A study commissioned by a pro-business group in Maryland warns that raising the state’s minimum wage could lead to thousands of job losses, increase the price of consumer goods and weaken the state’s competitive position.
The study was released Monday on the eve of a legislative hearing in Annapolis at which Gov. Martin O’Malley (D) plans to urge lawmakers to pass a bill to raise Maryland’s minimum wage from $7.25 an hour to $10.10 by 2016 and peg future increases to inflation.
Stephen S. Fuller, an economist at George Mason University who conducted the study, said at a news conference that doing so would trigger “a long series of consequences.” He was joined by several business owners who predicted they would hire fewer workers and close locations if the governor’s legislation passes.
The event was put on by the Maryland Foundation for Research and Economic Education, which commissioned the study, and it offered a preview of some of the arguments that will be aired at a hearing Tuesday before a House of Delegates committee. A Senate panel plans to hear testimony on the issue on Thursday.
O’Malley has argued that an increase in the minimum wage is overdue and that “when people work hard and play by the rules, they should be able to move their families forward.” Most other leading Democrats in the state also support an increase of some amount and have argued the action would help working families.
Several recent national studies have produced findings that run counter to the report released Monday. A study released a year ago by John Schmitt at the left-leading Washington-based Center for Economic and Policy Research, for example, found “little or no employment response to modest increases in the minimum wage.”
Fuller said that he and his team found that people under age 25 account for about 60 percent of the minimum-wage workers in Maryland who would receive the greatest direct benefit from an increase.
Fuller projected that raising the minimum wage to $10 an hour would result in the loss of 11,502 jobs. He said his analysis does not take into account the recent actions in Montgomery and Prince George’s counties to raise the minimum wage in those jurisdictions to $11.50 an hour by 2017.
David J. Norman, president of DavCo, which operates more than 150 Wendy’s fast-food restaurants in the region, said that he anticipated having to close 10 to 15 locations in Maryland if forced to pay a higher wage at the same time the company is facing increased health care costs under the new federal law.
Larry Stottlemyer, founder of Adventure Park USA in New Market, said he would not be able to hire as many teenagers to work at his amusement park if the minimum wage increases. “I just can’t absorb that kind of money,” Stottlemyer said.
Tuesday’s hearing is also expected to draw a slew of supporters of a higher minimum wage, including union members, clergy and a group of business owners that argues putting more money in the hands of low-wage workers would strengthen the economy.
The Maryland Foundation for Research and Economic Education, which commissioned the study released Monday, is the research arm of Maryland Business for Responsive Government, a nonpartisan group involved in state issues.