HHS Item 1
July 11,2016
Worksession
MEMORANDUM
July 7, 2016
Health and Human Services
CO~I
ee
Josh Hamlin, Legislative Attorne "
.
d
Jacob Sesker, Senior Legislative Analyst
TO:
FROM:
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f
Worksession:
Bill 12-16, Human Rights and Civil Liberties - County Minimum
SUBJECT:
Wage Amount - Annual Adjustment
Bill 12-16, Human Rights and Civil Liberties - County Minimum Wage - Annual
Adjustment, sponsored by Lead Sponsor Councilmember EIrich, and Co-Sponsors
Councilmembers Leventhal, Riemer, Navarro and Hucker, was introduced on April 12. A public
hearing on the Bill was held on June 21.
Bill 12-16 would:
increase the County minimum wage by a certain amount;
require the Chief Administrative Officer to adjust the County minimum wage rate
each year; and
generally amend the laws governing the minimum wage
Background
In 2013, the Council enacted Bill 27-13,
I
which established a County minimum wage for
private sector employees working
in
the County, unless the State or federal minimum wage is
higher. The County minimum wage established under Bill 27-13, as amended, is phased in over
several years. The rate'was set at $8.40 per hour effective October 1,2014, and increased to $9.55
per hour on October 1,2015.
It
is $10.75 as of July 1 of this year, and will go to $11.50 per hour
on July 1, 2017. The County minimum wage does not apply to a worker who is exempt from the
State or federal minimum wage, is under the age of 19 years and is employed no more than 20
hours per week, or subject to an "opportunity wage" under the State or federal law. Employers of
tipped employees may include in the computation of their wage amount a "tip credit" not
exceeding the County minimum wage less $4.00 per hour. ,
In 2014, the Maryland General Assembly enacted a law raising the State's minimum wage
from $7.25 to $10.10 per hour over four years, with incremental increases to $8.25 in 2015, $8.75
in 2016, $9.25 in 2017, and $10.10 in 2018. The federal minimum wage is $7.25 hour and has not
County minimum wage law has been amended twice since being established by Bi1127-13. Bill 59-14
modified some ofthe effective dates for increases, and Bi1l24-15 modified the method for calculating the "tip
credit" allowed to employers oftipped employees.
1
The
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changed since 2009.
2
There is a nationwide effort to increase the minimum wage at the federal,
state, and local levels to $15 per hour, which has thus far had some success.
3
California and New
York
4
have enacted statewide laws that will increase the minimum wage for at least some workers
to $15 per hour over a period of years. State legislatures in Massachusetts
5
and New Jersey6 are
weighing measures to increase the minimum wage to $15 per hour for some or all workers. In this
region, the District of Columbia and Baltimore City are currently considering bills to phase in
minimum wage increases resulting in a $15 per hour minimum wage by 2020.
State laws:
Under California's new law,
7
beginning January 1, 2017, the minimum wage for employers
with at least 26 employees will increase annually until it reaches $15 per hour by January 1, 2022:
• January 1,2017 through December 31,2017: $10.50 per hour;
• January 1, 2018 through December 31, 2018: $11 per hour;
• January 1,2019 through December 31, 2019: $12 per hour;
• January 1, 2020 through December 31, 2020: $13 per hour;
• January 1, 2021 through December 31, 2021: $14 per hour; and
• Beginning January 1,2022: $15 per hour.
For employers in California who employ 25 or fewer employees, the same phased increases
begin a year later, in 2018, and culminate in a $15 per hour minimum wage beginning January 1,
2023. The minimum wage will then be indexed annually for inflation (national CPI) beginning the
first January 1 after small businesses are at $15 per hour. The indexing may result in increases of
o
percent (but no decreases) with a ceiling of 3.5 percent per year. The law also includes so-called
"off-ramp" provisions that allows the governor to pause any scheduled increase for one year if
certain economy or budget conditions are met.
8
Once the $15 per hour minimum wage has been
reached, the "off-ramp" provision expires.
The New York law, enacted as part of the State's budget, does the following:
• For workers in New York City employed by large businesses (those with at least
II
employees), the minimum wage would rise to $11 at the end of 2016, then another $2 each
year after, reaching $15 on
12/3112018.
A chart showing the federal minimum wage rates from 1938-2009 is at
http://www.dol.gov/whdlminwage/chmt.htm
3
A summary ofjurisdictions approving some fonn of $15 minimum wage is at
http://www.nelp.org/content/uploads/PR-Minimum-Wage-Year-End-15.pdf
4
In March
2016,
the Center on Wage and Employment Dynamics (CWED) prepared a Policy Brief examining
potential impacts of a
$15
per hour minimum wage in New York. That Policy Brief can be accessed at:
http://irle
c
berkeJey.edu/cwed!l:lriefs/2016:.01.pdf
5
http://www.metrowestdailynews.com/articJeI20
160605/N
EWS/1606077 50
6
http://www.nj.com/politics/index.ssf!2016105/15minimumwagegetssenatecommitteeapproval.html
7
https:llleginfo.legislature.ca.gov/facesibi1lNavClient.xhtml?bill
id=101520
J
60S83
8
Economy conditions:
the Governor has the ability to pause an increase if seasonally adjusted statewide job growth
for either the prior 3 or 6 months is negative and retail sales receipts for the prior 12 months is negative.
Budget conditions:
The Governor has the ability to pause an increase if any year from the current budget year to 2
additional years is forecasted to be in "deficit" when including the next scheduled increase. A "deficit" is if the
operating reserve is projected to be negative by more than 1 percent of annual revenues, currently about
$
1.2
billion.
The budget off-ramp can only be used twice.
2
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• For workers in New York City employed by small businesses (those with 10 employees or
fewer), the minimum wage would rise to $10.50 by the end of 2016, then another $1.50
each year after, reaching $15 on
12/3112019.
• For workers in Suburban New York City (Nassau, Suffolk and Westchester Counties), the
minimum wage would increase to $10 at the end of 20 16, then $1 each year after, reaching
$15 on
12/31/2021.
• For workers in the rest of the State, the minimum wage would increase to $9.70 at the end
of 2016, then another 70 cents each year after until reaching $12.50 on
12/3112020
-
after
which it will continue to increase to $15 on an indexed schedule to be set by the Director
of the Division of Budget (DOB) in consultation with the Department of Labor.
• Beginning in 2019, the State DOB Director will conduct an annual analysis of the economy
in each region and the effect of the minimum wage increases statewide to determine
whether a temporary suspension of the scheduled increases is necessary.
Minimum wage legislation in the region:
The District of Columbia enacted a law in June increasing the minimum wage to $15 by
2020.
9
The law passed unanimously, and was signed by Mayor Muriel Bowser on June 27.
It
would
raise the District of Columbia minimum wage currently $11.50 in annual increments until it
reaches $15.00 by July 1, 2020. Beginning on July 1, 2021, the minimum wage will increase
further based on the increase in the Consumer Price Index for All Urban Consumers for the
Washington Metropolitan Statistical Area. The DC Bill will also increase the tipped minimum
wage from the existing $2.77 per hour, where it has been since 2005, in annual increments of 56
cents (55 cents in 2020) to $5.00 on July 1,2020, again with annual indexing in successive years.
The City Council of Baltimore is considering a Bill that would raise the City's existing
minimum wage of $8.25 per hour to $10 in January 2017, and then by $1.50 a year until it reaches
$15 by 2020.
10
After reaching $15 per hour, the minimum wage will be adjusted each year to
match increases in the cost of living using the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W). The Baltimore Bill also includes the gradual elimination of the lower
minimum wage for tipped employees (often called the "sub-minimum"), so that by July 2025,
employers would be required to pay tipped employees the full minimum wage. The bill would
phase-out the sub-minimum wage for tipped employees by increasing it from the current sub­
minimum wage (under Maryland law) of $3.63 per hour as follows:
• January 1,2017: $4.50 per hour
• July 1,2017: $5.25 per hour
• July 1,2018: $6.00 per hour
• July 1,2019: $7.50 per hour
• July 1,2020: $9.00 per hour
• July 1,2021: $10.50 per hour
• July 1,2022: $12.00 per hour
• July 1,2023: $14.00 per hour
• July 1,2024: $15.00 per hour
• July 1,2025 and thereafter: Full minimum wage
9
http://lims.dccouncil.us!Legislation/B21-0712?FromSearchResults=true
10
https:!lbaltimore.legistar.com/LegislationDetaiLaspx?ID=2692688&GUID=FOB89A4C-DD5942FF-B459­
5B40DD8E8391&Options=ID%7CText%7C&Search=minimum+wage
3
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The Baltimore Bill would also eliminate some exemptions under the City's existing law, and
amend the enforcement provisions of the law.
A
public hearing on the Bill was held before the
City Council's Labor Committee on June 15, and the Bill is scheduled for worksessions on July
19 and 21.
Bill
12-16
Bill 12-16 would extend the incremental increases set in County law to go up to $15 per
hour effective July 1, 2020. Under the Bill's transition provisions, the County minimum wage
would increase to $12.50 in 2018, $13.75 in 2019, and $15.00 in 2020. Additionally, the Bill
would require, beginning in 2021, annual adjustments to the minimum wage by the annual average
increase, if any, in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI­
W)
for the previous calendar year.
Legal Authority
Montgomery County can set its own minimum wage by law even though the State of
Maryland has a minimum wage law. In
City ofBaltimore
v.
Sitnick,
254 Md. 303 (1969), the
Maryland Court of Appeals upheld a city ordinance establishing a minimum wage standard that
was higher than the State standard. In that case, the plaintiffS argued that State law had preempted
the field of minimum wage. In rejecting that argument, the Court held that the City of Baltimore
could pass its own minimum wage law based on the city's exercise of concurrent power because
the city law did not conflict with the State law.
Fiscal and Economic Impact
The OMB and Finance Fiscal and Economic Impact statement is at ©5-12. OMB estimates
a total fiscal impact in fiscal years 2018 through 2022 of $6,483,575. This estimate is based on
pay increases to employees on the minimum wage/seasonal salary schedule, assuming the current
number of hours worked by affected employees. The Office of Finance notes that "there is no
consensus among economists on the effects ofthe minimum wage on enforcement," and concludes
that it is uncertain whether increasing the minimum wage would either increase or decrease
employment among low-wage workers.
Public Hearing
Forty-one people testified at the June 21 hearing, presenting a number of perspectives on
the Bill. The Bill's supporters pointed out that the cost ofliving in Montgomery County is high,
with a family of four needing $79,000 per year to independently maintain a modest standard of
living (see ©13-14, SEIU and ©15-16, Community Action Board). Several supporters also
requested an amendment to the Bill to increase wages paid by employers to tipped employees (see
©17-18, Progressive Maryland and ©19-20, UFCWI994). Supporters also said that increasing
the minimum wage results in benefits for business, such as increased employee retention and
productivity, which offset the additional fiscal burden (see ©21-23, AFL-CIO).
The Council heard from workers making at or near minimum wage and advocates of the
positive effects of an increase in workers' lives (for example, see ©24-25, (Felix Kala), ©26,
4
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(Mekdes Sisay), and ©27-28, (CASA)). The benefit of increased money earned through higher
wages circulating in the local economy was also cited in support ofthe Bill (see ©29, Boaz
Young­
EI)
Opponents questioned whether it is necessary to legislate now a series of increases that
would not begin until 2018 (see ©30-33, GGCC). Others questioned the adequacy of the Fiscal
Impact Statement's estimate of the costs of an increase to the County (see ©34-35, GBCC). The
Council heard from a small business employing home health aides to provide in-home care to
seniors that rising labor costs would burden the business and result in seniors not getting needed
care (see ©36-37, Wendy Johnson). The disproportionate impact of minimum wage increases on
small businesses and young workers were also raised in opposition to the Bill (see ©38-39, Stacey
Brown). Emily Bruno of Denizens Brewing Co. said the implementation ofa$15 minimum wage
would particularly threaten the viability of new businesses (©40-43).
The Maryland Restaurant Association said that the Bill would lead to the elimination of
jobs in the restaurant industry (©44-45). Potential adverse effects on the regional competiveness
of County businesses, and the cumulative impact of other worker protection mandates were also
issues of concern (see ©46-49, MCCC). Another issue raised by opponents of the Bill was "wage
compression," which occurs when lower-paid workers' (those making below a newly increased
minimum) wages rise and the wages of workers paid at or above the new minimum do not. Jane
Redicker of the Greater Silver Spring Chamber of Commerce pointed out that "increasing the
minimum wage does not just impact those making minimum wage; it effects the entire salary
structure." (©50-51) Afshin Abedi indicated that certain health care businesses could not pass on
additional labor costs to consumers, because they are prohibited from charging Medicaid patients
for services (©52-53).
Members of the County's nonprofit community pointed out that minimum wage increases
would present a challenge to delivering the current level of service when State and local funding
does not increase to cover additional costs. Brigid Howe of Nonprofit Montgomery said that "the
choice between providing care
to
our most vulnerable neighbors and raising wages is a difficult
one." (©54-55) The Montgomery Coalition for the Homeless offered support for the Bill, but
indicated that this support is based on the assumption that the County would supply the $200,000
annual increase in labor costs (©56). Tim Wiens of Montgomery County Inter
ACCIDD
said that
the organization shares the goal of the Bill, but estimated $20,558,048 in increased annual labor
costs as a result of going from the $11.50 per hour minimum wage slated to take effect in 2017 to
$15 per hour in 2020 as proposed in the Bill ©57-59).
Issues for Committee Discussion
1.
Is
there a need to enact this Bill quickly?
As mentioned above, by Bi1127-13, the Council created the County minimum wage and
provided for the wage to be phased in over a period ofyears. The County minimum wage is $10.75
on July 1 ofthis year, and under the provisions of Bill 27-13, as amended by Bill 59-14,
will
go to
$11.50 per hour on July 1,2017. This Bill would continue these annual increases in the minimum
wage, beginning on July 1,2018 and going through 2020, when the County minimum wage would
reach $15 per hour, with increases indexed to inflation thereafter.
5
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Because the first increase proposed in Bill 12-16 would not take effect for almost two years,
the Council does have time to consider the possible impacts of the increases before deciding
whether to enact the Bill. While giving notice well in advance of increases may be helpful for
businesses in planning their expenses for future years, the Council heard from several members of
the business community at the public hearing questioning the need to enact the Bill quickly without
careful consideration of its ramifications to County businesses. In any event, the Bill has been
introduced, and has five co-sponsors, so County businesses are certainly on notice that further
increases in the County minimum wage are possible.
It
is true that the District of Columbia, one of the County's "regional partners" in
implementing the minimum wage in 2013,
II
has already enacted a law that will provide for future
increases in its minimum wage to $15 per hour by 2020. However, there are two key distinctions
between the circumstances in the District and those in the County. First, under the District's 2013
law, the last increase in the minimum wage took effect on July
1
of this year, making the DC
minimum wage $11.50 per hour. In this regard, the District was in the position that the County
will be in one year from now. Also, a ballot initiative likely to be voted on this fall would have
increased the minimum wage to $15 per hour by 2020, and eliminated, by 2025, the reduced
minimum wage that employers are required to pay tipped employees. The County does not face
that outside pressure to act.
The move to a $15 per hour minimum wage is certainly gaining momentum nationwide,
with several large cities, as well as the states of California and New York implementing increases
to reach $15 over different periods ofyears . However, aside from SeaTac, Washington, population
27,875, no jurisdiction has yet reached that goal. The Council has the opportunity to carefully
consider a number of issues related to further increases without delaying any such increases. While
it is unlikely that this consideration will provide a certain, definitive path forward,
it
is nonetheless
worth taking the time to evaluate, as well as possible under the County's specific circumstances,
what effects further minimum wage increases might have.
2.
What is the rationale for a $15 per hour minimum wage?
The federal minimum wage was introduced in 1938, and throughout its history, has not
been considered a "living wage." Increasing the County's minimum wage would move it closer
to being a "living wage,"12 but given the cost of living in Montgomery County, independently
maintaining even a modest standard of living on 40 hours a week at $15 per hour would be
challenging, ifnot impossible. In fact, the
2012
Self-Sufficiency Standard, representing the annual
income required for a family of three (one adult, one preschooler, and one school-aged child) to
live in Montgomery County without financial assistance, was
$
77,933. 13 Across the nation there
has been an increasingly prevalent view that there is a need to guarantee a living wage, due to the
Council Chair Derrick Leon Davis of Prince George's County, the other "regional partner" in 2013, has indicated
that it is unlikely that Prince George's will be providing for further increases at this time.
See:
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The County has a living wage law, applying to County contractors, which requires them to pay their employees at
least $14.47 per hour. This amount is adjusted every year based on the increase in the CPI-U.
l2
13
hHp;l/www.healthvmontgomery.orgimodules.php?op=rnodload&name=NS-Indicator&fiIe=indicator&iid=322
6
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shift in the economy away from mid-wage labor to low-wage labor.
14
This view is reflected in the
draft 2016 platform for the Democratic Party, which includes a $15 federal minimum wage.
IS
Increasing the minimum wage would benefit working adults. According the most recent
U.S. Bureau of Labor Statistics data (2014), 51.1% of workers making at or below the federal
minimum wage were age 25 and older. In contrast, only 21.4 of these workers were between the
ages of 16-19.
16
Increasing the minimum wage would also benefit a significant number of women,
whose employment is highly concentrated in low-wage personal care and healthcare support
occupations. According to a 2014 White House report, "women account for more than half (55
percent) ofall workers who would benefit from increasing the federal minimum wage to $10.1 0."
17
It
stands to reason, then, women would represent as large, and probably a larger, proportion of the
beneficiaries of increasing the County minimum wage to $15.00 per hour.
The argument for increasing the minimum wage to $15 per hour posits that the increase
would boost the economy by putting more money into the hands of workers who would spend it.
This boost would offset increased labor costs to business, thereby reducing job losses or mitigating
losses with the creation ofnew jobs.
18
Another rationale offered to support increasing the minimum
wage is that it would reduce reliance on public assistance programs. In economic research, low
wages have consistently been the leading predictor ofenrollment in public assistance programs by
working families.
19
The reasons identified above are offered in support of minimum wage increases generally.
The appropriate amount of a local minimum wage is another question. From 1960 to 1979, the
federal minimum wage averaged 48% of the national median hourly wage, according to a recent
Brookings Institution paper
(Designing Thoughtful Minimum Wage Policies at the State and Local
Levels,
by Arindrajit Dube) (©60-72). Dube proposes using half ofthe local-area median wage as
the starting point in setting an appropriate level for a local minimum wage, and then taking into
account the local cost of living as a relevant consideration. In his paper he suggests that the
appropriate level for a minimum wage in Maryland is between $10.85 and $11.69 per hour (in
2014$), and that the appropriate level for a minimum wage in the DC Metropolitan Statistical Area
is between $11.73 and $13.51 per hour (in 2014$).
As with almost all aspects of the debate about the minimum wage, however, there is not
consensus among experts. Economist Harry Holzer, in considering the then-proposed $15
minimum wage in the District of Columbia, cautioned that an increase ofthat magnitude may have
negative consequences for workers.
20
Holzer expressed particular concern that setting the
minimum wage at $15 would create incentives for businesses to move across local borders due to
substantial differences in local minimum wages within the region.
14
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The
draft
reads "Democrats believe that the current minimum wage is a starvation wage and must be increased to a
living wage. No one who works full time should have to raise a family in poverty. We believe that Americans should
earn at least
$15
an hour and have the rightto form or join a union," See: http://www.politico.com/story/2016/07/dnc­
15
platform-draft-225046
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17
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sitesf4.~fault/fi le~
docs/20
1403:25min imumwageandwomenreportfIr.@l.pdf
16
http://raisetheminimul11wage.orgipages/stimulus
19
See pages
14-15
of
Local Minimum Wage Laws: Impacts on Workers, Families and Businesses
at
http:/(murray.seattle.gov!wp-contentfuploads!"")O
14/03/UC-Berkeley-IIA
C-Report-3-20-20 14.pdf
20
hrrp:/lwww.brookings.edu!research!opinions!2015!07/15-dolIar-minimum-wage-harm-economy-holzer
18
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3.
How might the economy absorb an increase in the minimum wage to $15 per hour?
The information in this section is taken directly from the packet from Bill 27-13.
21
It
provides a useful background and is equally applicable to the consideration of further increases in
the County minimum wage to $15 per hour.
Some labor economists perceive that there is monopsonistic competition in the low-skill,
low-wage labor market-the buyer (employer) has a disproportionate amount of power in the
market for low-wage, low-skilllabor.
22
Governments respond to this imperfect market by requiring
employers to pay minimum wages-the results of which may include increased employment (by
increasing an individual worker's incentive to work), increased economic activity, and reduced
poverty. Other economists argue that the labor market is competitive, and that government
interference in the labor market harms both employers and employees by requiring employers to
pay a wage that exceeds the marginal value of labor. These economists argue that the minimum
wage thereby results in reduced demand for labor, leading to reduced employment.
The following is a summary of the economic channels through which an increase in the
minimum wage might flow:
Earnings:
Hourly wages for individual employees earning below the new minimum wage
would increase. Increasing the wage in 2018 from $11.50 to $12.50 would clearly increase the
hourly wage of workers earning $11.50 by $1.00
(i
8.7%). Employers may respond to changes in
the minimum wage by reducing the hours of their employees-if wages are increased by 8.7% and
hours are reduced by 8.7% then the employee will not experience an increase in earnings.
Wage compression:
While
it
is easy to calculate the increase in hourly wage for a worker
earning the minimum wage, it is less clear what effect an increase in the minimum wage would
have on those workers currently earning $12.25 Gust below the 2018 minimum wage) or $12.75
Gust above the 2018 minimum wage). Employers required to pay a higher minimum wage may
compress wages for workers earning above the minimum wage. In their study of the impacts of
the 2007-2009 increases in the Federal minimum wage on restaurants in Georgia and Alabama,
Hirsch, Kaufman and Zelenska found that almost half of the employers that they interviewed said
that they would delay or limit pay increases or bonus pay for more experienced employees as a
result of the increase in the Federal minimum wage.
23
Broad empirical studies of US economic
data have also indicated that the minimum wage compresses wage distribution (see, e.g. DiNardo,
Fortin, and Lemieux 1996).24
A review of the entire packet for Bill 27-13 provides additional background. The packet can be accessed here:
21
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If you tuned out at
monopsonistic
here is the short version: whereas in a monopoly a very small number of sellers
enters a market place with many buyers, in a monopsony a very small number of buyers enters a market place with
many sellers. In the low-wage, low-skill labor market there are many more or less interchangeable sellers of labor
(potential workers), and relatively few buyers (employers). That under some circumstances employers have an
advantage in this marketplace is an idea that is older than West Virginia-John
Stuart Mill
first opined on this topic
in 1848.
23
Minimum wage channels
0/
adjustment.
IZA DP 6132.
http://www2.gsu.edu/-ecobth!TZA HKZ MinWageCoA dp6132.pdf
22
24
Labor market institutions and the distribution o/wages: 1973-1992.
8
http://www2.gsu,edu!--ecobthfIZA HKZ MinWageCoA dp6132.pdf
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Employment:
There is substantial disagreement among labor economists with respect to
the economic and employment impacts of a minimum wage. For example, one think
tank
(the
Economic Policy Institute) projected that the 2013 Harkin-Miller proposal-to increase the
Federal minimum wage to $10.10 per hour-would increase total employment in Maryland by
2,000 FTEs.25 Another think
tank
(the Employment Policies Institute) projected that the 2012
Harkin-Miller proposal-to increase the Federal minimum wage to $9.80 per hour-would reduce
total employment in Maryland by approximately 3,800 to 11,500 jobs. 26
Teen employment:
Neumark and Wascher observed that past studies of the impacts of the
minimum wage found that employers respond to an increase in the minimum wage by decreasing
employment of younger workers,21 Critics of Neumark and Wascher's work tend to point to the
subjectivity involved in selecting which studies to include in the analysis, and to the fact that many
of the studies involved were measuring the effect of a statutory minimum wage in the UK rather
than in the US. A different 2009 meta-study of 64 minimum wage studies published between 1972
and 2007 tried to measure the impact of minimum wages on teenage employment. The authors
(Doucouliagos and Stanley) graphed employment estimates and found that the most precise
estimates were heavily clustered at or near zero effects on teen employment.28
Workforce composition:
Allegretto, Dube and Reich (2011), in their study of employment
from 1990-2009, found no statistically significant effect ofthe minimum wage on teens as a whole
or on white, black, or Latino teens. 29 In a separate study, Dube, Lester and Reich (2012) found no
evidence that employers changed the age or gender composition of the workforce in the restaurant
sector in response to changes in the minimum wage.
30
Efficiency:
While the direct quantifiable evidence is sparse, Hirsch, Kaufman and Zelenska
found in their interviews with restaurant managers in Georgia and Alabama that about 90% of
managers planned to respond to the minimum wage increase with increased performance standards
(requiring better attendance and punctuality, raising productivity expectations, faster termination
of poor performers, etc.).
Turnover:
Typically the turnover rate among low-wage employees is high and the cost to
employers is high (in recruitment/screening costs, training, lost efficiency). Turnover is reduced
when wages are higher. The savings that accrue to the employer as a result of reduced turnover
may offset a portion of the cost of the wage increase. Dube, Lester, and Reich used a contiguous
counties approach to study the effect of differences in minimum wages on teens and restaurant
employees across US counties. They find "evidence that separations, new hires, and turnover rates
for teens and restaurant workers fall substantially following a minimum wage increase."
25
Raising the minimum wage to
$]
O. ]0 would give working/amiles, and the overall economy, a much needed boost.
lillQ;j!www.epi.org/Rublicationlbp357-federal-minimum-wage-increase/
26
The impact ofa $9.80 Federal minimum wage. http://www.epionline.org/study/r143!
27
Minimum wages and employment.
IZA DP No. 2570.
http://ftp.iza.orgldp2570.pdf
28
Publication selection bias in minimum wage research: A meta-regression analysis.
b.!!l?..
;lb~~y~y.:..9.~iJkil1.edu.!!..I!&!!.~J~w/a~worki!J.gQ!!R!;~papers/~OOLlt~.Q.QJlQ.t·
Do minimum wages really reduce teen employment? Accounting/or heterogeneity and selectivityin state panel
data.
http://www.irle .berke lev .edu/workingpapers/ 166-08.pdf
30
Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties.
29
http://www.irle.berkeley.edu/workingpapersfIS7-07.pdf
9
 PDF to HTML - Convert PDF files to HTML files
Motivation:
A higher minimum wage may motivate workers to work harder independent
of any actions by employers to improve productivity. Because higher pay increases the cost to
workers oflosing their job, workers may work harder (increase productivity) to keep their job.
Non-wage benefits:
Most low-wage workers receive few non-wage benefits. Card and
Krueger, in their seminal study of the labor market behavior of restaurants in response to an
increase in New Jersey's minimum wage in the 1990s, observed that the non-wage benefit most
frequently offered was free or reduced price meals.
31
Their study indicated that restaurants did not
respond to an increase in the minimum wage by changing their free or reduced price meal benefits.
A more recent study by Simon and Kaestner (2004) found small or no effect on non-wage
benefits.
32
Training:
There is no conclusive empirical evidence that an increase in the minimum wage
affects the amount of training that employees receive or the amount that employers expend on
training. Neumark and Wascher tend to fmd negative effects of minimum wages on training, but
they acknowledge that most other recent research fmds no evidence ofan effect. Some economists
have the perspective that employers might respond to an increase in the minimum wage by
increasing training (i.e., to raise productivity to a level befitting the new higher wage).
Increased demand:
The minimum wage has the effect of transferring income from
employers, who generally have a high savings rate, to employees, who generally have a low
savings rate. This
transf~r
could spur additional consumer spending, with the result being an
increase in GDP and employment.
Pricing:
Some employers might choose to increase prices in response to an increase in the
minimum wage. One review of studies (Lemos, 2008) concluded that "most studies
reviewed... found that a 10% US minimum wage increase raises food prices by no more than 4%
and overall prices by no more than
0.4%.'033
Other studies have reached different conclusions­
for example, Dube, Naidu and Reich found that prices "increased significantly" at fast food
restaurants, but not at table service restaurants.
34
Profits:
firms could accept reduced profits in response to an increase in the minimum
wage. There has been very little study of this in the United States, though a study ofthe impact of
a British minimum wage law found that profitability was negatively affected by introduction of a
minimum wage.
4.
Which occupations are most likely to be affected by an increase in Montgomery
County's minimum wage?
In
2015, more than 143,000 workers in Montgomery and frederick counties earned less
than $13.59 (the 25
th
percentile wage in the Silver Spring-frederick-Rockville Metropolitan
Minimum wages and employment: A case study ofthe fast food industry in New Jersey and Pennsylvania.
hg'p..;jLQsn:'lgf.~[g.:..l2er~l~~QWP.!!Pf.:..~!l.i!TI
in-aer,ru!f
32
Do minimum wages affect non-wage job attributes? Evidence onfringe benefits and working conditions. NBER
Working Paper
9688. http://www.nber.org!papers/w9688
33
The effect ofthe minimum wage on prices.
lZA
DP No. I072.
=~==~~"-===
34
The economic effects of a citywide minimum wage.
http://digitalcommons.ilr.comell.edu/cgi/viewcontent. cgi?article= 1293&context=
i
lrreview
3
J
10
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Division).35 In total, there are 89 occupations with median wages of $151hour or less and average
wages of $ 16lhour or less. Total employment in those occupations is nearly 150,000. Four broad
occupational categories have average hourly wages that are below $16 per hour: healthcare
support; personal care and service; building and grounds cleaning and maintenance; and food
preparation and serving. The median hourly wage in each category is below $151hour in 2015,
meaning at least half of the workers in each broad/major occupational category would be directly
affected by setting the minimum wage at $ 151hour. In total, there are more than 100,000 workers
employed in these occupational categories in the Metropolitan Division (or 17.7% of total
employees). Of course, employees in other occupations will also be affected, though in many of
those occupations much smaller percentages of workers earn wages below the $ 15lhour level. A
more accurate estimate of the number of affected employees in Montgomery County only will
require additional analysis. For more information regarding the low-wage occupations, see BLS
Data (OES Series) at ©73-75.
Average
hourly
wage
$15.94
$14.40
$13.64
$11.78
$13.33
Major Occupational Category
Healthcare Support Occupations
Personal Care and Service Occupations
Building and Grounds Cleaning and Maintenance Occupations
Food Preparation and Serving Related Occupations
Total
#of
employees
16,040
18,980
22,110
44,590
101,720
Occupations that will be most affected (by both the scheduled 2017 increase and any
subsequent increases to the minimum wage) are those that pay the lowest wages. Those
occupations include shampooers, amusement and recreation attendants, lifeguards, dishwashers,
prep cooks, ushers and ticket takers. For each of those occupations the average wage in 2015 for
workers in Silver Spring-Frederick-Rockville was at or below $1O.00Ihour. Montgomery County
workers in those occupations are likely to be making the current minimum wage of
$1O.75Ihour. More than 33,000 people are employed in these occupations in the Silver Spring­
Frederick-Rockville Metropolitan Division.
S.
What have been the effects of the increases implemented under Bill 27-13?
Data shows changes in several of the "economic channels" described above since the
enactment ofBill 27 -13. Due to certain limitations ofdata, including lack ofgeographic specificity
and a relatively short evaluation period, it is difficult, if not impossible to say that a causal
relationship exists between the changes and the minimum wage increases implemented since the
Bill's enactment. However, a look at these changes may be useful in assessing potential impacts
of continuing to increase the minimum wage up to $15 per hour.
How have consumer prices changed since the enactment ofBill 27-13?
Publicly available data from the Bureau of Labor Statistics (BLS) indicate that prices in
the DC region generally are increasing more quickly than in US cities generally, and that the prices
of food away from home are increasing more rapidly in the DC region than elsewhere. According
35
Prior to 2015, this was known as the "Bethesda-Rockville-Frederick Metropolitan Division.
II
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to the BLS, from 2013 through May of2016 prices for all urban consumers in the Washington,
DC metro area increased by a total of 3.86% (prices for all urban consumers in US cities have
increased by 3.08% during that time). Prices for "food away from home" increased more rapidly
during that time, going up by 7.01 % in the Washington, DC metro area, and by 6.84% across all
US cities.
Limitations of the data include the following:
• The Washington, DC metro area includes jurisdictions that have increased the minimum
wage, as well as those that have not.
• All US Cities includes cities that have increased the minimum wage, as well as those that
have not (though given that multiple jurisdictions in the DC metro region have increased
minimum wages, it is likely that the effect on all US Cities would be smaller than the effect
on the DC metro region).
• It
is not yet known whether price effects will become more evident over time (e.g. if
business decisions to raise prices will lag, or will be driven by increases to labor costs
above a certain level).
How has employment changed since the enactment ofBill
27-13?
The overall employment picture in Montgomery County has remained steady and strong
over the past two years. Employment in the Silver Spring-Frederick-Rockville Metropolitan
Division increased from 561,830 to 566,300 in 2014, and then to 574,560 in 2015. Of course, the
actual effect of increasing the minimum wage is likely to be felt in specific industries-such as the
fast food industry-in which workers are paid low wages, in which labor costs are significant, and
in which capital investments can substitute for labor.
From 2014 to 2015, the number offast food cooks in the Silver Spring-Frederick-Rockville
Metropolitan Division and in the District of Columbia declined significantly (from 1,440 to 860 in
Silver Spring-Frederick-Rockville and from 2,570
to
2,050 in the District of Columbia).
In
the
same period, employment as fast food cooks rose significantly in Baltimore-Towson, Richmond,
and also in the Washington-Arlington-Alexandria Metro Division (in spite of the decline in DC).
While there is always noise in the annual employment numbers for an occupation at the local level,
these numbers merit further consideration. Longitudinal employment numbers for other low-wage
occupations may indicate that this decline is anomalous (Le. simply a blip in the 2015 numbers or
related to something that affects fast food only) or may support the notion that employment in
many low-wage occupations is affected by changes to the minimum wage.
• Employment of cashiers here has also declined, falling from 14,010 in 2013 to 13,340 in
2015. In contrast, employment ofcashiers in Baltimore-Towson is up from 37,860 in 2013
to 39,210 in 2015.
• Employment in some low-wage occupational categories has not declined. One example is
home health aides-demand is increasing, and capital substitutions for labor are less
feasible.
Some employment effects will become more evident as the minimum wage increases are
phased in. For example, Montgomery County's last scheduled increase is July 1, 2017. The
employment effects, if any, of Bill 27-13 will be much clearer in May of 2019 when the
12
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Occupational Employment Statistics will reflect a full year of the July 2017 increase to
$11.50/hour.
How have wages changed since the enactment ofBill
27-13?
Average wages of Montgomery County workers have increased over the past two years,
from $28.89/hour in 2013 to $29.28/hour
in
2014 and then to $29.89/hour
in
2015. While average
wages have increased, the increases are largest among those with the highest incomes. Incomes
at the 90th percentile increased by 4.9% from 2013 to 2015 (from $57.39/hour to $60.20/hour).
During the same period, incomes at the 10th percentile increased only modestly from $9.13 to
$9.26/hour, or 1.4%.
Wages of fast food cooks were up sharply from 2013 to 2014
in
the Silver Spring­
Rockville-Gaithersburg Metropolitan Division, but wages for the same occupation dropped from
2014 to 2015. For example, at the 50th percentile (median), wages rose from $9.09/hour in 2013
to $10.62/hour in 2014 before falling back to $10.42 in 2015.
A quick review of wage data does indicate that there is some wage compression in low­
wage industries. For example, the gap between the 10th percentile wages of cashiers and 50th
percentile wages of cashiers fell from $1.52/hour in 2013 to $1.19/hour in 2015. Put differently,
while wages at the 10th percentile did increase by $0.47/hour, wages at the 50th percentile
increased by only $0. 14/hour. As the phase-in continues, the effects of the wage compression will
become more clear.
6.
What has been the experience in other local jurisdictions that have increased their
minimum wages to $15 per hour?
Because of the relative novelty of $15 minimum wage laws, it is hard to draw much
guidance from other jurisdictions that have enacted them. 36 Other than SeaTac, which due to its
size and unique economic characteristics37 doesn't offer a good comparison, none have reached
the $15 target yet (see ©76-83). Most of these jurisdictions are on the west coast, in the San
Francisco Bay Area, Silicon Valley, and Los Angeles
in
California, as well as the City of Seattle,
Washington. In enacting its 2014 law raising the minimum wage to $15 per hour, the Seattle City
Council also commissioned a study of the law's impacts, contracted with the University of
Washington to conduct the study.38 While it is likely more useful to look
at
local impacts of the
increases in the County minimum wage since the enactment ofBill 27-13, the information gathered
as part of the Seattle study may provide some guidance.
Seattle:
In
2014,
Michael Reich, a University of California, Berkeley economics professor with the Institute for Research
on Labor and Employment said "Our data show that an increase up to
$13
an hour has no measurable effect on
employment," but added "we have not studied what would happen at
$15."
h!!p...Ji..':Vw\:Y~~!!!11etimes.cotl:!lseattle­
36
P.~l'!~~!..!MH.~s-lQQI5.-at:_~vhat-h\!p~n.~d:.'YheD..::.9..i1j~s-raised:!IliDinU!ln:~t}g~!.
37
According to the most recent US Census and Bureau of Labor Statistics data, SeaTac's population is
27,875,
and
there are
13,751
workers within the city. Nearly a third of the people who work within the city work at the Sea-Tac
International Airport, which serves Seattle and Tacoma, Washington.
38
http://evans.uw.edulpolicy-impact/minimum-wage-study
13
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Seattle enacted its $15 minimum wage law in June 2014.
39
The law provides different
phase-in periods for different "schedules" of employers, described below:
• Schedule
1
employers
(more than 500 employees in the US) must pay an hourly minimum
wage of at least: $11.00 by April 1, 2015; $13.00 by January 1, 2016; and $15.00 by
January 1, 2017. The hourly minimum wage paid by a Schedule 1 employer will be
increased to reflect the rate of inflation on January 1 of each year thereafter.
Schedule 1
employers
that pay toward an individual employee's medical benefits plan must pay an
hourly minimum wage of at least: $11.00 by April 1,2015; $12.50 by January 1, 2016;
$13.50 by January 1,2017; and $15.00 by January 1,2018. Effective January 1,2019, the
minimum wage requirement will be the same for all Schedule 1 employers.
• Schedule
2
employers
(500 or fewer employees in the US) must pay an hourly minimum
wage that is the lower of the minimum wage required ofa Schedule 1 employer or: $10.50
by January 1,2016; $11.00 by January
1,2017;
$11.50 by January 1,2018; $12.00 by
January 1,2019; $13.50 by January 1,2020; $15.00 by January 1,2021; $15.75 by January
1,2022; $16.50 by January 1,2023; and $17.25 by January 1,2024. Effective January 1,
2025, the minimum wage requirements will be the same for all employers.
As noted above, Seattle commissioned a study to assess the impacts ofthe increases during
the phase-in period. The first report ofthe study was presented to the Seattle City Council on April
18 of this year,40 and found little impact on prices in the first year of the law's implementation.
The study involved a survey of 567 randomly selected Seattle employers as well as 55 workers,
asking their awareness of and feelings about its expected and actual effects, to establish a baseline
for that information. While 62% of employers surveyed said that they expected to raise prices of
goods and services to cover increased labor costs, an analysis of area prices over time did not
reveal such price increases. As with the examination of local impacts of the County's minimum
wage increases implemented thus far, this is early-stage analysis and not necessarily a good
predictor of impacts of future increases.
The Bay Area and Silicon Valley:
In California, a number ofjurisdictions have approved minimum wage increases that reach
the $15 level earlier than 2022, as is required under the recently enacted State law. On November
4,2014, San Francisco voters passed PropositionJ, raising the minimum wage to $15.00 by2018. 41
Proposition J provided for minimum wage increases according to the following schedule: (1)
effective May 1,2015, $12.25 per hour; (2) effective July 1,2016, $13 per hour; (3) effective July
1, 2017, $14 per hour; (4) effective July 1, 2018, $15 per hour; and (5) each July 1 thereafter,
adjusted for inflation. 42
Prior to the enactment of the Seattle law, two studies on potential effects of a minimum wage increase were
commissioned by the Inequality Advisory Committee convened
by
Mayor Ed Murray. These studies can be accessed
here:
http://mun·ay.seattle.gov/wp~contentluploadsI20l4i03/Evans-report-3
21
14-+-appdx.pdf
and
here:
ht!I2.J!..l)l~l1.~tl~1!tt
I
~,gQ.yj~:fontenti..!lllQ"ads!10
14/03iUC
-Berkelev-llAC-ReR0l1-3-20-20 14.p_Qi
39
4°http:/~~lml..9J~gistar.:f.QmlLegislq!ionDetail.a!;ip~1l!2=2691005&GUID=IC8J9B99-302C-4F5C-AD39-
CWED analyzed the potential impacts ofthe proposed increase prior to the November vote. The analysis can
be
accessed at: http://www.irle.berkelev.edulcwed/briefs!20J4-04.pdf
42
http://sfgov.org!olse!minimmn-wage-ordinance-mwo
14
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Since 2014, the minimum wage in San Francisco has risen 21 percent. During this period,
unemployment in San Francisco County has dropped from five percent to 2.9 percent.
In
the same
period, the labor force has grown from 522,300 to 549,800. However, according to the Executive
Director ofthe Golden Gate Restaurant Association, many restaurants have raised prices this year,
and one local fast -casual restaurant plans to raise menu prices seven percent. According to the
Association, an accumulation of labor compliance costs has forced the increase in prices, as
restaurant owners have to account for minimum wage, increased health care spending and
mandatory paid parentalleave.
43
In
addition to San Francisco, the Bay Area city of Emeryville, in Alameda County
has
enacted a $15 minimum wage law. In Emeryville, employees of large employers (more than 56
employees) will earn at least $15 per hour as of July 1, 2017, while employees of employers with
56 or fewer employees will reach the $15 minimum wage as of July 1,2018.
44
Also in Alameda
County, the City of Berkeley, which has a minimum wage slated to go to $12.53 in October, will
have two $15 ballot measures on the ballot this fall. The City Council recently approved placing
on the ballot a measure that would raise the minimum wage to $15 in 2019; a citizens' ballot
initiative that would raise the minimum wage to $15 next year will also be on the ballot.
45
In
Santa Clara County, Mountain View
46
and Sunnyvale
47
have enacted laws raising the
minimum wage to $15 per hour.
In
each of these jurisdictions, the minimum wage will reach $15
per hour as of January 1, 2018, with future annual increases tied to inflation.
The Los Angeles Area:
On May 19,2015, the Los Angeles City Council approved a measure providing annual
minimum wage increases for employees in the City of Los Angeles up to $15.00 in 2020.
48
The
measure applies to all employers, but implementation is delayed for employers having no more
than 25 employees. Non-profits with more than 25 employees may apply for a waiver ifthey meet
certain conditions. The Los Angeles County Board of Supervisors approved a measure that will
increase the minimum wage for unincorporated areas in the County each July over five years in
identical increments, starting at $1O.50Ihour on July 1,2016, then $12.00 (2017), $13.25 (2018),
$14.25 (2019), and $15.00 (2020). Following 2020, minimum wage will adjust according to the
cost ofliving.
In
both the City and County, compliance ofbusinesses with under 26 employees on
payroll will be required a year later.
7.
What are the potential effects of having a minimum wage substantially higher than
most other jurisdictions in the region?
While an increase of the County minimum wage to $15 per hour by 2020 would be
generally synchronized with the District of Columbia, it would create significant disparities'
43
SF's Minimum Wage Hike Took Effect July
1,
but Changes Little:
http://www.sfchronicle.com/business!article/SF­
s-minimum-wage-hike-took -effect-Ju ly-I-but-8335408.php
44
http://www.ci.emeQ·ville.ca.us/I014/M inimum-Wage-Ordinance
!It!Q.~(L!Y..w\¥.:.!2~r..h.fl!~.Y..§iQ.~.:.!<.Q.mL~1.Ql.Q.Qlll.&~.r~eleY-~Q.unci1':@J1.rov§-alt~1}ative:!!ljnimun!:.w~:..measl!r!:.:for:
45
,!?il1'-c,uL
http://www.nl.OuntainYiew.goy!depts/comdev!ecol1omicdev/city minimum wage.asp
47
http://sunnyvale.ca.gov/Do ingBusiness/EconomicDevelopmen tiM inimumWage.aspx
48
CWED prepared a report for the Los Angeles City Council analyzing potential impacts of the City's then­
proposed increase. The report can be accessed at: http://irle.berkeley.edu/cwedlbriefs/2015-01.pdf
46
15
 PDF to HTML - Convert PDF files to HTML files
between the County and other neighboring jurisdictions in the region.
In
the absence of further
federal, State, or local action, the County's minimum wage would be roughly twice the minimum
wage of Fairfax County and other suburban Virginia jurisdictions, nearly 50% higher than
Frederick and Howard Counties, and 30% higher than Prince George's County. While there has
been research done on the impacts of disparities in minimum wages in neighboring jurisdictions,
the disparities studied did not approach those that will likely result from the enactment of Bill 12­
16.
It
is possible that a substantial disparity will increase the number of non-County residents
seeking low wage employment in the County, increasing competition for these jobs and possibly
negatively impacting employment of County workers.
49
There are potential mitigating circumstances that could reduce these disparities.
Attempting to predict voter behavior in the presidential primaries has been a dangerous game thus
far, but it is at least a possibility that the nation's voters will elect a President that supports raising
the federal minimum wage to $12 per hour 5o
and
place one or both houses of Congress in control
of the Democratic party.51 Any increase in the federal minimum wage will reduce the difference
between the County minimum wage and that of Fairfax County and the other Virginia suburban
jurisdictions. Also, while it is unlikely that Maryland's sitting Governor would sign a bill
increasing the State minimum wage, there is a gubernatorial election iIi 2018, so it is at least
possible that another statewide increase could occur before the increases proposed in Bill 12-16
are fully implemented.
8.
How will the increase in the minimum wage impact non-profits and other businesses
that are not able to pass along increased labor costs to consumers?
At the public hearing, the Council heard from representatives of nonprofits and service
providers that cannot pass along increased labor costs to consumers. Jurisdictions raising their
respective minimum wages are increasingly having to grapple with this issue. The organizations
that addressed the Council expressed support for the idea of increasing the County minimum wage,
but indicated that it would result in additional costs that they would not be able to pass on to
consumers.
Nonprofit Montgomery recognized increasing the minimum wage as a tool to address
poverty, and that workers "deserve a wage that leads to self-sufficiency." They asked however,
that the Council consider several items concerning the implementation of any increase (see ©55),
first among them ensuring that funding and reimbursement rates for County nonprofit contracts
match increased labor costs as a result of the increases. Similarly, the Montgomery County
Coalition for the Homeless offered support for the Bill, but indicated that increasing the wages of
its 44 case aides to $15 per hour would result in an additional $200,000 in annual costs (see ©56).
Montgomery County Inter
ACCIDD,
a coalition of about 30 agencies serving adults with
intellectual and other developmental disabilities, indicated it would support the Bill if it included
language requiring the County to provide funding necessary to keep its member agencies' pay to
staffat 125% of the minimum wage. Inter
ACCIDD
estimated that the additional cost to maintain
49
For an illustration of increased commuting for low-wage jobs, see:
http://www.nytimes.com/20
14/021
16!us!crossing-borders-and-changin g-li ves-l ured-bv-higher-state-m in imum­
wages.htm]? 1'=0
50
https:iIwww.hi]laryc]inton.com/issues/p]an-raise-american-incomes!
51
http://fivethirtyei ght.com/features!the-gops-house-majoritv-is-safe-r
ightl
16
 PDF to HTML - Convert PDF files to HTML files
that pay rate, over the $11.50 per hour already provided for in law, would be $20,558,048 per year
(see ©57-59). Maryland Association of Adult Day Services, while not necessarily representing
non-profits indicated that some of its member businesses are contractually prohibited from
charging Medicaid patients for services reimbursed through the Medical Assistance Program. As
such, these businesses, which provide a necessary service, would be unable to recover increased
labor costs associated with a minimum wage increase. The Association requested consideration
of an amendment exempting such businesses.
Around the country, jurisdictions are increasing their respective minimum wages while
many nonprofit service organizations are struggling to maintain funding levels. Because the non­
profit organizations represented at the public hearing, and likely others providing services in the
County, rely largely on public (County, State, and federal) funding sources, those sources would
be expected to increase their contributions or possibly accept some degradation or reduction in the
services provided. In the face of increased costs but without a corresponding increase in funding,
these organizations may resort to reducing staff or service hours, may cut back services offered or
scale back service areas, or, where possible serve only clients who can afford higher fees.
9.
Will there be a fiscal impact on the County beyond that estimated in the Fiscal Impact
statement?
As noted above, the fiscal impact estimate is based entirely on a projection ofthe minimum
wage/seasonal salary schedule (see ©84) to assess the cost ofthe Bill's proposed increases due to
increases.
It
is not clear whether any adjustment to the County's other salary schedules
52
was
considered, whether to raise in-schedule minimums to or above the minimum level or to avoid
wage compression. For example, in the FY20 16 General Salary Schedule (see ©85), the minimum
salaries in Grades 5 through 9 fall below the roughly $31,200 that would be earned under a $15
per hour minimum wage. Certainly, these minimums will be adjusted upward in the years that any
increase to $15 will be phased-in, but likely not at the pace proposed in Bill 12-16. A look at what
will almost certainly be a shrinking gap between the lowest paid salaried County employees
illustrates the wage compression problem; it would be helpful to understand the likelihood and
cost of an additional upward adjustment in some or all of these grades.
Also, as previously discussed, certain nonprofits that depend largely on County funding
have indicated that they will face significant additional expenses should the minimum wage be
increased to $15 per hour. Because they are mostly unable to pass along these additional costs to
consumers, these organizations would be looking to their funding sources, including the County,
for the necessary increased resources. There may be additional similarly-situated organizations
from whom the Council has not yet heard.
An
examination of the scope of affected organizations,
and the potential cost to the County in providing additional resources, could help to give a more
accurate assessment of the fiscal impact of enacting the Bill. Such an examination could likely be
done using the approved County budget and contracts with potentially affected organizations.
Finally, it is worth noting that one anticipated effect of increasing the minimum wage is
reduced dependence among low-wage workers on social safety net programs. The County's
earned income
tax
credit supplement is one program that is specifically designed to benefit low­
income workers. Finance projects that the number of recipients of that
tax
credit supplement in
FYl7 will continue to increase, reaching nearly 12% above the number of recipients in FYI4.
It
52
The County Salary Schedules can be accessed at http://www.montgomerycountvmd.gov/HRJc!asscomp.htm!
17
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is not known at this time whether the increase in the number ofeligible recipients would have been
larger without Montgomery County's legislated increase in the minimum wage.
[
WORIONG FAMIU£S .NCOME
SUPPLEMENT
NOA
(elTc)
Fiscal
V
••
2000
2001
2002
2003
County
Mitch
100.00%
12S.~
Admin.
eM
$11.813
$9,740
$10,9~1
Cost of
EITe
Refunds
$2,199,592
$2,544,412
$3,952,062
$4,585,128
$6,012,089
$1,907
t
451
$10,236,647
'$9,970.176
$12~1o,993
Total
Total
Redpienu
12,322
10,917
14;112
14,814­
18
J
014
20.;805
Average
Cost
S2,211,405
$2,554,152.
$3,962,983
$4,595,860
$6,024.999
$7,921,560
$10,262,023
$9.986.203
$12,928.570
$9,016,267
$15,082,985
$12,953,114
$12,838,409
Sl~720,565
EITC
$118.51
$23~OS
2004
2005
2006
2007
1008
100.00%
100.00%
100.0056
100.~
$10,732
$12~910
2009
2010
2011
2012
2013
2014
2015
Att.
2016,E·st.
2017C£ Ree.
100.00%
100.0056
100.0056
100.0056
100,00%
72.50%
68.90%
75.50%
85.00%
90,00%
95.00%
100.00%
$14/109
$25
j
376
$16,021
$17)577
$15
1
361
$19,.448
$32.,726
$3$1
2.31
$34,058
$38,.663
$40.811
$41pSO
$44.600
$9.000.906
$15:063,531
$12,920,388
$12,805
1
117
$14,686,501
$16,847,181
$18,916,413
S21
t
3S9.1SO
$24.229.900
20;789
20
1
210
26)584
19,559
30,189
33,840
34
t
290
34.816
37,281
38)n4
$219.86
$309.51
$332.64
$380.08
$492.40
$493.33
$485.66
$460.19
$498.91
$381.81
$373.44
$421.11
$451.90
$488.31
$534.01
$583.38
$16.885,860
S18~~9
$21,400,800
4OP76
41
1
610
$24.274:500
10.
Should the County Minimum Wage be indexed to the CPI-W?
Bill 12-16 provides that, beginning in 2021, the County minimum wage is to be adjusted
annually by the annual percentage increase, if any, in the CPI-W. Providing for an annual
adjustment to the minimum wage would largely depoliticize the regular increases, and would
ensure a measure ofpredictability to employers. However, annual increases in the minimum wage
could result in wage compression being a yearly problem for employers, as employers would be
required to increase wages for workers making the minimum wage without regard to whether the
business could provide corresponding raises up the wage scale. In addition, the State minimum
wage is not indexed to inflation, so the already significant spread between the County minimum
wage and the State minimum wage will continue to grow.
Indexing to inflation does not, however, result in higher real wages each indexed year.
Since 1990, the real value of the minimum wage has been as low as $6.58 (in 2007) and as high
as $7.89 (in 2009). See ©86-88, Congressional Research Service, 2013
"Inflation and the Real
Minimum Wage: A Fact Sheet.
"
Similarly, indexing the minimum wage to inflation does not mean
18
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that hourly wages at the minimum wage will keep up with total economic productivity, the earnings
of the top earners, or the average or median wages of all non-supervisory employees.
53
For a thorough explanation of the issue, please see attached statement by Arindrajit Dube,
Ph.D. to the U.S. Senate Committee on Health, Education, Labor and Pensions for a hearing on
indexing the minimum wage. See ©89-109.
Implementation Issues
If the Committee decides to recommend the continuation of minimum wage increases up
to $15 per hour as proposed in the Bill, there are some potential implementation issues that have
been raised in the conversation up to this point. These issues are briefly described below.
1.
Should an increase in the minimum wage to $15 per hour be phased-in over a longer
period?
As described above, different jurisdictions have implemented different timelines for
reaching the $15 per hour minimum wage. Some have provided longer phase-in periods for small
employers. Doing so may mitigate some of the impact on small businesses, but may complicate
enforcement.
2.
Should the Bill include mechanisms to "pause" scheduled increases based on
economic conditions?
As previously noted, California and New York have included in their State laws "off
ramps" or "pause" mechanisms that would allow scheduled increases in the minimum wage to be
delayed due to certain adverse economic conditions. Aside from the fact that such mechanisms
would tend to hurt those who can least afford it in hard economic times, there may also be
significant challenges to implementing these provisions at the county-level.
3.
Should the application of the minimum wage and "tip credit" to tipped employees be
changed?
At the public hearing, a number of speakers in favor of the Bill urged the Council to also
increase the amount that employers must pay tipped workers. Currently, County law allows an
employer to apply a "tip credit" equal to the County minimum wage less $4.00, in calculating a
tipped employee's compensation. What this means, is that an employer is effectively only required
to pay tipped employees $4.00 per hour. Tipped employees are guaranteed to earn the minimum
wage when employer pay and tips are combined, and an employer must make up any shortfall. To
increase the amount earned by tipped employees, the law could be amended to simply reduce the
amount of the allowed tip credit. Under the current method, there is no increase in the employer
pay corresponding to future increases in the minimum wage. If the minimum wage is indexed as
proposed in the Bill, the Council could include a mechanism to index tipped employees' pay-from­
employer as well.
For example, the Economic Policy Institute compared the change in the minimum wage since 1968 (the year in
which the real value of the minimum wage was the highest in the history of the minimum wage) to changes in other
economic indicators- if the minimum wage had increased at the same rate as economic productivity it would be
$18.72; ifthe minimum wage had increased at the same rate as the wages ofthe top 1
%
of earners it would be $28.34;
if the minimum wage had increased at the same rate as real average wages since 1968 the minimum wage would be
$10.46.
53
19
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This packet contains:
Bill 12-16
Legislative Request Report
Fiscal and Economic Impact statement
Selected Public Hearing Testimony
Jaime Contreras, SETIJ
Laurie-Anne Sayles, Community Action Board
Progressive Maryland
UFCW Local 1994 MCGEO
Carlos Jimenez, AFL-CIO
Felix Kala, CASA
Mekdes Sisay
Ana Martinez, CAS A
Boaz Young-EI, UFCW Local 400
Marilyn Balcombe, Gaithersburg-Germantown Chamber
Jennifer Russel, Greater Bethesda Chamber
Wendy Johnson
Stacey Brown, Signarama
Emily Bruno, Denizens Brewing Co.
Melvin
R.
Thompson, Restaurant Association of Maryland
Ilaya Hopkins, Montgomery County Chamber
Jane Redicker, Greater Silver Spring Chamber
Afshin Abedi, Maryland Association of Adult Day Services
Brigid Howe, Nonprofit Montgomery
Susie Sinclair-Smith, Coalition for the Homeless
Tim Wiens, Inter
ACCIDD
Dube,
Designing Thoughtful Minimum Wage Policy .
..
BLS Data
Inventory of Local Minimum Wage Ordinances
FY
16
Minimum Wage/Seasonal Salary Schedule
FY16 General Salary Schedule
Fact sheet: The Real Minimum Wage
Statement from Arindrajit Dube, Ph.D.
Circle
#
1
4
5
13
15
17
19
21
24
26
27
29
30
34
36
38
40
44
46
50
52
54
56
57
60
73
76
84
85
86
89
F:\LAw\BILLS\1612 Minimum Wage - Annual Adjustment\HHS Memo.Docx
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Bill No.
12-16
Concerning: Human Rights and Civil
Liberties - County Minimum Wage ­
Amount - Annual Adjustment
Revised:
03/29/2016
Draft No.
_2_
Introduced:
April
12. 2016
Expires:
October
12. 2017
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date:
~No=n~e':______::__---_
ChI _ _, Laws of Mont. Co. _ _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Councilmember Eirich
Co-Sponsors: Councilmembers Leventhal, Riemer, Navarro and Hucker
AN
ACT to:
(1) increase the County minimum wage by a certain amount;
(2) require the Chief Administrative Officer to adjust the County minimum wage rate
each year; and
(3) generally amend the laws governing the minimum wage
By amending
Montgomery County Code
Chapter 27, Human Rights and Civil Liberties
Article XI. County Minimum Wage
Section 27-68
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 bill.
The County Council for Montgomery County, Maryland approves thefollowing Act:
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BILL
No.
12-16
1
Sec
1.
Section 27-68 is amended as follows:
27-68.
(a)
Minimum Wage Required.
County minimum wage.
Except as provided in Subsection (b), an
2
3
4
employer must pay wages to each employee for work perfonned in the
County at least the greater of:
(1) the minimum wage required for that employee under the Federal
Act;
(2) the minimum wage required for that employee under the State
Act; or
(3)
[$11.50] $15.00
per hour.
5
6
7
8
9
10
11
(b)
Annual adjustment.
The Chief Administrative Officer must adjust the
minimum wage rate required under Subsection (aX3), effective July.L
2021, and July
1
of each subsequent year,
Qy
the annual average
increase, if any, in the Consumer Price Index for Urban Wage Earners
and Clerical Workers, CPI-W, or
calendar year.
~
12
13
14
15
16
17
18
19
successor index, for the previous
The Chief Administrative Officer must calculate the
adjustment to the nearest multiple of five cents, and must publish the
amount ofthis adjustment not later than March
1
of each year.
W
Exclusions.
The County minimum wage does not apply to an employee
who:
(1)
20
21
is exempt from the minimum wage requirements of the State or
Federal Act;
22
23
(2) is under the age of 19 years and is employed no more than 20
hours per week; or
(3)
[(c)]@
is subject to an opportunity wage under the State or Federal Act.
Retaliation prohibited.
A person must not:
24
25
26
27
(1) retaliate against any person for:
G
f:lJaw\bills\1612 minimum wage - annual adjustment\bill2.doc
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BILL
No.
12-16
28
(A)
(B)
lawfully opposing any violation ofthis Article; or
filing a complaint, testifying, assisting, or participating in
any manner in an investigation, proceeding, or hearing
under this Article; or
29
30
31
32
33
34
35
36
37
38
39
40
41
(2)
obstruct or prevent enforcement or compliance with this Article.
Sec. 2. Transition.
Notwithstanding Section 27-68, as amended in Section I, the County
minimum wage, until July 1, 2020, must be the greater of the minimum wage
required under the Federal or State Act or:
(a)
(b)
(c)
effective July 1,2017, $11.50 per hour;
effective July 1,2018, $12.50 per hour;
effective July 1,2019, $13.75 per hour.
Sec. 3.
Approved:
Effective Date.
This Act takes effect on October 1, 2016.
42
43
Nancy Floreen, President, County Council
Date
44
45
Approved:
Isiah Leggett, County Executive
Date
46
This is a correct copy ofCouncil action.
47
Linda M. Lauer, Clerk ofthe Council
Date
o
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LEGISLATIVE REQUEST REPORT
Human Rights and Civil Liberties
Bill 12-16
County Minimum Wage
-
Amount
-
Annual Adjustment
DESCRIPTION:
The Bill would increase the County minimwn wage that must be paid
to certain employees working in the County for a private sector
employer or the County government to $15.00 per hour by 2020. It
would also require annual adjustments to the County minimwn wage
each year beginning in 2021.
The existing County minimwn wage of $9.55 per hour, which will
increase to $10.75 on July 1 of this year and $11.50 on July 1,2017,
is insufficient to support a full-time worker in the County, and
existing law does not provide for annual increases based on inflation.
To maintain a reasonable living wage for workers in the County
when the State and federal minimwn wage is insufficient.
Hwnan Rights Commission, Office of Management and Budget,
Department of Finance
To be requested.
To be requested.
To be requested.
To be researched.
Josh Hamlin, Legislative Attorney, 240-777-7892
To be researched.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
Class A civil citation and equitable relief.
F:\LAW\BILLS\l6xx Minimum Wage - Annual Adjustment\LEGISLATIVE REQUEST REPORT.Doc
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ROCKVILLE,MAR
YLAND
MEMORANDUM
May 2,2016
Nancy Florcen. President, County Council
TO:
FROM:
Jennifer A.
Hughes, Director, 0
Joseph F. Beach, Director, Depa
v
SUBJECT:
PEfS
for
Bill 12-16, Human Rights atld Civil Liberties -
County Minimum
Wa.ge
- Amount··- Annual Adjustment
Please find attached
the
fiscal and
economic impact
~1atemel.'lts
for
the
above~
referenced legislation.
JAH:fz
cc:
Bonnie Kirkland, Assistant Chief Administrative Officer
Usa Austin, Offices of the County Executive
Joy
Nurmi, Special Assistant to the County Executive
Patrick Lacefield, Director, Public Information Office
Joseph F. Beach, Director, Department of Finance
Shawn Y. Stokes, Director, Office ofHuman Recourses
Jim Stowe, Director, Office of Human Rights
David Platt, Department of Finance
Corey Orlosky, Office of
Management and Budget
Alex Espinosa,
Office of
Management and Budget
Naeem
Mia.
Office of Management and Budget
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BiII12~16
Fiseal Impact Statement
Human
Rights and
Civil Uberties.-CoUilty
Minimum
Wage-Amount~Annual
Adjustment
1.
Legislative
Summary.
Bill
12-16 would increase the County minimum
wage
to $15.00 pet hour effective July
1,
2020. Under the bill's transition provision, the County minimum wage would increase
from $11.50 effective July 1, 2017 to $12.50 per hour July 1, 2018, $13.75 per hour July
1,2019, and $15.00 per hour July 1,2020.
2.
An estimate of changes
in
County
revenues and expenditures regardless
of
whether
the revenues or
expenditur~s
are assumed intbe recommended
or
approved budget.
Includes source of information, assumptions, and methodologies used.
This proposed legislation would not change any County revenues or expenditures in the
County Executive's recommended
FY 17
budget. The changes in
this
proposed legisJation
would
have
an impact beginning
iIi
FYI9.
The fiscal impact of
this
bill has been estimated using the current minimum wage
law
establishing a tninimum \\I-age of$1 1.50 effective July
1, 2017
as the
baseline. To
determine the
impact~
a. projection of the minimum wage/seasonal salary schedule
was
used to discovertbat the changes to minimum wage would impact grades 81 through 85
in FY19 and beyond.
The
Co~ty
currently
utilizes an estimated 565,258 hours of \\-'Ork
in grades 81 through 85. Additionally, once
the
minimum wage reaches $15.00 per hour)
this legislation would provide
a,n
annual adjustment t6 the minimum wage by the annual
increase in the
CPI. This
adjustment
is
used in
the
6~year
fiscal year projection
in #3)
and
w'Ould continue to have an
imp~ct
beyond
6
years.
Specifically for the
Office
of Human Rights,
a
person may file
a
complaint
against
their
employer for non-compliance
with
the law and
in
violation of the wage requirements in
this bill \\1th the Maryland Department of Labor, Licensing and Regulations Employment
Standard Service.
It
is unknown 'whether an increase in
the
minimum wage rate would
affect the number of complaints filed
each
year from Montgomery County So
case
processing and closure estimates are difficult to determine at this time.
These
variables·
should not impact revenues or expenditures in the foreseeable future. The Office of
Human Rights estimates a minimum cost
win
be required
to
print new minimum wage
posters for
the
county employment community, .
3. Revenue and expenditure estimates
covering at least the next 6 fiscal
years.
Ine
current minimum wage law provides for incremental changes to achieve a minimum
wage of $11.50 in
FY18.
The proposed legislation would add additional minimum wage
increases beyond FY18,
leadin~,to
an
estima~ed~ditional
fiscal impact of $6,483,575 to
the County over the next 6
ye~.,'Pfis.e,stiri)a'~t:~p~~nts
the increases proposed to take
effect in
F":'19-FY22,ac;;$urnifi~thecurren: ~umber
of hours worked
by
County
employees m
the
affected
grad~~
on the mlOlmum wage/seasonal salary schedule.
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..
FY18
...
..
"
..
_
" ."
,
.......
~.
fY19
..•....
FY21
Minimum wage
Hours worked
$11.50 ;
565,258
,
..........................
;
.•
$12.50
;
$15.00
-
565,258
$608,501
565,258
.,'
Cost.
Imp~:
Note:
$6,997,758.
$0
$7,606,259 •
$9,127,511
$9,373,954'
.....
,
.....
"
"'"''
$1,369/127.
$2,129,753
$2,376,195'
...........................
Total
irhpact
$6,483,575
Cl)st estimate
includes payroll
tax of
7.65%
The Office of Human Rights estimates a minimum 'cost will be required to print new
minimum wage posters for the county
etfiplo~ent,5':ommunity.
;, ,;
: ; ','
~
i
"
J':} , :
4. An actuarial analysis througJtthe entire amorm:ation period for each regulation
that would affect retiree pension or group insurance costs.
Not applicable.
S.
Later actions tbat may
affect
future revenue and expeaditures
if
the regulation
authorizes future spending.
Any substantive changes to the utilization of employees on the minimum "Wage/seasonal
salary
schedule would
have
an
impact
on the
estimat~
for the next 6
fiscal
years,
6. An estimate of the staff time needed to implement the regulation.
There would
be
minimal impact to the Office of Human
Rights
staff in regards to
processing complaints submitted
to
and enforced by the Maryland Department of Labor"
Licensing and Regulations Employment Standards Service. The Office ofHuman Rights
staff would continue to address questions and provide clarificati(l1l of the requirements of
the
law
and provide educational outreach to the general community.
7.
An
explanation
of how the
ad4i~.~iI
of
ncw"taff~po~sibilities
would affect other
dutics.
,~,;
:
Not applicable.
8. An estimate of costs when an additional appropriation is needed.
No
additional
appropriation is needed.
9. A description of
any
variable that could
affed
revenue
and cost
estimates.
Cost estimates could
be
affected
by
changes in the utili7.11tion of employees on the
minimum wage/seasonal salary schedule.
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There is no impact for the
O;fflee
o~
Human
Riglltsas
theMaryland
DLLR will enforce
the law
and
process
complaint,S~
' ; '
"
10. Ranges ofrevcnue or expenditures that are uncertain or difficult to project.
Not applicable.
11.
If
a regulation
is
likely
to have no fIScal· impact, why that is the case.
Not applicable.
12. Other fiscal impacts or comments.
Not applicable.
13. The following contributed to and concurred with
this
analysis.
James Stowe, Office of Human Rights
Corey
Orlosky,
Office of Management and Budget
Lori O'Brien. Office of
Human
Resources
Date
-); " ,
.• <.".-."
.',
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Economk bnpact StatemeDt
Bill
12~16,
Human Rights and Cil'il Liberties ­
County Minimum
·Wa~e
-
Amount - Anuual
Adjustment
Background:
This legislation would:
• Increase the minimum wage set
ill
County law
to
$15.00 per hour effective July 1,
2020, and
• Beginning
in
2021,
the
minimum wage would
be
adjusted by
the
annual increase
in the Consumer Price Index for Urban Wage Earners.
and
Clerical Workers
(CPI-W) for
the
previous calendar
year.
The County's minimum "vage would
be
phased
in
over several
years.
The
minimum
wage would increase to $12.50 per hour beginning on July 1, 2018, increase to $13.75
per hour beginning on July 1,2019, and increase to $15.00 petbour beginning on
July 1,2020.
1. The sources of infonnation, assumptions, and methodologies used.
The sources ofinfonnation include economic research papers and data
that
analyzed
the
effects ofincreasing the minimum wage on employment. Those papers and data.
include the following:
• David Neumark, "The Effects ofMinimum Wages on Employment", Federal
Reserve.Bank
of
San Francisco (f'RBSF) Economic
Letter~
December 21,
2015,
• Robert Pollin and Jeannette Wicks-Lim,
"A
$15 U.S. Minimum Wage: How
the
Fa&i-Food
IndustryCould Adjust Without Shedding
Jobs",
Working
Paper
Series, Political Economy Research Institute, University of Massachusetts
Amherst, January 2015, and
• Bureau of Labor Statistics (BLS), U.S. Department ofLabor, "Characteristics
oOv1inimum Wage
Workers,
2013", BLS
Reports,
Match
2014.
According to Neumark, '''researchers offer conflicting evidence on whether or not
raising the minimum wage means fewer jobs for low-skilled workers." These
conflicts are based on four models:
• The "neoclassical" model ot standard model
ofcompetitive
labor markets
predicts
that
a higher minimum wage will lead to job loss. This model
assumes a labor market for a single type
onabor.
According
to
this model,
a
minimum wage
that
is set
above
the competitive
equilibrium
reduces
employment. Employers may substitute low-skilled labor
for
other factors of
production such as equipment or other types of capital resources. Second,
Page 1 01'4
(j)
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Economic Impact Statement
Sill 12-16, Human Rights and Civil Liberties ­
County Minimum Wage - Amount - Annual Adjustment
higher wages and fix(;"'ti factors of production imply higher prices, thereby
reducing product and labor demand.
• However, since the labor market is more complex than the "neoclassical
mode" suggests, analtemative model is the "labor-labor substitution"
framework that
may
not result
in
total job
losses but
",ill result
in
a
shift
in
hiring from fewer low-skilled workers to more high-skilled workers.
• A third conceptual model a'l an alternative to either the 4'neoclassical'" or the
"labor-labor substitution!' model
is that
employers
have
significantly more
market
power
than
consumers. This monopsony could
be
the result of pricing
power by the employer) that is, he or she is able to pass along the increase in
the
wage rate through higher prices. This ability to pass on the wage increase
is attributed to the
elastic/inelastic
demand for the product by the consumers.
• Finally, a paper
by
.PoHin and Wisk-Ltm suggest
that
"there are four primary
ways
for
businesses
to
adjust to cost increases other than reducing
employment." The four \va.ys include: 1) an increase in the minimum wage
would reduce absenteeism, lower turnover and
trainingcosts~
and
yield
higher
productivity, 2) cover a share of the increase in the minimum wage
by
raising
prices (the monopsony model), 3) allocate a share ofthe business revenue
generated by economic growth to cover the increase in the minimum wage,
and 4) redistribute overall revenues within the finn from profits to the wages
of
their lowest-paid workers.
Alan
Blinder.tormer
Vice Chaimlan of the Board of Governors of the Federal
Reserve System, posits three reasons minimum wages do not affect employment
similar to the PollinlWisk-Lirn
study:
higher wages may reduce turnover and
therefore training costs, raising the minimum wage may eliminate the problem of
recruiting workers at a higher wage
than.
current
workers~
and minimum v\''age earners
represent a small portion of the employer's cost such that an in<.,'reasc is relatively
insignificant to the employer's
total
cost of production.
In Neumark's paper, he provides the research estimates of the responsiveness
(elasticity) of raising the minimunl wage to jobs losses. He reports elasticities
ranging from -0.1 to -0.2 depending on the makeup ofthe labor force and business
such
as
teenagers in restaurant industry to geographical locations. Based on review of
the research, Neurnark suggests a reasonable estimate based on his reviews
that
current
minimum wages "have directly reduced the number ofjobs
nationally
by
about 100,000 to 200,000 relative
to
the
period
before the Great
Recession:~
He
also
suggests that this small decline in aggregate employment should be "weighed against
increased
""rages for still-employed workers because of higher minimum wages.';
Based on 2013 data from the Bureau of Labor Statistics (BLS), there were 66,000
employees in Maryland out o1'a
total
of 1.334 million hourly-paid workers (4.95%)
Page 2 of4
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Impact Statement
nill
12-16, Human Rights and Civil
Liberties­
County
Minimum Wage - Amount - Annual
Adjustment
EccODOmiC
earning at or
below the
minimum wage as measured
by
the
1aoor
force series
data
Of
that percentage, 2.2 percent workers were
at
the minimum wage and 2.7 percent were
below the minimum wage. Since the 2013 data are based on a survey ofhouseholds
nationwide,
there are no specific data on
minimum
wage employees
in
Montgomery
County. Based on BLS data, minimum wage employees are concentrated in tIle
leisure and
hospitality
industry, retail, and education
allct
health
services.
In
terms of
occupations, nearly 44% are in food preparation and serving
related
occupations
natimlwide.
c
2. A des(:ription
of
any
variable that could affect the
economic
impact estimates.
• Ihe ability ofthe employer to pass the increase
of the minimum
'wage to
his
or
her customers;
• The share ofminimum wage earners to total employment for a particular
business~:
The
elasticiinelastic
demand for the business's product or service;
Ibe
elastici1y
of raising the minimum \\'age and
the
effects on employment;
'!be costs of retraining workers, and
The extent to which higher minimum wages induce greater spending in the local
economy.
3. The Bill's positive or negative effect,
if
any
on
employment, spending,
saving~
investment, incomes, and property
values
in the
County.
As stated previously, there is no consensus among economists
011
the effects of
the minimum wage on employment. Based on the review ofthe
research,
it is not
certain
whether
an increase in the minimum wage would either increase or decrease
employment.
This
uncertainty is based
011
the following factors presented in
Section
2:
• The ability of
the
employer
to compensate fbr the increase in the ttlinimum
wage
by
passing
such
increase
onto
customers with higher prices;
• The proportion of the wage costs anlOng workers
earning
the minimum wage
to the total costs of production; and
• The multiplier effect ofincreasing the minimum wage on the local economy.
Finally. in
the
research studies presented
above,
the
conclusIons
are based on datasets
used
to determine the effect
of the minimum wage on
employment.
the statistical
methods used to reach those conclusions, and the model used
as
the theoretical
franlework
to
conduct the analysis.
Page 3 of4
®
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Economic Impact Statement
BiU 12-16,
Human
Rights
and Civil Liberties­
County Minimum Wage '- Amount - Annual Adjustment
4.
If
a BiD
is
likely
to have no economic
impact~
why
is that the case?
It
is
uncertain whether increasing the
minimum
wage would either increase or
decrease employment among
low~wage
\\'Qrkc.rs. As
btated
in Section 3; the
economic impact would be based on the assumptions and the characteristics and
location of those businesses that
would
be
required
to raise the minimum wage.
5. The following contributed to and concurred
with this
analysis:
David Platt:,
Mary
Casciotti~
and Robert Hagedoorn, Finance.
~--?J-/il---
Date
Page 4 of4
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3ZBJ
SEIU
SfI'onger.Together
SERVICE EMPLOYEES
INTERNATIONAL UNION
CTW,
CLC
HECTOR
J.
FIGUEROA
President
Testimony of Jaime Contreras, Vice President 32BJ SEIU
Council Public Hearing on:
Bill 12-16, Human Rights and Civil Liberties - Co.unty Minimum Wage­
Amount - Annual Adjustment
June 212016
b
GDDd
evening CDuncil President FIDreen and CDuncil members. My name is Jaime
CDntreras and I am Vice President
Df
32BJ SEIU and DirectDr
Df
the Capital Area
District.
Thank
YDU fDr
the DppDrtunity
to.
testify here tDday Dn behalf
Df Dur
members.
32BJ represents
Dver
155,000 men and WDmen in 11 states Dn the East
CDast,
as
well as WashingtDn, DC. We have
Dver
18,000 members here in the Capital Area
which encompasses MDntgDmery CDunty.
Our members' lives reflect the experience
Df
tens
Df
milliDns
Df
Americans. We hail
frDm
64 different cDuntries and speak 28 different languages. Our members fight
to.
suppDrt their families in jobs that
fDrm
the backbDne
Df
the property service
industry - cleaners, janitDrs, security Dfficer and Dther building service
wDrkers.
Workers in MDntgomery CDunty and
acrDSS
America need a raise.
The ECDnomic PDlicy Institute estimates that the
CDSt Df
prDviding a mDdest
standard
Df
living
fDr
a family
Df fDur
in MontgDmery CDunty is
Dver
$79,000 a
year.
i
This means a wage
Df Dver
$19 an hDur
with
two income earners
in a
hDusehDld.
For IDw-wage
wDrkers,
an increase in the minimum wage
to.
$15 does nDt mean
luxury - but it will mean a stride·fDrward on the path tDwards earning a family
sustaining incDme.
OppDnents
Df
this bill will say that raising the minimum wage will CDst
too.
much.
But we
knDw
that it is pDverty level wages that CDst
tDD
much.
A recent analysis by the UC Berkeley Center
fDr
LabDr Research and EducatiDn,
found that between 2009 and 2011, poverty level wages
CDSt
the State DfMaryland
$628 MilliDn DDllars a year in Medicaid and TANF spending Dn wDrking families,
and the Federal GDvernment anDther nearly $2 BilliDn.ii
PDverty level wages
CDst
our cDmmunity thrDugh fDregDne investment in SChDDls,
hDspitals and infrastructure.
ill
lARRY ENGELSTEfN
Executive
VICe President
KYLE BRAGG
Secretary
Treasurer
~REAUEDLAENDER
Assistant
to
the
President
VICE PRESIDENTS
SHIRlEYAlDEBOL
KEVIN BROWN
JAIME CONTRERAS
ROB HILL
DENIS JOHNSTON
GABEMORGAN
ROXANA
RIVERA
JOHN SANTOS
JOHN THACKER
capital Area District
Washington 202.387.3211
Baltimore 410.244.5970
Virginia
703.845.7760
Connecticut District
Hartford
860.560.8674
Stamford
203.602.6615
District
f201
215.923.5488
Florida DIstrict
305.672.7071
Hudson Valley District
914.3.28.3492
Mid-Atlantic District
215.226.3600
National Conference of
Firemen and Oilers
606.324.3445
New
England
District 615
617.523.6150
New
Jersey District
973.824.3225
Western Pennsylvania District
412.471.0690
www.Seiu32bj.org
@
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Poverty wages cost our local businesses through weaker consumer demand and the reduced spending
potential of underpaid local workers.l
v
And poverty wages cost the families and children of low-wage households that deal with the stresses of
multiple jobs and the burden of
~ducational
and health disadvantages.
v '
<
This bill, with a staggered increase to $15 an hour in 2020, will stand Montgomery County alongside other
cities and states across the Country that are doing the right thing by giving low-wage workers and their
families a fair shot at a life with dignity. Importantly, it will move the wages of Montgomery County workers
alongside those of workers in DC - allowing economic justice to cross state borders along with economic
activity.
By indexing the minimum wage to the consumer price index beginning in 2021, the bill will ensure the
minimum wage does not fall behind the cost of living and maintains its real value over time.
We strongly encourage the council to expand the scope of this bill to ensure it benefits are fully realized for
tipped workers. Without adjusting the tipped credit, as the minimum wage moves to $15, tipped workers
will be required to off-set an increasingly larger portion of their wage out of their earned gratuities.
We support a significant reduction in the disparity between the tipped base wage and the full minimum
wage, as well as the indexation of the tipped base wage to make sure tipped workers are not left behind.
It is well overdue that we restore the capacity of all workers to care for their families and support their lives
based on the income from their job. Your vote can begin to rebuild this most basic deal here in Montgomery
County.
I reiterate our support for Bill 12-16 and urge the Council to pass it into.law.
2014 Dollars. See, EPJ's Family Budget Calculator: http://www.epi.org/resourcesfbudget/
<ii
2013 Dollars. See pp. 7-8, Jacobs,
K,
Penny, I, MacGillvray,
J
(2015). The High Public Cost of Low Wages. UC Berkeley Labor
Centre: http://laborcenter.berkeley.ed u /pdf120 151the-high-public-cost-of-Iow-wages,pdf
Iii
At any given level of fiscal deficit or surplus, spending on programs that su bsidize poverty level wages occurs in place of other
programs such as education, health and infrastructure investment See Cooper, D (2016). Balancing Pay Checks and Public
Assistance. http; //www.epi.org/filesI2015 fbalancing-paychecks-and -public-assistance.pdf
Iv
Low wages act as a drag on consumer spending and aggregate demand within the economy. Increasing wages for low income
workers, who have a higher propensity to spend, can stimulate demand and promote growth and employment See pp 6,
Ruestschlin, C (2012). Retail's Hidden Potential Demos.
http://www.demos.org/sites/default/fileslpublications/RetaiisHiddenPotential.pdf
v
See pp. 1, Dobson, L, Albeda, R (2012). How Youth Are Put At Risk by Parents' Low-Wages Jobs. Center for Social Policy,
University of Massachusetts, Boston.
https:llwww.umb.edu/editor
uploads/ima~slcenters
institutes/center social polieylYouth
at
RiskParents Low Wage Jobs F
all 121.pdf
i
<
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PARTNERSHIP
Montgomery County Community Action Board's
.County Council Testimony
Bill 12-16 Human Rights and Civil Liberties - County Minimum Wage
Tuesday, June 21,2016
.
Laurie-Anne Sayles
Community Action Board Member'
Good evening President Floreen, Vice President Berliner, and members of the
Montgomery County Council. My name is Laurie-Anne Sayles and I am a member of
the Community Action Board.
FDR once said, "No business which depends for existence on paying less than living
wages to its workers has any right to continue in this country."
I am here this evening to express the Board's strong support for increasing the County
minimum wage to $15. Just as the Board previously supported the 2013 increase, we
continue to believe that increasing the minimum wage will help more low-income.
residents move towards self-sufficiency. This increase is in keeping the Council's
previous support for progressive policies and programs that support workers, including
paid sick .Ieave, the Working Families Income Supplement, and child care subSidies.
Through its Volunteer Income Tax Assistance (VITA) Program and the Takoma-East
Silver Spring Center,the Community Action Agency works directlywith many County
residents who would benefit from the $15 minimum wage. Many of the participants in
our Board's poverty forums last year told us specifically that one of the biggest
challenges they face is finding a job that pays a living wage.
A
$15 minimum wage will
help these residents by ensuring appropriate compensation for their work.
1
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The Board acknowledges that the new minimum wage may
po~e
a hardship for
emerging small bl,lsinesses. While the research is inconclusive on the ultimate impact
on small businesses of raising the mi-nimum wage, we are open to innovative ideas that
will assist small business owners with transitioning to the new law.
While the higher minimum wage will have a tremendous effect on workers, we must
keep in mind that it is only one step in the process. Increasing the minimum wage will
help low-income residents but due to the incredibly high cost of living in Montgomery
County, many residents will still struggle to achieve self-sufficiency. For example, while
the proposed minimum wage increase will result in an annual income of about $31,200,
the Self-Sufficiency Standard for a single parent with two young children is $85,926. I
bring this to your attention only to highlight the significant challenges faced by our low­
income neighbors. This comparison also shows why the Community Action Board has
been a longtime proponent of the Self-Sufficiency
Stanci~rd
as a more accurate
measure of poverty in the County. The Self-Sufficiency Standard examines the cost of
necessities such as housing, transportation, and child care in a given area, and uses
these costs to determine the true cost of living there.· I am happy to report that this year,
the Community Action Agency will work with its partners to update the Maryland Self­
Sufficiency Standard for 2016.
In addition to the $15 minimum wage, our Board also encourages the Council to
consider other ways to address the needs of low-income residents, including expanded
affordable housing programs, increased support for early childhood education
programs, and additional tax credits to support low-wage workers.
While the federal minimum wage remains at the shockingly low amount of $7.25/hour,
we strongly encourage Montgomery County to pass this bill and place itself, once
a~ain,
at the forefront of local jurisdictions taking real steps to reduce inequality. On behalf of
the Community Action Board, thank you for your ongoing commitment to low-income
residents.
2
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Baltimore Offices
9 W. Mulberry Street, 4th Fl.
Baltimore, Maryland 21201
Mailing Address
PO Box 2181
Silver Spring, Maryland 20915
301.494.4998 phone
ProgressiveMaryland .org
Contact@ProgressiveMaryland.org
~
Testimony on Montgomery County Bill 12-16
To:
Date:
Position:
Montgomery County Council
June 21, 2016
Support
Thank you for the opportunity to testify on bill 12-16. I am here on behalf of Progressive
Maryland, one of the largest grassroots advocacy organizations in the state representing
working families. We have over 120,000 members and affiliates statewide, including over
36,000 here in Montgomery County. We ask the Council to support bill 12-16 to raise the
minimum wage to $15.
The $15 minimum wage is quickly becoming the national standard. At least 16 jurisdictions
including DC, New York state and California have passed legislation to raise wages to at least
$15. Fifty-three members of Congress and 200 economists have expressed support for a
national minimum of $15 because the simple reality is workers are being priced out of their
communities.
This bill would continue the pay raise that was implemented in 2013 until it reaches $15 in 2020
and would then be indexed to inflation. Montgomery County is consistently ranked as one of
America's most expensive regions with an area median income of $109,000. By comparison, a
full-time minimum wage worker only earns $19,864 per year. Increasing the minimum wage to
$15lhour would mean a raise for struggling workers while also benefiting businesses and the
local economy. We know that minimum wage workers spend most of their incomes on everyday
goods and services. That means more money going into retail businesses and restaurants and
is consistent with evidence we see in cities that have already adopted this increase.
Progressive Maryland is also concerned about the plight of tipped workers and would like to see
an amendment to include them in the minimum wage increase. Tipped workers-including
servers, bussers, and bar-backs-eam a subminimum wage of $4lhour making them almost
solely dependent on tips to meet their basic needs.
We've talked to dozens of workers in Montgomery County and continue to hear the same
stories with regard to tipped workers. They never know how much money they'll earn in a week
and rarely is their pay reflective of the level of service they provide. According to the Restaurant
Opportunity Center, 70% of tipped workers in Montgomery County are people of color, nearly
60% are women, and a third are parents. This two-tiered wage system only serves to widen the
gender and racial pay gap, making it harder for Montgomery County's most vulnerable workers
to provide for their families and achieve a decent standard of living.
Even though employers are supposed to compensate their tipped workers for any amount under
the minimum wage not earned in tips, we consistently hear stories of wage theft in which
employers simply do not pay workers what they are due. Workers are often fearful of losing their
jobs or being assigned fewer shifts and therefore do not challenge their employers over stolen
wages. It is also common practice for servers to pay a portion of their tips to bussers and other
back-of-house staff, meaning what they earn is not actually what they take home.
@)
Progressive Maryland: Building Power for Working Families
ProgressiveMaryiand .org
......
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Baltimore Offices
9 W. Mulberry Street, 4th Flo
Baltimore, Maryland 21201
Mailing Address
PO Box 2181
Silver Spring, Maryland 20915
301.494.4998 phone
ProgressiveMaryland.org
Contact@ProgressiveMaryland.org
Relying on tips makes workers economically insecure and makes for an unsafe work
environment. Research shows that 90% of women working as servers have experienced sexual
harassment on the jobfrom either a customer or a supervisor. But because any challenge to the
status quo may mean being assigned to a slower s.hiftorfewer hours, these women feelforced
to choose between tolerating workplace harassment or the prospect of not being able to feed
their families.
\
This is a critical issue for working families in Montgomery County. I strongly urge you to support
this bill with an amendment to provide a significant raise for tipped workers. Thank you.
.
Progressive Maryland: Building Power for Wor1<ing Families
ProgressiveMaryland.org
.
.,.,.
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Bill 12-16
Testimony: UFCW Local 1994 MCGEO
Raising the County Minimum Wage
Testimony of UFCW Local 1994 MCGEO
Senior Field Representative Erin Yeagley
The recent passage of legislation raising the county's minimum wage was the right thing to do, but the
failure to include an indexing mechanism has brought us together once again to ensure that wages keep
pace with the true cost of living in Montgomery County. Raising the minimum wage to $15 an hour and
indexing it for the future is the right thing to do for our community, which will fail to thrive if we fail to
ensure a living wage.
There are in fact county employees who would be positively affected by this change. UFCW Local 1994
MCGEO represents county temporary employees in a limited scope. But without full union rights or
merit status} many ofthe temporary employees that provide servicesto'the community, in our
recreation centers, our health centers, and throughout county government, struggle to pay the bills on
less than a living wage. They cobble together multiple part time jobs to make rent. Passage of this bill
would give
th~m
some much needed relief in the coming years.
Our union local does not want to see this bill weakened by extensions and exemptions. We stand with
the rest of the progressive community in pushing for a living wage that is not put on pause when times
get even tougher, a living wage that supports workers regardless of size of their employer. There's a
reason we refer to it as a "living wage", and all workers need it.
UFCW Local 1994 MCGEO also strongly urges the County Council to take action to increase the base
wage for tipped workers. Washington DC recently doubled their base wage for tipped workers, and we
urge you to do the same. The larger the gap between the base wage and the minimum wage that tips
must fill, the more workers are hurt when employers don't abide by the rules. Workers have little
recourse in such situations, afraid to speak out, and unable to effectively use the weak enforcement
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system. Raising the base wage for tipped workers, just as raising the wage for other workers, will not
have the disastrous effect some claim. Seven States currently require the base minimum wage for their
tipped workers, and according to the National Restaurant Association's projections, restaurant
employment in those seven states will grow in the next ten years by an average rate of more than 10%,
and sales during 2016 in those states are projected exceeds the national average.
Each time the minimum wage is raised here or elsewhere in the country, the alarm bells start ringing.
Each time, the exact same arguments are made by the opposition, with some insisting that we will lose
jobs and businesses if the wage is raised. But we've been here before, and over and over, these fears
are shown to be false. Washington D.C. is conquering its fears, let us do the same. $15 may be a new
number, but this is not a new kind of legislation. We have been at this fork in the road before, so let's
move forward again together to strengthen working families.
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Metropolitan Washington Council, AFL-CIO
888 16
th
Street, NW, Suite 520 • Washington, DC 20006 • (202) 974-8150 • Fax (202) 974-8152
Executive Board
Officers
Jackie Jeter
President (ATU 689)
Gino Renne
1st Vice President (UFCW 1994)
Andrew Washington
2nd Vice President (AFSCM E Cn 20)
Sandra Falwell
3rd Vice President (DCNA)
Dena Briscoe
Secretary (APWU 140)
Eric Bunn
Treasurer (AFGE District 14)
Testimony of Carlos Jimenez,
Executive Director
In Support of Bill 12-16
Before the Montgomery County Council
Honorable Nancy Floreen, President
21 June 2016
Members
Aaron Bast (Iron Workers 5)
Carl Carson (DC APRI)
Steve Courtien (CHOICE)
Chuck Clay (IATSE 22)
Cynthia Collins (SEIU 400-PG)
Jaime Contreras (SEIU 32BJ)
Elizabeth Davis (WTU 6)
Dan Dyer (OPEIU 2)
Mike Flood (AFSCME 2921)
Carl Goldman (AFSCME Cn 26)
Larry Greenhill Sr. (IBEW 26)
Jim Griffin (IBEW 1900)
Don Havard (IUOE 99)
Doris Reed (ASASP)
Dave Richardson (AFGE 12)
John Shields (SMART 100)
Ed Smith (IAFF 36)
Trustees
Mark Federici (UFCW 400)
Dan Fields (SEIU 722)
Tommy Ratliff (Teamsters 639)
Bringing Labor Together Since 1896
www.dclabor.org
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Good evening President Floreen and distinguished members of the Montgomery County
Council.
My name is Carlos Jimenez. I'm the executive director of the Metropolitan Washington Council,
AFL-CIO. We represent almost 200 affiliated unions across the region, which includes over
40,000 members who call Montgomery County home, and are tasked with representing their
interest and those of all working people who work and live in our jurisdiction. The AFL-CIO
takes great pride in being able to call ourselves a partner in efforts to raise standards and
efforts that contribute towards increased opportunity and prosperity for working people. We
believe that all working people
whether they work in retail, fast food, home care, or
restaurants - deserve to be paid fair wages for their work.
It
is because we firmly believe that those that work for a living ought to be able to make a living
that we come before this Council today and express our support for Bill 12-16. We believe that
increasing the minimum wage to $15.00 per hour will be an effective means of improving living
standards for low-wage workers and their families across Montgomery County, and that is good
for our overall economy.
It
should come as no surprise to anyone that it's getting more expensive to live in the County
and the region. MIT's Living Wage Calculator found that one adult supporting one child needs
to make $27.77 an hour to have a living wage in Montgomery County, We know that parents of
children in daycare in our region are paying some of the highest costs in the country. Given
rising costs for housing, living expenses, and other basic needs, it's critical we raise the
minimum wage to $15 dollar an hour.
Bringing Labor Together Since 1896
www.dclabor.org
@
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I have no doubt that we will hear opponents of this reasonable proposal argue that taking this
action will mean fewer employment opportunities for Montgomery County residents because
business owners will be unable to afford hiring at the increased minimum wage rate. But we
know that there is a historical body of research that shows that argument to simply not be true
there is no scientific evidence
to
support that claim when increasing the minimurn wage is
done in reasonable increments. While there are of course modest increases to overall business
costs, they are generally manageable and offset by some of the tangible benefits that result from
raising the minimum wage. We know that raising wages helps with employee retention and
productivity, which ultimately leads to lower labor costs. We know that a large portion of the
increase in earnings translate to an increase in purchasing power for working people, which
translates to a boon for our local economy. Moreover, Small Business Majority, a national small
business advocacy organization, found that nationally the majority of small business owners
support increasing the minimum wage and adjusting it annually to the cost of living.
While we'd like to see the minimum wage go up higher and on a faster timeline, particularly for
tipped workers, we believe this
is
a step in the right direction and one we strongly support.
Montgomery County has always been ahead of the curve and played a leadership role in setting
wages that allow its residents
to
work and live in the region. We believe that we need to
continue to playa leadership role in the region and the country in this national movement for
economic justice. We must do everything we can to address our County's needs and ensure we
are setting standards that allow those that work here to live and thrive in this great county that
we
all
call home.
Thank you for your time and the opportunity to speak before you today.
Bringing Labor Together Since 1896
www.dclabor.org
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'
A
CAS
June 21
st,
2016
~ ~
SOMOS CASA
I
WEARECASA
Montgomery County Council
Third Floor
100 Maryland Ave
Rockville MD 20850
Re:
Testimony in SUPPORT of Bill 12-16- Human Rights and Civil Liberties - County
Minimum Wage - Amount - Annual Adjustment
CASA
de Maryland, Inc.
("CASAli)
writes to register testimony in support of Bill 12-16
Good evening President and Councilmembers:
My name is Felix Kala, a day laborer and leader of a group of workers in Montgomery County
through one of
CASA
workers center. I support Bill 12-16 to raise the minimum wage to
$15.00 and I stand in solidarity with Tipped Workers.
As a day laborer, I work in anything related to general maintenance that comes my way, such
as landscaping, cleaning, and maintenance, and get paid $10.00 an hour. When there is a lot
of work opportunities, the $10 rate allows me to pay for my bus ride to and from my home,
food, and especially my medication that I need as I have gotten older.
My brother-in-law Philip graciously received me with open arms into his home since the day
that I came to the United States from Cameroon. I would like to help him with the rent and
utilities, but the money is not enough.
When the minimum wage gets raised to $15 in Montgomery County, I will be able to start
helping Philip with rent and utilities, I'll be able to save money for a rainy day, and eventually
I might save up enough money to finally take a vacation in America!
My experience is not unique but it is shared among workers of the group I lead. Raising the
minimum wage will allow the workers to have security of their homes because they will be
able to pay their rent on time. They will also have healthy families because they'll be able to
afford good meals and a better life.
8151 15th Ave. Hyattsville, MD 20783
I
www.wearecasa.org
I
301.431.4185
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As day laborers, we might not have much security for the day of tomorrow but with your
support of Bill 12-16, we will be able to sleep better at night.
Thank you for your support for Bill 12-16.
Sincerely,
Felix Kala
Montgomery County Day Laborer and Leader of Day Laborer Group
8151 15th Ave. Hyattsville, MD 20783
I
www.wearecaso.org
I
301.431.4185
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June
21, 2016
Montgomery County Council
100
Maryland Ave
Rockville, MD
20850
Testimony
in
Support of
Bill
12-16
Hi, my name is Mekdes Sisayand I am a minimum wage worker in Montgomery County.
I want to thank you for taking up this issue. Working in Montgomery County for minimum
wage has taught me that customer service work
is
significantly undervalued. The pay that
minimum wage workers receive is not equal to the amount of work that I put in each day, it
does not reflect the value I contribute to my employer, and it does not match the increasing
costs of living my coworkers and I face.
As
the daughter of immigrant working class parents, I have a firsthand understanding of
what it means to be immigrant and working class. My father is a taxi and uber driver in the
DCjMD
area and my mother has worked several customer service low wage jobs since her
arrival in this country. Growing up, I watched them struggle tirelessly to provide for me and
my siblings. Providing for us meant giving up their dreams, free time, and even their own
self care. Now that my parents are reaching elderly years, and I am nearing adulthood I
understand that this lifestyle
is
unsustainable for them. Both suffer from health problems
and cannot continue to work at the rate they do. I would like to become self sufficient so that
the burden is removed from them, but at the current minimum wage, that's not possible.
As
my siblings and I are all in college, a
15
dollar minimum wage would mean the ability to
contribute to my education and survival and remove that burden from my parents.
I believe every person is of equal value, but everyday I see how I am undervalued as a
woman and a low-wage worker. A
15
dollar minimum wage would be a step towards
acknowledging the value women of color workers contribute in the workplace.
As
a woman
of color minimum wage worker, I have experienced rude, harassing behavior from
customers and witnessed my fellow female co workers go through the same ordeal. A
$15
minimum wage would go a long way toward creating more gender and racial equity and a
society where each person is valued.
I ask that you please support this bill to raise the minimum wage to
15
dollars so that
workers like me can better provide for ourselves. Thank you.
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CAS
~
June 21
st,
2016
~ ~
SOMOS CASA
A
I
WE ARE CASA
Montgomery County Council
Third Floor
100 Maryland Ave
Rockville MD 20850
Re:
Testimony in SUPPORT of Bill 12-16- Human Rights and Civil Liberties - County
Minimum Wage - Amount - Annual Adjustment
CASA de Maryland, Inc. ("CASAli) writes to register testimony in support of Bill 12-16
Dear President and Councilmembers:
My name is Ana Martinez, I am the Domestic Worker's organizer for CASA, the largest
immigrant advocacy organization in the region. 1am here today to testify on behalf of our
80,000 members in support of Bill 12-16, we support a minimum wage increase including
the wages of tip workers. As a community organizer 1engage directly with our members
and hear their stories on how low wages impacts them and their families.
Just this past weekend, I held a community meeting with members of
CASA's
Women
Seeking Justice Committee. At this meeting I asked our members, if their wages would
increase to $15 an hour, what would they do with that extra income?
Claudia mentioned that it would help her not worry about the rent, that it would assure
that she had enough income so that she would not be scrabbling at the end ofthe month to
pay her bills. Claudia used to work for a cleaning company until last month. She has three
children and has to assure she is able to keep up with the bills as well as still be able to
spend time with her family.
Maria told me that if she earned more, she would be able to sign her children up for after
school activities such as Taekwando or math programs. Maria is a domestic workers and
she is a devoted mother to two children in which she wants to assure they have the best
education and access to other opportunities.
Evelyn mentioned that it would help pay off her mortgage for a condo. Since the HOA fee
has gone up at her condo, she has been struggling to make sure she doesn't lose her home.
Evelyn is a Domestic Worker and since her husband cannot work because of health
reasons, she is the one supporting them both.
8151 15th Ave. Hyattsville, MD 20783 Iwww.wearecasa.org I 301.431.4185
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Candelaria told me that it would help her pay for childcare and transportation. Candelaria's
husband usually provides for the family but because of recent financial difficulty,
Candelaria had to return to work. Even though she was working, all her income ended
going into childcare and transportation since she has three kids induding an infant who
she is still breast feeding. Now her oldest son who is in High School, just got his first
summer job so he can help his family out.
This is what we are fighting for, we are fighting for the dignity of hard working individuals.
We are fighting so they have the income to pay for their basic expenses such as rent,
mortgage, childcare, and opportunities for their children. We are fighting so that they are
not struggling to make ends meet, especially since Montgomery County has a high cost of
living. We are fighting for the Domestic Workers, for the single moms, and for all low wage
workers so that they too, can provide a decent life for their families.
As you consider this bill, please remember the stories of Claudia, Maria, Evelyn, and
Candelaria as they represent the realities of the working families in Montgomery County.
We urge the council to increase the minimum wage to $15 an hour and to increase the
wages of tip workers.
Thank you for your time.
Sincerely,
Ana Martinez
Community Organizer
8151 15th Ave. Hyattsville, MD 20783
I
www.wearecasa.org
I
30l.431.4185
@
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TESTIMONY IN SUPPORT OF 811112-16:
Minimum Wage Adjustment of 2016
TO: President Floreen and Members of the Montgomery County Council
FROM: Boaz Young-EI, Political Representative, United Food and Commercial Workers
Local 400
DATE: June 21, 2016
Mrs. President and members of the council, thank you for the opportunity to testify today
on this important bill. My name is Boaz Young-El and I am the political representative for
the United Food and Commercial Workers Local 400. We represent nearly 4,000 members
Montgomery County, MD, mostly in the retail and grocery industries. UFCW Local 400
strongly supports Bill
12-16,
Minimum Wage Adjustment of2016and we urge you to
favorably report
it
without amendment.
Our members in Montgo::nery County enjoy the protections and wage increases due to
them per their collective bargaining agreements that we have worked hard to secure over
the years with their companies. However, even with collective bargaining agreements in
place, there is still more room for improving the lives of our members economically as well
as the lives oftheir family members, and bill 12-16 would be a huge step in that direction.
Bill 12-16 calls for a min wage increase to $15 per hour for all residents working in
Montgomery County, and an increase for tipped employees to $5 per hour, to be phased in
by July 1, 2020. Under the Bill's transition provisions, the County minimum wage would
increase to $12.50 in 2018, $13.75 in 2019, and $15.00 in 2020. Additionally, the Bill would
require, beginning in 2021, annual adjustments to the minimum wage by the annual
average increase, if any, in the Consumer Price Index for Urban Wage Earners and Clerical
Workers (CPIW) for the previous calendar year.
It does not help employers or employees or the economy when employees work full time
jobs, or more than one job, and still cannot make ends meet economically. Eventually
raising the minimum wage to $15 per hour would result in an employee earning $30,000
dollars a year, and that
i~
if they work 40 hours every week, and we all know that even that
amount would still leave many families struggling to live and provide for their families in
Montgomery County.
If the wage is increased
~a
$15 per hour, employers would benefit over the long run from
an increase in the County Minimum wage; for we see that when consumers are
economically viable they spend more in their surrounding communities which in tum helps
to drive business, as well as lead to a better quality of life for not only our members but
their families and comm:.mities as well.
This is a fair and common sense policy that will benefit employers, workers, and the
economy of Montgomer:! County. On behalf of all of our members in Montgomery County,
we urge a favorable report on Bill 60-14. Thank you for your time.
Please contact Boaz Young-EL, 301-332-6612, if you have any additional questions.
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rftrtI
[ID1
Gaithersburg-Germantown
Chamber of Commerce,
Inc.
Adjustment - Public Hearing
Marilyn Balcombe
June 21, 2016
910 Clopper Road, Suite 205N, Gaithersburg, Maryland 20878 (301) 840-1400, Fax(301) 963-3918
Bill 12-16,
Human Rights and Civil Liberties - County Minimum Wage - Amount - Annual
Thank you for the opportunity to comment on Bill 12-16 which will increase the County's minimum
wage. The Gaithersburg-Germantown Chamber of Commerce represents 400 businesses, most of which
are small business owners and many of whom have questions and concerns about the proposed
increase.
1.
Why
Now?
In 2013 the Montgomery County Council approved an unprecedented increase in the minimum wage.
That wage increase has yet to be fully implemented. There are two more wage increases already
scheduled in July 2016 and July 2017. We believe that it is ill advised to approve another increase in the
minimum wage without understanding the impact ofthe prior increase. Any change proposed by the
new Bill won't take effect until 2018 through 2020, so why do it now? All of you will have the
opportunity to make this change in 2017 and 2018. Other than jumping on the band wagon, there is no
compelling reason to take up this legislation in 2016.
2.
What is the collective impact on business to legislative changes impacting employee
compensation?
There have been a number of recent significant changes in the structure and level of employee
compensation for businesses in Montgomery County. These changes will have a cumulative impact on
existing and future business. Recent changes hlc1ude:
Two more annual increases in the County's minimum wage scheduled in 2016 and 2017,
respectively. In addition to the wage increase, there are additional costs associated with social
security, workers compensation, and all benefits tied to wages.
Mandatory Safe and Sick leave in Montgomery County scheduled to take effect in October
2016.
The change in the Federal Overtime Regulations to take effect in December 2016 which may
have a major impact on personnel costs.
It is difficult to predict the cumulative effect of these changes on businesses large and small. There are
too many balls in the air for businesses to have a good understanding of how the various legislated
changes will impact their overall budgets. I understand that there is a rush to join los Angeles, San
Francisco,
&
!\lew York in the Fight for $15, but to do so at the risk of harming our own local economy is
not prudent.
Balcombe, Testimony, Bill 12-16
1
®
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3. Will increasing the minimum wage increase or decrease employment among low-wage workers?
The Fiscal Impact Statement for Bill 12-16 reached the following conclusion: "It is uncertain whether
increasing the minimum wage would either increase or decrease employment among low-wage
workers." To put it simply - we don't have a clue what effect this Bill will have on employment.
Before the County mandates another increase in the mandatory minimum wage, it is important to have
a good understanding of who the winners and losers will be. As we've stated in the past, there will be
some employers who cannot pass the increased cost on to the consumer (they will be priced out of the
market) or they do not have the sufficient revenue to absorb the additional cost. In those cases, some
employers will have to cut staff. We have made this argument before to no avail. Either it wasn't
believed, or a conscious decision was made that there will be some winners (those who keep their jobs
and get a pay increase) and there will be some losers (those who lose their jobs to afford the pay
increase for their former colleagues).
Given the data presented by the County Executive's office, raising the minimum wage to $15 is not a
clear victory for all.
4. How much will this Bill cost the tax payers of Montgomery?
The fiscal note for this BilLestimates the direct cost increase for the County will be almost $6.5M. Which,
based on the discussions we've had about privatizing DLC, is a lot of money.
My biggest concern about the fiscal note is that it does not address the full cost of the proposed wage
increase. For example, it does not include the increased cost of County contracts or County grants. The
current mandatory minimum wage for contracts of $14.40 per hour will increase to $15. How much will
that increase the cost for the County?
This Bill will also have an impact on non-profits in the County that provide vital services to our
community and often pay employees at the lower end of the pay scale. Many non-profits rely on County
grants for those services. Will the County provide additional funds for the grantees or will the grantees
be forced to cut necessary services? During the 2017 County budget hearings, some non-profit groups
are already requesting additional funds to cover the upcoming mandatory sick and safe leave.
To me, the most profound impact that this Bill will have on the County personnel cost will be the
inevitable change in the overall salary structure. If the lowest pay grade in the County (including MCPS)
is elevated to $15 hour, there will be a ripple effect resulting in a corresponding increase throughout the
salary structure.
Salary structures are complicated systems based on education, experience, supply and demand, relative
value of the work being done, responsibility, etc. There is a reason why an administrative assistant
make~
$40,000 a year and a County Councilmember makes $120,000. If you raise the lower end of the
pay scale by 50% in five years, it will have an impact on the rest of the pay scale.
When the County decides how much it will pay certain employees or when the County negotiates the
terms of a bargaining agreement, there is a difference between individuals currently earning the base
wage and those currently making $1S hour, again based on skill, experience, job requirements, etc.
What is the plan for County employees who are currently making $lS/hour? Will they be getting a
corresponding raise? Please see Page 4 for an example of the potential impact on the County's pay
scale.
Balcombe, Testimony, Bill
12-16
2
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At this point, we don't know how the increased expense in County personnel, County contracts, and
County grants will be accommodated in future County budgets. Because we don't know the real extent
of the fiscal note for the County, we don't know what additional revenue will be needed. The FY 2017
County budget saw an increase in property tax and an increase in recordation tax. Can we expect annual
property tax increases to pay for the annual increases in minimum wage throughout the County
personnel structure?
5.
How will this increase impact our competitiveness in the region?
When the
Co~nty
passed its increase in minimum wage in 2013, it did so in conjunction with Prince
Georges County and the District of Columbia. We know that DC just past the increase, but Prince
Georges County has been clear that they will not move forward at this time.
In,a Washington Post article (March 31,2016) Prince George's County Council Chairman Derrick Leon
Davis (D-Mitchellville) said it is unlikely that his jurisdiction will join the latest effort.
The county
I
he said,
is currently facing too many economic uncertainties
to
justify another increase. Moreover, nonprofit
providers ofservices
to
the developmentally disabled are already saying that without more help from
the government, they will be unable
to
keep pace with the current schedule of wage increases. IIOur
realities are catching up with us right now,
n
Davis said. "At this time, it would be imprudent
to
take
another step in that direction.
/I
We know that other jurisdictions (Frederick, Howard, Virginia) have no plan to change their minimum
wage. It is also unlikely that the State will pass another minimum wage increase in the near future.
Adding an increased minimum wage to the mandatory sick leave requirements puts businesses in
Montgomery County at a disadvantage. Now, some may argue that the higher wages in Montgomery
County will be an advantage in terms of recruiting and retaining the best and the brightest. There are
two competing flaws with that argument. The first is that many businesses cannot afford to pay
increased wages regardless of how great the talent pool is. The second flaw is that if a company is now
required to pay $15 an hour and can attract a higher skilled, more experienced work force, the lower
skilled, less experience workers will not be able to compete and instead of getting a pay raise, they are
shown the door.
6.
What is the long-term impact of tying future increases to the CPI-W?
This Bill is already one of the most significant minimum wage increases in the Country. We have no idea
what the state of the economy is going to be in 2020. We have no idea what'a $15 minimum wage will
do to employment and the local economy. We don't know what the State or our surrounding
jurisdictions are going to do in regards to minimum wage. What happens when the CPI goes down, like it
did in 2009 and 2015? Will there be a decrease in mandatory minimum wage? Again, there is far too
much uncertainty to mandate annual increases in the out years. Not to mention putting the tax payers
on the hook increases in the County's payroll.
7.
Is the proposed mandatory minimum wage of $15 too large for businesses to absorb?
We have heard from our businesses on this legislation and many of them will be greatly impacted. I'm
not talking about the large employers who already pay well beyond minimum wage. I'm talking about
our small employers who study their cash flow on a weekly / daily basis, often making decisions about
which vendor they won't pay this week just so they can make payroll. Some of them will need to reduce
. staff, some of them will forgo expansion, some might leave the County, and unfortunately some will go
out of business They are working very hard to build a business, create jobs, and raise a family. And they
count too.
Balcombe, Testimony, Bill 12-16
3
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MONTGOMERY COUNTY GOVERNMENT
GENERAL SALARY SCHEDULE
PROPOSED FISCAL YEAR 2017
EFFECTIVE JULY 10, 2016
GRADE
MINIMUM
~15
Hour
Once Bill 12-16 goes in effect, will
everyone in Grades 5,6,7,8,9 make the
exactly same or will there be a
corresponding increase at all levels?
5
6
7
8
9
$26,489
$27,504
$28,575
$29,687
$30,860
$31,200
$31,200
$31,200
$31,200
$31,200
10
11
12
13
14
15
16
17
18
19
20
$32,098
$33,395
$34,749
$36,180
$37,684
$39,257
$40,935
$42,792
$44,753
$46,863
$49,068
$32,098
$33,395
$34,749
$36,180
$37,684
$39,257
$40,935 .
$42,792
$44,753
$46,863
$49,068
Grade 10 is currently paid 17% higher than
Grade 5. Will Grade 10 get an increase or
remain only 3% higher than Grade 5?
Grades 5 through 20 shown here.
Balcombe, Testimony, Bill 12-16
4
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THE GREATER BETHESDA
C
A
1-1
B E
R,
of
C 0 tv1 r! ERe E
Smart Business, Bright Future
7910 Woodmont Avenue, Suite 1204
Bethesda, MD 20814
T (301) 652-4900
F (301) 657-1973
staff@bccchamber,org
yyww, bccchambeLQ[Q
TESTIMONY BY JENNIFER RUSSEL
ON EXPEDITED BILL
12-16 HUMAN
RIGHTS AND CIVIL LIBERTIES
­
COUNTY MINIMUM WAGE - ANNUAL ADJUSTMENT
BEFORE THE MONTGOMERY COUNTY COUNCIL
JUNE 21, 2016
Good evening. I am Jennifer Russel speaking this evening on behalf of The Greater Bethesda Chamber of
Commerce.
I am testifying in opposition to Bill 12-16, which would increase the County's minimum wage to $15 by
2020. Since the increases from your previous minimum wage Bill 27-13 don't conclude for another two
years, please seriously consider answering these questions during your upcoming worksessions:
1.
Why now? What's the rush in passing legislation that clearly has not been vetted with the businesses
that will be affected?
2. Why you? Why are we doing this alone? We have always contended that the mandatory minimum
wage is a State issue and you should, too. As the County isn't even responsible for enforcing this
legislation, you shouldn't be mandating what the minimum wage should be that should be the State's
responsibility. As you know, a bill was introduced at the State level in 2016, which would raise the
minimum wage to $15 by 2022. Although it didn't pass, we expect this bill to be introduced again in
2017. Why should our County be the lone jurisdiction in Maryland with the highest minimum wage?
What kind of distinction is that? Have you considered how this will impact our competitiveness in the
region?
3. Do you know what the impact has been on business from the last time you raised the minimum
wage? Have you .conducted research to find out what the impact will be this time.
around? Businesses large and small have been hit with numerous mandated changes 'in compensation
(Affordable Care Act, sick leave, minimum wage, and soon Federal overtime regs), in addition to the
persistent energy tax, and recently increased property taxes. Just this month, restaurants have seen a major
increase in costs from the DLC for beer and wine with just a few days' notice. Many of our members
haven't had a chance to determine the impact of the current changes, let alone another wage increase.
Montgomery County should study and better understand what the impact is on local employers from the
most recent minimum wage increases before adding more on. We urge you to direct the OLO to conduct
a study on the impact Bill 27-13 has had on County businesses before implementing add-on legislation.
BETHESDA
I
CABIN JOHN
I
CHEVY CHASE
I
FRIENDSHIP HEIGHTS
I
GARRETT PARK
I
GLEN
ROCK SPRING
ECHO
I
POTOMAC
r
THE PIKE DISTRICT
I
I
WESTBARD
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TESTIMONY BY JENNIFER RUSSEL
EXPEDITED BILL 12-16 HUMAN RIGHTS & CIVIL LIBERTIES
JUNE 21, 2016
COUNTY MINIMUM WAGE - ANNUAL ADJUSTMENT
PAGE 2
4. What is the impact on the County's personnel costs?
According to the Fiscal Note provided to the
County Council on May 3rd by the Montgomery County Department of Finance, "the proposed legislation
would add additional minimum wage increases beyond FY18, leading to an estimated additional fiscal
impact of $6,483,575 to the County over the next 6 years." This fiscal impact statement does not address
whether there will be a corresponding increase throughout the Montgomery County government's salary'
structure (wage compression). Nor does the statement address whether increases in payroll taxes and other
related benefits were included in this impact statement. The statement doesn't mention the impact on
County employees, County Contracts, and County Grantees.
The County Council just approved an increase in both the property tax and the recordation tax. Should
we expect that there will be an additional tax increase to pay for the increase in County personnel costs?
The Montgomery County School System recently agreed to scale back negotiated wage increases for its
teachers, to allocate money elsewhere in the school system. The minimum wage increase would ignore
the economic reality that the Council already seems to understand.
A local or "regional" minimum wage increase is certainly well intentioned, and probably good for politics,
but at this time and in this form it is bad for business. We believe the County should instead focus its
efforts on attracting and incentivizing new and existing businesses to create a more vibrant local economy.
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7
Ladies and gentlemen of the council
I am here before you as the- owner of a small business. In fact, my entire family is here because we want
you to see the face of a small employer. You are considering raising the minimum wage to $15.00 an
hour. This will hurt businesses and citizens including the most vulnerable. Senior Helpers, provides in­
home care to Seniors. We employ Home Health Aides and help people live in their homes. Home care is
out of pocket.
Home care in Maryland averages $21.00 an hour. Average CNA wages at a home care agency is $11.60.
Increasing the minimum wage from the already scheduled rate increases (up to $11.50) would add an
additional 29% increase to salary costs. This means - to keep our business viable, we will have to
increase home care costs with a corresponding percentage. What does this mean to our clients...
?
Weekly hours
Daily Hours
Annualized Increase
168 24
84 12
56 8
28
$
$
$
$
52,416.00
26,208.00
17,472.00
8,736.00
4
A few folks have LTC insurance, but often times it does not cover more than a few hours of care a day.
Increase costs and they will skip care, or hire people under the table - this means they lose the
protection of an agency (who carries insurance, and does background checks), it also means the county
and state lose taxes from the employee who works illegally, and the employer's income won't be taxed.
Here are two real stories that will become more common if home care costs increase.
Mrs. G. turned 100 years old while our client. At first she was at home and had a helper a few hours a
week. She needed more care and moved to an assisted living. Her dementia progressed and she kept
falling so the facility required a sitter. Her assets dwindled and they cut coverage. After a cut in care,
she was left alone in her room; she stood up, fell back, and broke her neck. Mrs. G. moved to a nursing
home and within 30 days died of an infection.
Mr. T., who came to us out of a rehab and had long term care insurance, but had over $300,000 stolen
from him due to dementia. He needed total bed care. His wife engaged us for all his LTC insurance
would cover... 3 hours a day. He developed bed sores from laying in the same position all day. He
lingered, for months, in pain, because his family didn't have the resources to pay for enough care.
We pay over minimum wage, we pay overtime, and we provide benefits. We have not hired an office
position because our profit margin does not allow for that. Raising the minimum wage to $15.00 will
burden businesses. We are considering a lease extension, but have held off because ofthis proposal.
Maryland wages should be state wide. MC is so close to PG county that people will just choose to move
to facilities in PG county who can keep their prices lower because staff costs are lower. Montgomery
county will lose residents and the taxes from business in MC who aren't serving them.
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According to the Alzheimer's Foundation of America...
About Alzheimer's Disease
Cost
• The national tab for caring for individuals with Alzheimer's disease is estimated at $100 billion
annually.
• Alzheimer's disease costs U.S. businesses more than $60 billion a year, stemming from lost
productivity and absenteeism by primary caregivers, and insurance costs.
• The annual cost of caring for one individual with Alzheimer's disease ranges from nearly $18,500
to more than $36,000, depending on the stage of the disease.
Long-Term Care Statistics
1. About 70 percent of individuals older than age 65 will require at least some type of long-tenn
care services during their lifetime.
2. Among those currently receiving long-tenn care services, 40 percent are people aged 18 to 64.
3. More
than
40 percent will need care in a nursing home for some period oftime.
4. Among those individuals 65+ who need long-term care, 20 percent will need services for more
than five years.
5. Women need care for longer (on average 3.7 years) than men (on average 2.2 years).
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