D) and Treasurer Nancy K. Kopp (D) — that a pause in wage increases would be a mistake.

“While we included a statutory pause in the law, we do not believe now is the time to stop this increase – even though our State’s economy is struggling,” the lawmakers wrote in the letter. “We recognize the hardships that many small businesses in Maryland are currently experiencing and the stagnation that the COVID-19 virus has brought to our economy. That is why, as a legislature, we specifically set a lower rate of increase for businesses with less than 15 employees at 60 cents.”

The next minimum wage increase in Maryland is scheduled for the beginning of 2021, when it will increase from $11 to $11.75 per hour.

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