Montgomery County would lose approximately 47,000 jobs by 2022 if it raises the minimum wage to $15 an hour, according to a study released by the county government Tuesday evening.
County Executive Isiah Leggett (D) commissioned the study — which suggests the vast majority of jobs lost would be low-wage positions — when he vetoed an increase to the minimum wage in January.
Last week, county council member Marc Elrich introduced a new bill to bring the hourly minimum wage up from the current $11.50 to $15. The bill attempted to address opponents’ concerns about the impact of an increase by giving nonprofit organizations, adult day-care providers and companies with fewer than 26 employees until 2022, instead of 2020, to raise wages.
The business community and others who oppose a higher minimum wage criticized Elrich for proposing the legislation days before the study was due. But proponents of raising the wage questioned the value of the study, conducted by the Philadelphia-based economic consulting group PFM, since it asked employers to predict what would happen instead of looking at the impact of an actual wage hike.
PFM found that increasing the minimum wage to $15 would result in an aggregate loss of $396.5 million of income in the county by 2022 as businesses laid off employees, cut remaining employee hours and benefits, and suspended plans to invest in new locations and hire additional workers.
“We can’t minimize some of the impacts outlined here,” said Leggett, who explained his decision to veto the earlier bill by saying he was worried that the wage hike would hurt the county’s economy. “Even if it’s not 47,000 jobs lost, even if it’s half that, those are some startling numbers. You can’t discount it all.”
No other jurisdiction in Maryland has embraced a $15-per-hour minimum wage, but several Democrats running for governor have included it in their platforms.
Elrich — one of three council incumbents running to succeed Leggett, who will retire after 2018 — said last week that the PFM study was “nonsense” because it is not possible to project the future impact of a wage increase. He said asking employers about the potential effect of a wage increase was certain to produce negative responses.
Despite decades of debate about raising the minimum wage — which proponents say improves the lives of low-wage workers and decreases the amount taxpayers spend on services such as Medicaid and food stamps — economists, politicians, and business and labor organizers have no consensus about its long-term economic impact.
A study by economists at the University of Washington in June found that raising the hourly minimum wage to $15 cost low-wage workers in Seattle $125 a month because employers reduced hours and let workers go.
A different study from the University of California at Berkeley found no job losses for low-income Seattle restaurant workers when their wages increased to $13 an hour.
Although respondents in the Montgomery study expressed philosophical support for minimum-wage increases, especially in the nonprofit sector, they estimated they would have to reduce their lower-wage workforce by an average of 23 percent if the minimum wage reached $15.
Employers said they can attract and retain quality lower-wage workers with pay of about $11 an hour, the study said, suggesting that the county’s existing $11.50 minimum is “reflective of the market” and “not likely to cause substantial disruption if left in place.”
PFM based its study on electronic surveys and phone and in-person interviews with business owners, business community leaders and nonprofit employers and leaders. The group conducted the surveys and interviews April through June.