New year brings raise for minimum-wage workers, in final phase of voter-approved plan

December 31, 2019

Tens of thousands of Maine workers will get a $1-per-hour pay raise Wednesday as the final installment of a voter-approved referendum that increased the state’s minimum wage by 60 percent over four years.

On Jan. 1, Maine will join a handful of states requiring businesses to pay most workers at least $12 an hour. This marks the fourth annual increase in Maine under a 2016 ballot measure that aimed to address years of wage stagnation that left the state’s minimum at $7.50 an hour.

Critics, however, say the measure that raised the minimum wage $1.50 an hour the first year and $1 an hour since then has gone too far, too fast for small businesses in a rural state.

“There is a cumulative cost increase that is creating a lot of pressure on business owners,” said David Clough, Maine state director for the National Federation of Independent Business. “And it is going to pulse through the economy even more in 2020.”

Meanwhile, supporters contend that even $12 an hour is not a “living wage” for many Mainers, especially those who have families with small children. Even so, they said the compounded impact of a steadily rising minimum wage – along with annual increases tied to cost of living going forward – has helped thousands of families.

“All of the predictions of minimum wage (increase) proponents have actually been exceeded,” said Mike Tipping, spokesman for the Maine People’s Alliance, a progressive advocacy group that led the 2016 referendum campaign. “Not only have we seen record employment, business growth and rising wages, but we’ve also seen some of the biggest decreases in child poverty in the state.”

About 8 percent of Maine’s 679,000 workers earned at or below minimum wage in 2018, according to available state labor data. The Economic Policy Institute, a national left-leaning nonprofit focused on issues affecting lower- and middle-income workers, puts that figure much higher, estimating 102,900 workers in Maine will directly benefit from the 2020 wage increase because they currently earn less than $12 an hour. That will translate into a pay jump of $1,266, on average, for those workers during the year, according to the analysis.

Nationwide, nearly 7 million workers in 22 states will see their pay increase because of changes in the state or local minimum wage, the Economic Policy Institute reported.

Maine’s minimum wage held steady at $7.50 an hour – just 25 cents above the federal minimum – from October 2009 until January 2017. After years of being unable to get a wage increase through the Maine Legislature and around Republican Gov. Paul LePage, advocates followed through on their threat to take the issue directly to voters.

In November 2016, nearly 56 percent of voters supported the ballot initiative to raise Maine’s minimum wage to $12 an hour by January 2020. While lawmakers subsequently changed the law to allow restaurants to continue paying tipped workers a lower hourly wage, Democrats rejected repeated attempts by LePage, business groups and Republican lawmakers to slow down or even scrap the overall, multiyear increase.

The Maine Center for Economic Policy, a left-leaning policy organization that advocates in Augusta, estimated that an additional 68,000 workers will indirectly benefit during 2020 because their employers will increase wages that are now at or close to $12 an hour.

James Myall, a policy analyst with MECEP, said that after so many years without an increase, the $12 wage is simply “correcting for that lag.”

“When workers with low incomes have more money in their pockets, the entire economy benefits,” Myall said in a statement. “Workers in low-paying jobs tend to spend any increased income on the basics – things like food, clothing, child care or utilities. That kind of consumer spending goes right back into the local economy, supporting local jobs and spurring further growth.”

But some businesses say the surge from $7.50 to $12 an hour over four years has undoubtedly pinched – or gut-punched – their finances at a time when other costs also are rising.

Last March, dozens of business owners testified in support of several bills – all of which ultimately failed to pass – that proposed different ways to reduce the cost of the minimum wage referendum. Some bills proposed the creation of a youth or “training wage” that would allow businesses to pay less than $12 an hour to high school-aged students, while another measure sought to give businesses in rural areas more time to get to $12 an hour.

Among those who testified was Beth Francis, whose family owns The Storekeepers, a small convenience store, gas station and takeout food market in the western Maine town of Hebron.

In an interview Monday, Francis said she and her husband have been forced to increase prices and scale back on the number of hours they are open because of the higher staffing costs. Their workforce also has shrunk from seven to five because of attrition. And many of their vendors have reduced staffing as well, impacting their customer service.

Francis, who had supported a bill to create a lower youth wage for students still attending high school, said adult workers carry more responsibility because minors cannot sell beer or cigarettes, work alone or open/close the store. In the past, they were able to offer adult workers an additional $2 to $3 an hour but not anymore.

“We’re struggling to stay afloat,” Francis said. “We’ve been here a long time and it’s not like we are rolling in dough … but it’s not easy anymore. It’s not fun and it’s not easy. I hope Augusta hears this and does something.”

Clough, with the National Federation of Independent Business, said it’s unrealistic to expect a rollback of the minimum wage now. But he said advocates need to be cautious as some people push nationally and in Maine for a $15 minimum wage.

“It’s going to be very important going forward in the immediate future to do no additional harm, and that’s not just for the minimum wage,” Clough said.

Supporters plan to continue defending the framework of the 2016 law, including the provision that ties Maine’s minimum wage to rises in inflation.

“What we can absolutely say is it didn’t cause any of the terrible things that opponents predicted,” said Tipping with the Maine People’s Alliance.

Tipping said his organization will be pushing during the 2020 legislative session for an overtime-related bill and to better protect whisteblowers who are calling attention to wage theft and other labor fraud.

MECEP’s Myall said he certainly wouldn’t discount the experiences of individual businesses as they struggle with the wage increase mandates. But he said Maine has not seen the widespread negative impacts that some predicted before the 2016 referendum vote and in the legislative debates that followed.

“As far as I’m aware, there no is immediate push for a $15 minimum in Maine,” Myall said in an interview. “The increase to $12 is going to help a lot of people who are currently making poverty wages, but we know it’s not sufficient for many folks.”