Agenda Item 12
January 20,2015
Public Hearing
MEMORANDUM
January 15,2015
TO:
FROM:
County Council
D<'JJL
Josh Hamlin, Legislative
Attorne~
SUBJECT:
Public Hearing:
Bill 59-14, Human Rights and Civil Liberties - County
Minimum Wage - Effective Dates
Bi1159-14, Human Rights and Civil Liberties - County Minimum Wage - Effective
Dates, sponsored by then Council President Rice, was introduced on November 25. A
Health and Human Services Committee worksession is tentatively scheduled for February
12,2015 at 9:30 a.m.
Bill 59-14 would change the effective dates of future increases in the County
minimum wage from October 1 to July 1 ofthe years 2015,2016, and 2017. In November
2013, the County enacted Bil127-13, Human Rights and Civil Liberties - County Minimum
Wage Dollar Amount, establishing the County minimum wage with phased increases on
October 1 of each year through 2017. In its 2014 session, the Maryland General Assembly
enacted HB 295, increasing the State minimum wage with phased increases on July 1 of
each year through 2018. Synchronizing the dates would simplify the administration of the
annual increases by employers.
This packet contains:
Bill 59-14
Legislative Request Report
Table comparing minimum wage rates
Fiscal and Economic Impact statement
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Bill No.
59-14
Concerning: Human Rights and Civil
Liberties - County Minimum Wage ­
Effective Dates
Revised:
11/05/2014
Draft No. 1
Introduced:
November 25. 2014
Expires:
May 25.2016
Enacted: _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ __
Sunset Date: ..... =o""'n=e_--::_ _ __
N
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President Rice
AN
ACT to:
(1)
(3)
change the effective dates of increases in the County minimum wage; and
generally amend the law governing the County minimum wage.
By amending
Chapter 34 of the Laws of Montgomery County 2013
Section 2, Transition
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bil/.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL No. 59-14
1
Sec.
1.
Section 2 of Chapter 34 of the Laws of Montgomery County
2013 is amended as follows:
Sec. 2.
Transition.
2
3
4
5
6
7
Notwithstanding Section 27-68, as added
in
Section 1, the County minimum
wage, until [October] July 1, 2017, must be the greater of the minimum wage
required under the Federal or State Act or:
(a)
(b)
(c)
Approved:
effective October 1, 2014, $8.40 per hour;
effective [October] July 1,2015, $9.55 per hour; and
effective [October] July 1,2016, $10.75 per hour.
8
9
10
11
Craig
L.
Rice, President, County Council
Date
12
Approved:
13
Isiah Leggett, County Executive
Date
14
15
This is a correct copy ofCouncil action.
Linda M. Lauer, Clerk of the Council
Date
®
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LEGISLATIVE REQUEST REPORT
Bill 59-14
Human Rights and Civil Liberties
-
County Minimum Wage
-
Efftctive Dates
DESCRIPTION:
Bill 59-14 would change the effective dates of future increases in the
County minimum wage from October 1 to July 1 of the years 2015,
2016, and 2017.
After the County enacted Bill 27-13, establishing the County
minimum wage with phased increases through 2017, the Maryland
General Assembly passed HB 295, increasing the State minimum
wage. Both County and State minimum wages include annual
increases through 2017 and 2018 respectively, with the County's
minimum wage increasing on October I of each year, and the State
minimum wage increasing on July 1 of each year.
Synchronize the increases ofthe County and State minimum wages.
Office of Human Rights
I
Human Rights Commission
To be requested.
To be requested.
To be requested.
To be researched.
Josh Hamlin, Legislative Attorney
To
be
researched.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
NI
A
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wage -
effective dates\lrr.doc
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A Comparison
of
Bill 27-13
and HB 295 Minimum Wage Rates
Date
October 1,2014
January 1,2015
July 1,2015
October 1,2015
July 1,2016
October 1,2016
July 1,2017
October 1, 2017
July 1,2018
Federal
7.25
7.25
7.25
7.25
7.25
7.25
7.25
7.25
7.25
State
7.25
8.00
8.25
8.25
8.75
8.75
9.25
9.25
10.10
County
8.40
8.40
8.40
9.55
9.55
10.75
10.75
11.50
11.50
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ROCKVILLE, MARYlAND
MEMORANDUM
January
12,
201S
TO:
FROM:
SUBJECT:
George Leventhal, President, County Council
Jennifer
A.
Hughes, ....
Joseph F. Beach,
11l:to.'
fficeofManage~udget
~~ent
of Finan1J •'-'
FETS for Bill 59-14, Human Rights and Civil Liberties - County
Minimum
Wage
- Effective Dates
Please find attached the fiscal and economic impact s.tatementS
tor
the
above­
referenced legislation.
JAH:fz
cc: Bonnie Kirkland, Assistant Chief Administrative Officer
Lisa Austin, Offices of the
County Executive
Joy Nurmi, Special Assistant to the County
Executive
Patrick Lacefield,
Director,
Public Information Office
Joseph F. Beach, Director, Departtllcnt of Finance
James Stowe, Director, Office of Human Rights
David Platt, Department ofFinance
Phil Weeda, Office of Management and
Budget
Helen Vallone, Office ofl'vlanagement and Budget
Alex Espinosa, Office
of
"~fanagement
and Budget
Naeem Mia, Office of Management and Budget
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Fjs~al
Impact
Statement
Council Bill 59-14. Human Rights and Civil Liberties-County Minimum Wage-Effective Dates
1.
Legislative Swrunary.
a.
Change the effective dates of future increases in the
COWlty
minimum wage from
October 1
to
July
1 of years 2015, 2016, and 2017.
b.
Amend the law governing the County minimum wage. (Chapter 27 instead of
Chapter
34)
2.
An
estimate
of
changes
in County revenues
and
expenditures regardless
of whether
the
revenues or expenditures are assumed in the recommended or approved budget. Includes
source ofinformatioD assumptions, and methodologies used.
j
There would be no apparent change in county revenues or expenditures. Currently
alJ
county full time employment
positions
pay above the minimum wage and our
current
contracting policy requires
the
county to pay according to the County's
Living
Wage
Program, The current rate is $14.l5lhour for FY 15.
3. Revenue and expenditure
estimates covering
at least the next 6 fiscal years.
Expenditures over the next 6 fiscal years are estimated to
be
flat and consistent
v.-ith
current budget pmjections,
4. An actuarial analysis through the entire amortization period for each bill that would affect
retiree pension or group insurance costs.
Not applicable
5. An estimate of expenditures
related
to
County's
information technology
(IT)
systems,
including Enterprise Resource Planning (ERP) systems.
Not applicable
6. Later
actions that may atrect
future revenue
and
expenditures
if the biB authorizes future
spending.
Not applicable,
7.
An
estimate of the staff time needed to implement the bill.
No additional staff required.
8.
An
explanation of how the addition of new staff responsibilities would affect other duties.
Not applicable.
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9.
An
estimate of
costs
when. an additional appropriation
is
needed.
Not applicable.
10. A description of
any
variable
that
could affect revenue and cost estimates.
Not applicable.
11. Ranges of revenue or expenditures that are uncertain or difficult to
project
Not applicable.
12. If a bill is likely to have no fiscal impact, why
that
is
the
casco
The bill
chal1ges the
implementation date only.
13.
Other
fiscal impacts
or comments.
Not applicable.
14.
TIle
foilo\-ving contributed to and concurred.
\lvith
this analysis:
Jim
Stowe, Director, Office of Human
Rights
Joseph Adler, Director, Office or Human Recourses
Phil Wecda, Office of Management and Budget
Helen Vallone, Office of Management and Budget
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Economic Impact Statement
Bill 59-14, Human
Rights
and Civil Liberties ­
County Minimum Wage - Effective Dates
Background:
This legislation would change the effective dates offuture increases in the County
minimum \\'Rge from October 1 to July 1 of the years 2015, 2016, and 2017. The changes
would mcre'd.se the number of months covered under the minimum \'Vage in FY2016 and
FY2017
by
three months. The rates for FY20 16 and FY2017 are $9.55 per hour and
$10.75
per
hour, respectively
1.
Tbe sources of information, assumptions, and methodologies used.
Sources of infonnation include:
• theBI.s Reports,
'"Characteristics ofMinimurn
Wage
Workers,
2013", Report
1048, U.S. Bureau afLabor Statistics (BLS), MarCh 2014, and
• Montgomery County labor force statistics, Local Area Unemployment
Statistics (LAUS), BLS.
The
Department of Finance (Fmance) assumes, under Bill
59~14
there will be an
increase
of three
months
(from October
to July) of
coverage
for
rates
that
under
current law begins in October. Under current law, the minimum vv'age between
October 1,2014 and October 1,2015
is
$8.40. Under
Bill 59-14)
the
minimum wage
of$9.55 would begin in
July
1,2015 instead of October
Il
2015. Therefore. there is
an increase in the minimum wage of $1.15 per hour for
that
three-month period.
Under the same provision in
aill
59-14, the increase in the minimwn wage is $1.20
for the period July through September 2016 for FY2017 effective from July 1) 2016.
The Department of Finance assumes that 480 working hours are affected by the
increase in the effective dates. The pumber
is
based on three months,
four weeks per
month, and fony hours per week.
Based on data in
HIS
Reports.
the number of
employees
in the state below the
minimum wage was
36,000
in CY2013. Using
the data
from
that
report and
data
from LAUS) Finance estimaies the number of employees in the County below the
minimunl wage to
be
6,382 in FY2016 and 6,471 in PY20J 7.
2. A description of any variable tbat could affect the economic impact estimates.
The variables
that
could
affect
the economic impact estimates are the number of
working hours of 480 and the number of workers below the minimum wage as
estimated
by
Finance.
Page 1 of3
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Economic Impact Statement
Bill 59-14, Human Rights and Civil Liberties ­
County Minimum Wage - Effective Dates
3. The Bill's positive or negative effect,
if
any on employment, spending, saving,
investment, incomes, and property values
in
the County.
Based on the assumptions discussed in paragraph #1, Finance estimates the positive
effect on employee incomes
is
over $3.5 million in FY20 16 and over $3.7 million in
FY2017. \Vhile the estimated number of employees below the minimUm wage would
receive a positive economic benefit, employers would experience additional labor
costs equal to the amount of the employee benefit. However, ifthe employer chooses
to pass on those additional costs through higher prices, the consumer would incur the
additional costs. Therefore: the additional income
to
the employee would
be
offset by
the additional costs to either the employer or consumer. As a result, the net effect to
the County:s economy from Bill 59-14 would be zero and the Bill would have no net
economic impru.,'t.
However, there is no consensus among economists on the effe(.,'ts ofthe minimum
wage
and
employment. Based on the review ofthe research,
it
is not certain whether
an
increase in
the
minimum wage would increase or decrease employment. This
uncertainty is based on
the
following factors:
• The ability of the employer to compensate for the increase
in
the minimum wage
by
passing such increase onto customers with higher prices
• The
proportion of the
~'age
costs among workers earning the minimUIl1 wage
to
the total costs ofproduction
• The
multiplier effect of increasing the minimum wage on the local economy
4.
If
a Bill is likely
to
have no economic impact, why is that the case?
Bill 59-14 would have positive economic impact on current employees currently
below
the
minimum
wage
but that positive economic impact
is
offset
by
additional
labor costs incurred
by
employers.··
As
stated
in
section
#3,
such
a
tradeoff would be
a
net
zero impact. However, it is uncertain whether increasing
the
minimum wage Over
the
Ulree
month period would have
an
effect on employment.
5. The following contributed to or concurred with this analysis:
David
Platt and
Rob
Hagedoom,
Finance;
James Stowe, Director, Office of
Human
Rights.
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