Maryland’s minimum wage was one of many that increased at the stroke of midnight on New Year’s Eve, in the first of a series of raises that will eventually push the state’s pay floor above $10 an hour.
Under legislation approved last summer, Maryland’s minimum hourly rate increased from $7.25 to $8.00 on the first of the year, and it will increase again to $8.25 in July. The minimum will tick up several more times over the next three years, reaching $10.10 in 2018.
One of the Obama administration’s top domestic priorities, efforts to boost the minimum wage have polarized employers and policymakers across the country — and the same holds true in Maryland, where business leaders are split on how the change will effect local companies in the new year.
On one side of the debate, employers say lifting the minimum wage simply increases the cost of doing business. Jessica Cooper, the Maryland state director for the National Federation of Independent Business, a small business advocacy group, said business owners in the state will be forced into “some really tough decisions” as a result.
“For many, the options come down to increasing prices, hiring fewer people, cutting hours or benefits, or possibly cutting staff,” Cooper said. “This year, companies are going to have to make those decisions not once, but twice.”
She added that Maryland businesses that employ young workers and other typically low-wage employees will likely be the hardest hit, though the effects will likely be felt by other companies as higher paid workers demand a bump in their paychecks, too.
“I think a lot of Marylanders forget about those domino effects,” Cooper said.
In the other camp, some businesses say the move will put more money in consumers’ pockets, which they hope will translate into more customers and higher sales numbers. The Chesapeake Sustainable Business Council, a local group that promotes sustainable business policies in the District, Maryland and Virginia, has applauded the move, citing estimates from the Federal Reserve Bank of Chicago that the change will spur an additional $1 billion in consumer spending over the next couple years in Maryland.
Maryland’s employers aren’t alone, either. Owners in nearly two dozen states woke up to higher minimum wages on Thursday. For the first time ever, more than half of states now have wage floors higher than the federal minimum, which remains at $7.25 an hour.
District business owners will see the city’s minimum hourly rate, which rose from $8.25 to $9.50 last July, climb to $10.50 this July. Next year, it will increase again to $11.50, after which it will be indexed for inflation. Virginia, meanwhile, remains level with the $7.25 federal minimum.