Business Lobby Fails to Sway City Council As $15 Min. Wage Measure Advances

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  March 2, 2017

Business Lobby Fails to Sway City Council As $15 Min. Wage Measure Advances

With mounting evidence raising the minimum wage does not hurt business or employment, Baltimore is getting closer to a $15 minimum wage by 2022
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JAISAL NOOR: Intense lobbying efforts by some members of the business community failed to halt the advancement of a measure that would establish a $15 minimum wage in Baltimore by 2022, with exemptions for small businesses that would reach 21, by 2026, and workers under 21.

A $15 minimum wage measure failed last year, but this year it has the support of the majority of the new city council, and on Wednesday made it out of the Labor Committee by a vote of four to one. The full council, to hold an initial vote on the measure as early as next week, and it could soon be on Mayor Catherine P's desk.

Last week HB317, a state measure, pushed by Democrats, that would block localities like Baltimore from raising the minimum wage, was reportedly dead in committee, after facing widespread opposition. The Mayor's office has not yet indicated whether she will sign a $15 minimum wage measure.

Stoked by the national, Fight for 15, movement -- $15 an hour minimum wage increases have been passed by a growing number of cities and states across the country. It has increasing support in Baltimore, with a poll commission by SCIU, conducted by the Mellman Group, found over 80% of residents surveyed in favor of the measure, with only 11% opposed.

Baltimore's stark economic reality laid bare by the uprising after the death of Freddie Grey, in police custody, has an increasing number of residents arguing for a new approach to tackling the city's systemic inequity. According to a 2015 White House study, Baltimore has the worst social mobility for those growing up black and poor in the country. Finding, every year a child of low-income family lives in Baltimore City, reduces their adult earnings by .9%.

According to the Economic Policy Institute, a $15 minimum wage could lift tens of thousands of people out of poverty. Some small business owners testified in favor of the measure, including Jacqueline Jones, the owner of Sugar, a retail store in Baltimore.

JACQUELINE JONES: As a business owner, I'm strongly in support of raising Baltimore's minimum wage to $15 an hour, raising people to a level where it's possible for them to afford their basic needs -- increases the likelihood that they would have disposable income, and choose to spend some of it at local businesses, and perhaps at mine. It is in the best interest of any business, to ensure that their employees are to meet their own basic needs.

This is also a matter of ethics for me. I may be old-fashioned, but I believe that I should not be relying on government subsidies, to stay in business. If I am paying my employees at a level where they are relying on food stamps to eat, and section 8, for housing, the government is picking up the tab on my substandard wages. That's not an ethical business, that's stealing from the taxpayers.

JAISAL NOOR: But some say that raising the minimum wage could hurt those it aims to help. These include John Danko, President of Danko Arlington, and Donald Fry, President and CEO, of the Greater Baltimore Committee.

JOHN DANKO: We're manufacturers in Northwest Baltimore, and we make custom components for the Department of Defense. We compete nationally as a low bidder, so the 15 an hour wage bill is of great concern for us, 'cause we feel we won't be able to compete with other states that have wages that they pay journeymen at 15, while we'll have to start unskilled employees at 15.

So, one-third of our company is ex-offenders. We also hire immigrants, and refugees. We take great pride in teaching skills. We actually start at 11 an hour. And most of our employees are at over 15 -- but we add that training. And if the wages are going to start at 15, we don't feel we'll be able to recoup the investment in the training at $15 an hour.

DONALD FRY: And we oppose that legislation, not because we are disrespectful of the fact that people need more income. But to do it in Baltimore City, Maryland, would place the city at a competitive disadvantage. Surrounding jurisdictions will not have that minimum wage level. As a result, you can possibly see businesses relocate outside of Baltimore City. You see businesses not expand their operations in this city.

So, Baltimore already has challenges by having a higher tax rate, it also has higher property tax rates, also has a higher cost of doing business. So, this just would be another disadvantage, for the City of Baltimore to increase jobs and also see business expansion. So, obviously tonight's the hearing for the committee. I think we may be making a good case as to why does put the city at a competitive disadvantage.

It also highlights the fact that you may be hurting some individuals, that you're actually trying to help, because you could find that those individuals are displaced by other employees, who would work in minimum wage jobs in the surrounding jurisdictions, but would come to Baltimore City to make the additional money.

The other cities don't have the same ecosystem that Baltimore City has. A place like Seattle, or even Washington, D.C. does not have the same type of industry sectors, doesn't have the same demographics as Baltimore City does, and that nature. So, you can't compare one to the other.

JAISAL NOOR: Arguments by a business community that raised the minimum wage in a city with neighboring localities, with a lower wage, would hurt businesses and job prospects, aren't resonating with city council people. Mainly because they haven't come to fruition in other cities that have raised their minimum wages, say two advocates who have studied the impacts.

David Cooper, Senior Economic Analyst at the Economic Policy Institute, and Laura Huizar, staff attorney for the National Employment Law Project.

DAVID COOPER: Well, most of the research that's been done on impacts of the minimum wage, have looked at what the impacts have been in all kinds different geographies. Not just these high income cities, and the overwhelming conclusion of that literature is that minimum wages do what they're intended to do, they raise the wages of low wage workers without having negative effects on the employment of those workers. They achieved exactly what they're intended to achieve.

And there have been other cities that are not that dissimilar to Baltimore, that have enacted ... (background noise) ... the closest example is Santa Fe, which raised its minimum wage 65% above the state of New Mexico's minimum wage, and they only saw positive outcomes from that increase.

The one that is kind of interesting, that's novel here, is this notion that if the city were to raise its minimum wage, that suddenly there'd be this flood of workers from the suburbs that would come in and take all the jobs. And I think that that's just not a realistic assumption to make. Because if it were actually the case, that workers were suddenly leaving jobs in the suburbs to all come to the city, well, then employers in the suburbs would have to raise their wages in order to attract and retain staff.

And when that happens, the difference between the pay outside of the city, and inside the city, is going to start to look very much the same, and the cost of commuting is not going to be worth it.

LAURA HUIZAR: Well, at this point, we see that the Fight for 15 has gotten wage increases for 19 million workers around the country, in places like California, for example. You have rural cities and counties, also increasing their wage to $15, along with bigger cities like San Francisco. And so we know from the economic evidence that's accumulated over the years, that you can increase the minimum wage, without a significant impact on employment.

And it's not just cities on the coasts that have have adopted increases, we have cities like Santa Fe, St. Louis, Missouri, Johnson County, Iowa, Flagstaff, Arizona, and many others that are also increasing their wages.

JAISAL NOOR: Fry, who's also helping the efforts against the bill, says the fight isn't over.

DONALD FRY: Well, yeah, I think the Mayor, as we know has talked about the importance of increasing the minimum wage at the statewide level. Now she's in a position where she has to look at it from a citywide perspective, being the chief executive of the city.

We'll wait to see what the outcome of the city council legislation is, what the actual final product is, and then I'm sure they'll have an opportunity to talk to the Mayor at that time.

JAISAL NOOR: From Baltimore, this is Jaisal Noor.


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