Minimum Wage, Montgomery County

On Raising the Minimum Wage, Part II


Today, 7S continues yesterday’s discussion of critical issues surrounding the proposed increase in the County’s minimum wage to $15 per hour.

Impact on Employment

Minimum wage opponents have long argued against raising the minimum wage on the grounds that it will spur businesses to hire fewer people. The intent of the policy is to help people who are struggling get out of poverty – not unemploy them – so this is a critical question.

Proponents argue correctly that past studies have shown that moderate wage increases have not had a measurably negative impact on employment relative to neighboring jurisdictions. They can also make a case that the stagnation in the minimum wage has left it lower in real terms than in earlier eras.

Moreover, a minimum wage increase can aid the economy by giving money to people who will undoubtedly spend it because of basic needs and pent up demand, and stimulate the economy.

Of course, the impact of Montgomery’s increase on our own economy depends on whether they spend it here or in neighboring jurisdictions. Do beneficiaries live here? Do they spend their money here?

The Size of the Wage

Councilmember George Leventhal, who opposed the previous wage increase, supports this one because he didn’t think the previous one caused any problem, so the County should press forward with this one. That logic remains wholly unconvincing because one could similarly argue why stop at $15. Why not $17 or $20?

The size of the minimum wage is obviously crucial. Even if the current $11.50 hasn’t caused any problems, which some might debate based on employment figures, it doesn’t mean that a $15.00 wage – a 23% hike – will not, especially if inflation remains low over the phase-in period.

Don’t forget that various social charges tied to total wages will also rise, as will the potential wage differential with neighboring jurisdictions. The proposed $15 minimum will be twice as high as the minimum wage in Virginia.

Councilmember Elrich frames his argument in favor of the wage on what is needed to get people a living wage. A living wage, unfortunately, may be divorced from the wage that has a negative impact on the economy and employment.

The graph at the top shows the difficulty of the assessment problem. If the minimum wage had continued to increase as it did in the 1950s and 1960s, it would be much higher today. But it has tended to fall or stagnate since around 1968, which makes the argument for the increase but also suggests that the higher rate would be outside our historical experience.

Broad Economic Changes

The tight labor markets of the 1990s resulted in wage increases and substantial reductions in poverty.  In contrast, the magnitude of the financial crisis left tremendous slack in the labor market and current low unemployment rates don’t reflect that there is much room for discouraged workers to enter the labor force.

At the same time, wages have stagnated during post-2000 economic recoveries, making it unclear that tighter labor markets will increase wages. The Republican focus during the 2000s on directing ever more money in tax cuts to the wealthy while cutting services only accentuated this trend – an experiment the Republicans seem intent on repeating.

As has often occurred in the past, technological innovations are destroying jobs and creating others. Right now, technology is rapidly replacing many low-end jobs, which creates downward pressure on wages despite lower unemployment. Scanners allow people to check out themselves at the supermarket. McDonald’s is now experimenting with a touchscreen order system. The Internet puts enormous pressure on in-store retail sales.

Minimum wage increases may encourage firms to move more aggressively to adopt new technologies, resulting in fewer workers. This is not necessarily bad for the economy, as it could position Montgomery to be at the cutting edge of efficiency. Higher wages may spur Montgomery businesses to become leaner and meaner faster than the competition while ensuring that employees get better compensation.

Economic Strategy

Finally, the County needs to consider how this issue fits into its broader economic approach. We have experienced low growth and stagnant employment. What can the County do to reverse these trends? How does a minimum wage increase fit into that strategy?

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2018 Montgomery County Executive Race, Minimum Wage

Raise the Minimum Wage? Roger Berliner Answers

Seventh State is pleased to present Roger Berliner’s response to our question on the minimum wage.

Do you favor an increase in the Montgomery County minimum wage and, if so, by how much and on what timeline? Would you have any exemptions and, if so, for whom?  

I do favor increasing our county’s minimum wage to $15 an hour. I support the County Executive’s timeline, which would increase wages each year and reach $15 an hour by 2022 for larger businesses and 2024 for small businesses. I believe the County Executive’s time line best harmonizes the conflicting truths that are present in this debate: (1) too many people are working too hard for too little; and (2) if we raise wages too quickly, we will harm small businesses in our county, particularly minority-owned businesses, and this in turn will produce results that are exactly the opposite of what we want.

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2018 Montgomery County Executive Race, Minimum Wage

Raise the Minimum Wage? Marc Elrich Answers

Seventh State is pleased to present Marc Elrich’s response to our question on the minimum wage.

Do you favor an increase in the Montgomery County minimum wage and, if so, by how much and on what timeline? Would you have any exemptions and, if so, for whom?

Yes, I support making the Montgomery County minimum wage into a living wage of $15 an hour.  I led the fight to secure the county’s last minimum wage increase, which is why our minimum wage is now $11.50 an hour, and believe strongly that jobs should pay people enough to provide for their families.

An extensive body of evidence shows that minimum wage increases have had their intended effect of lifting wages for low-wage workers with little to no effect on employment.  Montgomery County is one of the wealthiest counties in the United States and has a very high cost of living, so we are even more well-positioned than many other jurisdictions to take the step of going to $15.

The most prudent course of action would be to raise the minimum wage to $15 per hour by 2020 for all workers in the county with no exemptions, indexing the minimum wage to rise with inflation or average wages after 2020.  Over 100,000 Montgomery County residents would benefit from such an increase.

Opponents of this idea today made the same arguments and dire predictions four years ago.  They were wrong then and they’re wrong now.

The $15 minimum wage bill I recently reintroduced, like the one that took effect in 2013, contains several compromises to assuage the concerns of some of my colleagues and some small businesses.  It delays the phase-in to 2022 for businesses with 25 or fewer employees, for example, and it continues to allow the exemptions for some workers that exist under federal law.  These compromises will result in less help for people in need than my ideal proposal would achieve, but the bill we ultimately enshrine into law will still have a huge, positive impact.

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2018 Montgomery County Executive Race, Montgomery County

On Raising the Minimum Wage, Part I

The County Council is getting ready to reconsider Councilmember Marc Elrich’s bill to raise the minimum wage to $15 per hour that was vetoed by County Executive Ike Leggett, who outlined changes to the bill that he would like to see. Elrich’s bill was one vote short of being able to override Leggett’s veto.

As we are heading into an election year, there is a lot of political pressure around the issue and I imagine something will emerge from the Council. Rather than focus on the politics, however, what are the questions that councilmembers and voters ought to consider?

Direct Impact on the County Budget

For all of the controversy over the effect of a wage increase on the County’s economy, it remains surprising that little thought has been given to the potential impact on the county budget. Marc Elrich argues that it shouldn’t be much:

Probably not much if any [impact] on the County’s own budget. County employees and those who contract for the County have to pay a living wage which this year is around $14.50. So any inflation would get you to $15 in two years at the most.

The PFM Study on the minimum wage was widely discredited as junk science but nonetheless outlined the argument for why a higher wage could cost the county money:

[A $15 minimum wage] would likely present a significant cost to the County both in terms of adjusting employees’ pay to reflect a higher wage floor and to avoid wage compression in relation to that floor, but also through the resulting increases in additional compensation dependent on the base rate of pay (e.g. overtime) and in the County’s pension liability for eligible employees, due to increases in base earnings.

The fiscal impact statement for the bill is rather Delphic:

This legislation, as well as this fiscal impact statement, does not address the issue of wage compression in the County. Any action taken to address this issue would have a significant fiscal impact, which would be difficult to determine at this time.

Seems like it would be good to have a healthy discussion of budgetary impact to make sure we don’t have a repeat from 12 years ago with the county government racking up wage bills that it couldn’t afford in advance of an election. Elrich makes a good case but would the County need to have a higher floor to compete with the private sector?

Should the County Leave It to the State?

Libertarians argue that there should be no minimum wage because individuals should have the right to make contracts at any mutually agreeable wage. Assuming that this ship said long ago in Montgomery County, the question still remains if it wise for the County to enact its own rate substantially different from the state and double that of Virginia.

Del. Bill Frick, a candidate for county executive, has argued we should have a higher minimum wage but it should be done by the State:

Minimum wage policy, however, is more effective as a state policy than as a local one.  Maryland has a Department of Labor, with the statutory power and duty to enforce minimum wage and other employment laws. Montgomery County does not. Just as zoning and land use decisions belong at the County level instead of the state, I believe employment regulation is better in the hands of the state . . .

Additionally, statewide action eliminates risk of losing business to either Howard or Prince George’s Counties, though not DC or Virginia. At-Large County Council Candidate Seth Grimes argues that the county needs to act because the state hasn’t:

The self-sufficiency standard varies widely across Maryland, [so] legislators outside high-cost counties including Montgomery might see a higher minimum as less of a priority than we in Montgomery do. Montgomery County especially needs a higher minimum, but statewide action has failed. Yet Mr. Frick would let a specious search for “more effective” policy hold us back from needed local action.

Still, the county has spent much time focused on areas outside of its core services and regulated in areas, such as pesticides, where it has little enforcement capacity. Frick raises the broader question of whether the County Council spends too much time on issues that should be legislated on in other arenas rather than the nuts and bolts of county government.

Tomorrow morning, 7S continues with a discussion of the impact of minimum wage increases on employment in Part II.

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2018 Montgomery County Executive Race

Floreen Endorses Krasnow

Apparently, Rose Krasnow announced that she was in for county executive at the Montgomery Women breakfast on Friday. Nancy Floreen, who also attended the breakfast, announced her support for Krasnow.

I believe this is this first endorsement by a sitting member of the County Council in the race. Floreen looked past three of her colleagues – Roger Berliner, Marc Elrich and George Leventhal – in making her choice.

If elected, Krasnow would be the first woman to serve as Montgomery County Executive. The two leading candidates in the Prince George’s race, State’s Attorney Angela Alsobrooks and former Rep. Donna Edwards, are women, so the two counties may both have their first female county executives.

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2018 Montgomery County Executive Race

Krasnow Looks In for County Exec

Adam Pagnucco has quite the scoop that he asked me to post. It looks like former Rockville Mayor Rose Krasnow is getting past mulling about a bid for county executive and ready to take the plunge and enter the race.

She has just established a campaign finance entity, Friends of Rose Krasnow, to collect campaign contributions for a run for Montgomery County Executive. The Chair of her committee, Marye Wells-Harley, is a former Vice Chair of the Planning Board.

Not a coincidence, as Krasnow has worked at the Planning Board since 2004 and is now Deputy Director. Krasnow will be the only woman in the race – not a bad niche as women make up roughly 60% of Democratic primary voters.

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2018 Montgomery County Executive Race

Raise the Minimum Wage? George Leventhal Answers

Seventh State is pleased to present George Leventhal’s response to our question on the minimum wage.

Do you favor an increase in the Montgomery County minimum wage and, if so, by how much and on what timeline? Would you have any exemptions and, if so, for whom?   

I support raising the minimum wage to $15 per hour by 2020, as our neighbor, the District of Columbia, has already done. I am amenable to a slower rate of increase for businesses with 25 or fewer employees and for non-profit organizations.

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2018 Montgomery County Executive Race, Minimum Wage

Raise the Minimum Wage? Bill Frick Answers

As the County Council is getting ready to vote on raising the minimum wage, Seventh State continues its series of candidate responses to questions with this issue.

Do you favor an increase in the Montgomery County minimum wage and, if so, by how much and on what timeline? Would you have any exemptions and, if so, for whom?  

I have co-sponsored and voted for bills to raise the minimum wage statewide in Annapolis. A thoughtful minimum wage policy, properly enforced, can be an important tool in reducing income inequality. That is why I helped enact a minimum wage increase as a legislator in Annapolis.  Minimum wage policy, however, is more effective as a state policy than as a local one.  Maryland has a Department of Labor, with the statutory power and duty to enforce minimum wage and other employment laws.  Montgomery County does not.  Just as zoning and land use decisions belong at the County level instead of the state, I believe employment regulation is better in the hands of the state, where those regulations can be effectively enforced and implemented.

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Montgomery County

Council Places M-83 in the Freezer

By a 7-2 vote with Nancy Floreen (D-At Large) and Craig Rice (D-2) opposed, the Montgomery County Council approved a resolution sponsored by Councilmember Hans Riemer (D-At Large) telling the Planning Board to ignore that the controversial M-83 road in making future plans.

The controversy pits Upcounty residents against smart growth and environmental opponents of new roads. Many Upcounty residents in communities like Clarksburg would love to see the long promised alternative route to their communities built in order to alleviate excruciating traffic. Environmentalists and smart growthers think that new roads promote the use of cars and sprawl.

Compromise or Just Spin?

The resolution is being presented by Riemer as a compromise because it keeps M-83 in the Master Plan but tells the Planning Board to act as if it will never be built. Nancy Floreen outlined the politics of spin surrounding this resolution in explaining her “no” vote:

There is nothing in here that says we are going to build M-83. So that is a win for the environmentalist, I guess. And, there is nothing in here that says we are going to build M-83, which is a win for the UpCounty.  I suppose, I should be happy about this because we leave M-83 on the master plan for the future, which is a good thing. But, because we are doing something that is designed to fuel public perception one way or the other, I think it is just plain irresponsible. It is a gratuitous slap in the face to the people who relied on the master plan. And for the people who are opposed to it, it continues the argument ad infinitum.

Indeed, the resolution in amenable to being messaged in a variety of ways to different audiences. Environmentalists and smart growthers can be told it all but kills the road for the time being. M-83 supporters will be told that it’s still in the Master Plan and that the anti-road people aren’t happy for this reason.

Road Opponents Carried the Day But this Street Fight Continues

Riemer, an M-83 opponent, is deeply misguided to the extent he believes that the sop of maintaining M-83 in the Master Plan will appease road supporters. They’re not fooled. The “it’s a compromise” argument only annoys because it comes across as disingenuous to people who wanted this road built yesterday.

Marilyn Balcombe, President and CEO of the Gaithersburg-Germantown Chamber of Commerce, is campaigning for at at-large seat on the County Council and making this an issue:

[T]o invoke the Paris Climate Agreement for any project that someone may disagree with is a very slippery slope. . . . Does this proposed resolution mean that we are never building any more roads in the County?

Not a bad substantive policy question in this election year.

Politically, the impact of this issue remains unclear. It’s a great way to rally Upcounty residents who want the road. But how many vote in the key Democratic primary?

Environmentalists are indeed are unhappy that the county didn’t just kill the road outright. Another county council can take the road out of the freezer and thaw it out. They have a lot of support Downcounty but it’s more diffuse pro-environmentalism rather than opposition to this particular project. Can they rally people beyond the small set of usual suspects to oppose the road?

A more likely strategy is that environmental and smart growth groups endorse against pro-M-83 candidates but mention other more compelling issues or general concerns about climate change in their messaging to voters.

Time to Get Off the Pot

While Riemer presents the resolution as a compromise that leaves all unhappy, another way to see this decision is that they decided not to decide. Often, waiting is a good decision. In the case, however, it has the strong whiff of kicking the can down the road to no purpose as the major fact we can expect to change is that traffic will get worse.

The “solution” that our elected officials voted for is really no solution at all. If councilmembers are against the road for whatever reason–the environment, smart growth, the lack of funds–they should just tell the people by killing it. Similarly, supporters should demand a resolution that actively prepares for it and be ready to explain how they will fund it.

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2018 Governor's Race

Van Hollen to Endorse Baker for Governor

Sen. Chris Van Hollen is set to endorse Prince George’s County Executive Rushern Baker for governor tomorrow.

During the 2016 Democratic primary, Baker took heat from some corners for endorsing Van Hollen over then-Rep. Donna Edwards in the hotly contested Senate race. Like Baker, Edwards is African American and from Prince George’s. Baker’s bet has now paid off handsomely with Van Hollen returning the favor and endorsing him early for governor in a large field.

This is a big endorsement for Baker, as it gives him an entry to new areas of the state. Critical to making use of any endorsement, however, is an ability to take advantage of it by communicating it to voters along with other reasons to vote Baker. Putting that together will require money and a good campaign team.

They seem off on the wrong foot. I don’t know why they’ve chosen to go big with this major endorsement on the Friday before the Virginia elections. Still, Baker will have plenty of time to tout Van Hollen’s support, which will be more valuable if Van Hollen is game to introduce him publicly, cut commercials, or connect him with major donors to political campaigns.

Here is the Baker campaign’s press release:

TOMORROW: U.S. Senator Chris Van Hollen to Endorse Prince George’s County Executive Rushern L. Baker, III to be Governor of Maryland

Upper Marlboro, MD –  Tomorrow, U.S. Senator Chris Van Hollen will announce his endorsement and support of Prince George’s County Executive Rushern L. Baker, III for Governor of the State of Maryland at 11:00 a.m. during a media event at the Wayne K. Curry Sports and Learning Center, 8001 Sheriff Road, in Landover, MD.  During this endorsement event, Senator Van Hollen and County Executive Baker will also address the impact and consequences of Republican attacks on and changes to the Affordable Care Act (ACA).

“I am proud and honored to have the endorsement of Senator Van Hollen for my candidacy as Governor,” said Baker.  “I have known and worked with Chris for nearly 30 years and am proud to call him not only a colleague but a friend.  Chris’ sterling reputation as a budget and policy wonk is only matched by his compassion and dedication to his constituents in Maryland.  Chris was an incredible Maryland State Delegate, Maryland State Senator,  Congressional Representative, and, now, as our U.S. Senator, he is fighting every day on Capitol Hill for the issues and concerns of every Marylander.  I thank him for his endorsement and am confident that as Governor of Maryland, we will accomplish so much for the residents of this great state.”

WHAT:
U.S. Senator Chris Van Hollen Endorses Prince George’s County Executive Rushern L. Baker, III to be Governor of Maryland

WHEN:
Friday, November 3, 2017, 11:00 a.m.

WHERE:
Wayne K. Curry Sports and Learning Center
8001 Sheriff Road
Landover, MD

Note: I have mentioned it previously but wanted to remind readers that I am supporting Rich Madaleno for governor.

 

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Maryland Politics Watch