Correction: An earlier version of this editorial incorrectly reported that the minimum-wage bill passed by the Montgomery County Council would permanently index the wage to inflation. The following version has been corrected.
MINIMUM-WAGE laws protect workers from a race to the bottom of the pay scale, thus advancing economic equality. The federal minimum of $7.25 per hour, which also prevails in Maryland and Virginia (it’s $8.25 in the District), is too low — just 36 percent of the average private-sector wage — having eroded in real terms since the last increase in 2009. The trade-off, of course, is that raising the wage too high and too suddenly could unduly deter employment, which would also hurt workers.
So the question should be not whether to raise the minimum but how. Ideally, there would be a uniform national policy. We’ve urged Congress to make the minimum $8 an hour and to index it to inflation. This would restore income from full-time minimum-wage work to its historical average as a percentage of the poverty line for a family of four and remove future increases from politics. But with congressional action blocked by Republican opposition, state-level increases have emerged as a second-best solution in places such as California and New Jersey.
The Montgomery County Council pursued a third approach: local legislation. Tuesday the council voted 8 to 1 to raise the minimum wage in annual steps, starting at $8.40 in October , until 2017 — when it would reach $11.50 . County Executive Isiah Leggett (D) has pledged to sign the bill, which is part of a coordinated effort with the legislatures of the District and Prince George’s County (which enacted a bill Wednesday) to create a high-minimum-wage zone.
This campaign may be well-intentioned, but it’s risky. No one can say for sure what will happen to jobs and small-business creation if these three jurisdictions establish a large, long-term differential between their wages and those in Virginia and, probably, the rest of Maryland. Notably, not even many backers in Annapolis of a higher state minimum have suggested $11.50.
Former chief Labor Department economist Harry Holzer, now a professor of public policy at Georgetown University, warned the Montgomery council that negative effects on hiring are likely to be larger from a localized minimum-wage increase, especially when thriving areas nearby pay significantly lower wages. Mr. Holzer urged the council to wait until 2016 and not to increase the wage above $10 if it acted now.
The council ignored him on both counts. Its haste is doubly unfortunate, since Maryland is likely to raise its minimum in the next General Assembly session, well before Montgomery’s new law takes effect. No worker would have been harmed if the council had taken more time to study the issue; certainly it would have benefited from a clearer idea of the statewide economic landscape, as council member Phil Andrews (D), the sole “no” vote, argued.
However, union-backed Democratic advocacy groups exerted powerful pressure on council members, several of whom are running for reelection in the party’s June primary. One Montgomery council member referred to the vote as a “litmus test” for that upcoming political contest, and from the point of view of the bill’s backers, the “yes” voters passed. On the more important test, however – that of prudent lawmaking — the council left much to be desired.