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  February 17, 2017

TRNN Replay: The Real Baltimore: Should Baltimore Raise its Minimum Wage to $15/HR by 2022?

In the fourth episode of The Real Baltimore, we examine a bill that would raise Baltimore's minimum wage to $15/hour by 2022, with council people Mary Pat Clarke, Marc Elrich and Carl Stokes
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KIM BROWN: Welcome to the Real Baltimore. I'm your host, Kim Brown.

Proponents say that it's one of the best ways to tackle historic inequality, and opponents say that it will hurt businesses. Whether you agree or not, the Fight for 15 movement is back on the scene in Baltimore, and across Maryland, in a big way this week. On Monday, February 4th, a bill was introduced into the city council that would set a $15 minimum wage in Baltimore, by the year 2022.

And then on Tuesday, in the state capital of Annapolis, the powerful Economics Matters Committee held a hearing of HB 317, a bill that would prevent cities in Maryland from doing just that. It's a pre-emption bill that would take away the power of localities to establish the minimum wage.

In a moment, we're going to be joined by our esteemed panel, but first our reporter, Jaisal Noor, has been covering developments in this story.

JAISAL NOOR: The Baltimore City Council introduced a $15 minimum wage bill on Monday. Councilwoman Mary Pat Clarke introduced the measure, which is also being supported by Council President Jack Young.

MARY PAT CLARKE: Baltimore City is finally setting out to correct the injustices, which have kept our city divided for generations. High on the agenda must be to close the growing economic gap between the haves, and have-nots, in our city government, and private sector work forces.

JACK YOUNG: I have a few calls a day with some business people who were not happy about my stance. But we can't have it both ways. This is a compromise bill, and I'm looking forward to moving this bill through the Council, making sure that we get this thing done, and maybe the state will follow the city once again. Thank you.

JAISAL NOOR: A measure for a $15 minimum wage fell short in 2016, but this measure has received broader support with a major concession: small businesses with fewer than 50 employees wouldn't reach a $15 wage until 2026. The bill would also not apply to workers under the age of 21. Several new council people supported the measure, including Shannon Sneed of District 13.

SHANNON SNEED: I'm here to support Maryland working families. I'm excited that it's coming to the Labor Committee, and so we look forward to talking about it there.

JAISAL NOOR: Baltimore is a city marked by pockets of wealth, contrasted with large swathes of disinvested communities, that advocates say was a product of intentional policies, like redlining, and mass incarceration.

Mayor Catherine Pugh's office said they have not taken a position on the bill, but it already has 10 co-sponsors. If 12 members back it, it would have a veto-proof majority.

KIM BROWN: We invited several members of the business community, and opponents of the $15 minimum wage, to join us for this discussion, but they all declined.

But now, we're joined with our panel in the studio. I'd like to introduce Marc Elrich, of the Montgomery County Council. He is an at-large member there. He's also a leading proponent of the $15 minimum wage in Montgomery County. We're also joined by Councilwoman Mary Pat Clarke, who's been a long time member of the City County, here in Baltimore. She introduced the $15 minimum wage this year and last year. And we're also joined by Carl Stokes, he is a former City Council member who abstained from voting on Baltimore's $15 minimum wage bill.

On that note, Mr. Stokes, I'd like to start with you, because you came out in opposition of this bill initially, at least last year, when it was introduced to the City Council. And, but it looks like it could pass, not only Baltimore, but Maryland in the year 2017. That is, could be a moot point if the Annapolis bill is actually passed to curb localities raising the minimum wage. But give us your thoughts about the $15 minimum wage for the city, and for the state at large.

CARL STOKES: I think it's a good place to be for the greater majority of the workers in the city, and around the state, as well as the nation, frankly. I didn't think that the bill that we had in the previous council was quite vetted enough. It cut out most of the people that could benefit, in other words, about 80% of workers would not have benefited from the $15 an hour minimum wage.

KIM BROWN: Because of the small business exception, is that what you're referring to?

CARL STOKES: Absolutely. I still feel somewhat uncomfortable this year. It's a compromise that's going to work with my former colleague and others, but I still feel a little... you know, because it's going to be nine or ten years before most of these workers actually get the $15, and you know what? The cost of living will get to that on its own. They won't need a bill to get to $15 an hour, I see.

Most of the children of these working families will be grown, and working themselves by the year 2026, frankly. I just think that too much has been given back, to be honest with you. That was my concern a year or so ago, that we really were telling the workers, here's where we're going with this. But in fact we really weren't going there quickly enough to benefit the greater majority of the workers.

KIM BROWN: Councilwoman Clarke, you were spearheading this effort in the City Council. What's your response to what Carl Stokes had to say?

MARY PAT CLARKE: Quickly enough seems to be the argument I'm getting more and more. Not... I'm against it because it doesn't come fast enough, $15 doesn't get here fast enough. Believe me when I tell you, that we have done our best to move it up. And this is where we have arrived, that 2020 was the original goal, 2022, it was the goal for employees of businesses in Baltimore, with 50 or more... businesses with 50 or more employees. It was never cutting out 80% of the workers. It was cutting out 26% of the workers who worked for 83% of the businesses.

Most of Baltimore's businesses are small. And so, the majority of businesses will be on the longer schedule, 'til 2026. But the majority of employees work for the big guys, and so 26% of the employees will have to wait to get to 15, to 2026. But at least it'll be an ease-in, and it'll be 60 cents more an hour a year until they get there, so it shouldn't put anybody out of business. Our smaller businesses should be able to handle that kind of predictable increase. Our big guys, we want to get there by 2022 for their employees.

KIM BROWN: Councilman Marc Elrich, from Montgomery County. The measure to pass $15 minimum wage in your county, was vetoed by county executive, Ike Leggett. And I know that you were also spearheading the effort to raise the wage there. What were your thoughts about what the executive did, in terms of vetoing the bill, but also does it stand a better chance of passing this year, in your opinion?

MARC ELRICH: Well, we will get something passed. The executive has said that he will pass a bill, and that he disagreed with some of the things in the bill, but not the principle of reaching 15. So, our debate is, when do you get the 15, and who goes to 15, at what speed?

My frustration is even more with my colleagues, than with the executive, because if we had six votes on the Council instead of five, we'd have overcome a veto, and we would have been done. And for the nine months that the bill's been out there, they made not a single suggestion about how to amend the bill that would get their support.


MARC ELRICH: And it's like dealing the Republican Congress. It's like, we want to study, we want to study. It's like; in the first place, you can't study what's going to happen, and how businesses are going to adjust. And if you talk to the business community privately, and say we know you can't study that, so they're asking for a study that doesn't mean anything. They wouldn't put anything on the table.

We amended our own bill. We put in an off-ramp for the executive in the case of a recession, because he wanted that. We said businesses of under 25 could go until 2022. We were looking for ways to accommodate, and so we took what we heard and tried to put it in the bill. And we still couldn't get support from our colleagues, and they still wouldn't put amendments on the table. That's a frustrating way to do business.

KIM BROWN: Indeed. And I wanted to say that we actually did reach out to an economist. After we taped this segment, we reached out to Jeannette Wicks-Lim, who has extensively studied the economic impact of the minimum wage.

The Greater Baltimore Committee, a group whose mission includes promoting business interests in the region, issued a press release opposing the proposed minimum wage hike. The President and CEO, Donald Fry said, "If passed, this bill would place Baltimore City at a serious competitive disadvantage. It has the potential to result in job losses and businesses leaving the city."

We spoke with Jeannette Wicks-Lim who is an assistant professor at the Political Economy Research Institute in Amherst, Massachusetts; who has studied the impact of minimum wage hikes in a variety of cities -- including Santa Fe, New Mexico, which was one of the first cities to pass a large minimum wage increase. Which went into effect in 2004: going from $5.15 to $8.15 an hour over the course of a year, which is a 65% wage jump. University of Kentucky economist Aaron Yelowitz, noted a higher unemployment rate, but when Lim looked at that data she found something else.

JEANNETTE WICKS-LIM: In Santa Fe, using the same data, because there are two ways that the unemployment rate can go up. It can be either that there are fewer jobs. So, there are a lot of people looking for jobs and there are fewer jobs for them to take; or, there can be the same number of jobs, or more jobs, and many more people looking for jobs.

So, both things can be, you know... The unemployment rate can go up for those two different reasons. Now, if you are finding that more people are looking for jobs, and the employment level is not going down, then that's actually a sign of a healthy economy. You've got people entering in the workforce because they're confident they can find some new job that will satisfy their needs.

So, what we found was, when we looked at Santa Fe's experience, we did see that there was an increase in the unemployment rate, but we also found that there was no impact on employment.

In other words, the driving force seemed to be that more people were looking for work. So, you know, one aspect of increasing Baltimore's citywide minimum wage will likely be that more people will see job opportunities in the area as good job opportunities, and they'll be looking for work.

Whereas, in the past they may have thought, you know, if the job quality is not very good, I'm going to look for work elsewhere. Or, I can't afford this job because it costs so much for me to get to work, and I'm not getting paid enough.

So, at least in that example, one of the examples where we do have concrete data on a minimum wage hike, that's comparable to what Baltimore is considering, and actually is a stronger minimum wage hike than what Baltimore is considering -- we don't see evidence of businesses fleeing to the extent that there is a negative impact on employment.

KIM BROWN: Lim adds, data on decades of the minimum wage increase have not found negative effects on employment.

JEANNETTE WICKS-LIM: We just don't find any significant negative employment effects. So, in that sense, it seems like businesses find lots of ways to adjust to minimum wage hikes. And so, that workers are able to benefit from having higher wages, having higher earnings, without experiencing job losses that offset that positive effect.

KIM BROWN: That was Jeannette Wicks-Lim from the Political Economy Research Institute.

KIM BROWN: So, Councilwoman Clarke, I wanted to ask you about the argument that comes from the business community, especially from the restaurant community, that says that if Baltimore moves forward with this $15 an hour minimum wage, that we will leave the city. "We will take our jobs and go to the county." What is your response to that?

MARY PAT CLARKE: Well, my response is, that one of the President of the City Council's amendments, was to remove tipping increases entirely. And that bill's online, and has been, so if they're talking about the tipped workers, this bill doesn't touch them in any regard. And then, I think, the rest of the bill, with other employees, would fall under either small business or large business standards, but if they've got 50 or more employees in a restaurant, I would hope they'd be able to pay the schedule 'til 2022 to get to 15.

You know, everybody's going to have to contribute to this effort. This is a community-wide effort. This is not like some idea that we just came across. The problem is the inequity, and the gap, in our society, and most especially in Baltimore City, between the highest earners and the lowest earners. It's an unacceptable gap, if you want to move forward in justice, in accord, as a community.

And so, what we can do is, we're not going to be Robin Hood and steal from the rich, but we are going to try to raise up the working poor of Baltimore City –- 98,000 residents of Baltimore who work in Baltimore -- will immediately be helped by the raises that come into effect. They are way, way underwater, and tired of working for nothing.

KIM BROWN: Carl, you know, some of the opponents to the minimum wage increase in Baltimore City, argue that Baltimore would become an island. Right? Baltimore would be isolated with this, higher than the rest of the state wage, and that would disincentivise businesses to come to the city. And also somewhat disincentivise people from moving to the city, because Baltimore City does have very high property taxes, after all.

So, what do you say to that? I mean, sort of contrasting what Councilwoman Clarke says, this is about trying to elevate the working poor of Baltimore, but do you disincentivise businesses moving here, is that a fair trade-off?

CARL STOKES: Well, it's not totally. Obviously the working poor need a sustainable salary for themselves and their families. There will not be any businesses that will close. I think that it is a disincentive for new businesses to move in to the city. I absolutely believe that. Yet, the city is a very expensive place to live, as well as to do business. As you mentioned, the high property taxes, the high business taxes, the high phone taxes, we can go on. And this will add to the cost of doing business.

Listen, the big guys –- as my former colleague says, Mary Pat Clarke says –- will be able to absorb this, not that they won't raise rates, even if they can absorb it. But this is the awling portion of it all, that people who are here, the small businesses who will, over time, have to incur this, you will find that their margins are not huge now.

People who are in business, for the most part, other than the mega-businesses, make a salary that takes care of their family and their day-to-day living. They don't make million dollar salaries. A guy who runs a hardware store, or a lady who runs a restaurant, is getting $60 thou... she's making maybe, middle income. That's it. They're not taking a lot of money out of those businesses. They can't afford it. So, it is going to impact all businesses.

No one's going to close their doors. I think there will be some adjustments, in terms of costs, of goods and services, no doubt about that. So, that’s where the island comes in, I think, in Baltimore; that you will see some slight increase of prices, and you'll see other folk not running into Baltimore City to open new businesses.

That is bothersome. But I weigh it against the fact that folk need to earn a living that'll allow them to sustain themselves and their families.

KIM BROWN: Marc, in Montgomery County, obviously coming from a different economic perspective than Baltimore City -- I mean, Montgomery County is among, if not the wealthiest county in the state -– so, I'm curious, what industries, which businesses, or which opponents, of the minimum wage were pushing against your attempts to get this $15 an hour hourly wage passed?

MARC ELRICH: Well, first thing I'd say is, understand Montgomery County, we have more kids on family-reduced lunch, than the city of Washington has in their entire school system. We've got severe pockets of poverty in our county, and you can track our poverty with low educational levels. You can track it with crime levels, you can track it with all the things that you would track any place else. Is it as severe as Baltimore? No. But do we have plenty of it? We have plenty of it.

The opponents of this have largely been the restaurant industry, the hotel industry, which is not fond of... you know, thinking that the people who make the rooms and all that, should make decent money, no matter how many handouts they get from Montgomery County and the State of Maryland.

We've gotten pushback from our disability folks because we guar... and this is where the Executive had one of his biggest concerns, we subsidize our disability providers so they can pay 125% of minimum wage. He was told that the bill would come to about $22 million a year when it was fully implemented, and that to him is a budgetary question. So, how we handle our disability providers is an issue.

And then there are independent providers who compete with unlicensed people, to serve the elderly, and provide somebody who's going to be in your house all day long, and help you cook meals, and make sure you're taken care of. And they are on slimmer margins. And the adults they deal with often are... these are the elderly, who are obviously not working, so they're on limited incomes often.

So, that's the big pushback. But the business community unites, regardless of whether they're affected by this or not. I mean, most businesses in Montgomery County pay far more than $15 an hour, and they still oppose it. They won't... it's like, it's just like they've got an allergy to the government saying anything, and that's a problem.

In my mind, and to the issue of...

CARL STOKES: That's true. I know of no business that pays minimum wage as we speak. I don't.

KIM BROWN: Really?

CARL STOKES: I'm a small business guy. I know of none of my friends, whose business, who pay minimum wage. They say it's a waste. It hurts the... they lose money on hiring people for $7 or $8, because they're leaving as soon as they can, and then they have to retrain someone else, spending money. They'd rather hire people at $10, $11, and keep them.

MARY PAT CLARKE: Which is above the current minimum wage. Well, amen. We're about to give them a whole bunch of people to hire. We're going to give them a world of people that they can settle down and will not keep changing jobs.

CARL STOKES: I understand. Good bless you...

MARY PAT CLARKE: ...and, they'll spend the money they're making where they live. Not where... not some place at some mall somewhere.

CARL STOKES: Yes, absolutely, we agree; my colleague, our colleague. I say former, but you know...

MARY PAT CLARKE: Well, we're all colleagues, Carl.

CARL STOKES: We're all colleagues. At least we're that. At least we're that. So, my colleague from Montgomery County said something that many of our business people in Baltimore do say. I'll pay them. I just don't want you telling me how much to pay them.

MARY PAT CLARKE: Well, then pay them now, and we won't have to.

MARC ELRICH: We won't have to do this.

CARL STOKES: God bless you.

MARY PAT CLARKE: It won't mean a thing. If they start paying minimum wage of $15 now, we will pass a law for everybody else, but it won't affect them.

CARL STOKES: What about this escalate –- I don't know if that's the term they use –- so, let me...

MARY PAT CLARKE: Compression...

CARL STOKES: What is it they call...?

MARY PAT CLARKE: Compression is what they call it, and it is one of the... one small... one of the arguments...

CARL STOKES: ... speak to it, because... because, let me be politically incorrect.

MARY PAT CLARKE: Let's say we tell people what it is...

CARL STOKES: ...and say...

KIM BROWN: Yeah, please, please...


MARY PAT CLARKE: Yeah, let me say what it is, and then you can say something wrong about it. Compression is the, "Gee whiz, I'm a supervisor, and my... the incoming labor force just got $15 an hour. Well, heck fire, I'm making $18. I should have more, because I'm supervising these $15 people." That's compression.

CARL STOKES: Right. So, I'm making this salary right now. It may be $15 an hour. I'm in charge of folk making $10 an hour, $11 an hour. You're going to give them a $4 an hour raise to what I'm making now, $15. Shouldn't I get a $4 an hour raise? That's what they're calling compression.

KIM BROWN: I guess so, Mr. Stokes, but at the same time I mean...

CARL STOKES: ... I'm not...

KIM BROWN: ...but Baltimore City is not talking about arriving to $15 an hour, until the year...

MARY PAT CLARKE: Until 2022...

KIM BROWN: So, by that time...

MARY PAT CLARKE: By that time, they'll be underwater.

MARC ELRICH: Inflation applies to everything but wages. They pay higher rents, they pay higher utility prices, they pay higher... if you're in the food service, you pay more for chicken, more for tomatoes. The only thing they can't adjust to, apparently, is paying more for wages. And it's just absurd.

MARY PAT CLARKE: In Baltimore, with 10.10, which is the highest that the state of Maryland's minimum wage is ever going to go, it stops there at 10.10. A single parent household, with a regular budget that we've documented, ends up, minus $7,286.37 underwater for the year, for paying the bills while working full time, person at 10.10. A two-parent, two-job family at 10.10, the state's maximum, is minus $5,072.97 a year, from what they're earning. And a single worker does the best of all: she's only $2,852.13 underwater.

In other words, there's no way out of it. They work full time, their earning's at minimum wage, and they have to pay the gas bill, they gotta pay the rent, they gotta buy some groceries. They gotta get a couple of pairs of shoes for the kids. And it's a budget that we put together and documented, that they are that far underwater every year. This... we can't live in this city as a community, and call it a community, if we have disparities like this from working, hard-working people.

And about those hotels, we built those hotels, and we got a UDAG grant to get that one, you know, that Hyatt going. And we expected those jobs to be, at least to have labor peace, and to let people unionize. And, yeah, they have now, because the whole chain did, but we had to picket and everything else, to make it happen. Sure, the city-owned hotel is unionized, yeah. But look around at all that we've tiffed ourselves into, and do they pay a decent wage? And do they have good working conditions for people? I mean, no.

And that's what... and we invested in the infrastructure, and in individual projects, to provide decent –- not manufacturing level –- but decent jobs for Baltimore's people.

KIM BROWN: We're going to leave it there for part 1, right there. We've been speaking with Councilwoman Mary Pat Clarke, Montgomery County at-large, Councilman Marc Elrich, and of course former Baltimore City Councilman, Carl Stokes. Stick around. This is part 1 of the episode of the Real Baltimore.

In part 2 we will look at Maryland House Bill 317 that would prevent any city, or county, in the state of Maryland, from raising their minimum wage independently.

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