Tag Archives: minimum wage

Caution in Annapolis While Leaning Left

By Barry Rascovar

March 14, 2014–IT WAS A disappointment to liberal opinionators but the 2014 General Assembly proved surprisingly cautious and balanced in moving Maryland decidedly to the political left during its 90-day session that ended April 7.

Gov. Martin O’Malley, barely containing his national ambitions, took a hard-left turn in his legislative agenda. It was aimed at impressing liberal Democratic interest groups across the country.

But House Speaker Mike Busch and Senate President Mike Miller wisely slowed the O’Malley Express and made sure Maryland didn’t get too far out in front of the Democrats’ march to the far left.

Senate President Mike Miller

Senate President Mike Miller

Time and again, leaders in the House and Senate put a damper on overly ambitious liberal proposals. Here are a few examples:

–Minimum Wage. Yes, O’Malley is bragging that Maryland is leading the nation by passing a $10.10 minimum wage. But read the fine print.

The first wage boost next January is only seventy-five cents an hour. It won’t be till mid-2018 – over five years from now – when Maryland reaches O’Malley’s Nirvana, that $10.10 threshold.

This cautious approach is dictated by legitimate concerns that a rapid, 39 percent wage boost will hurt many small businesses and retail chains and could lead to layoffs, store closings or cutbacks in work hours.

Weakening the Bill

The final bill also exempts certain employers, adds a lower, trainee category, contains no automatic annual inflation boost and denies higher wages to tipped workers.

O’Malley can brag all he wants, yet the final version is a far cry from his original proposal. The new law does provide higher baseline wages for low-income workers, but it takes a decidedly conservative approach getting there.

Pit Bull Legislation

–Dog Bites. Yes, lawmakers finally found comity on reversing a dreadfully misguided ruling by the state’s Court of Appeals that called one breed of dog, pit bulls (though they are not really a breed) “inherently dangerous.”

Pit-bull owners aren’t off the hook, though. Lawmakers added language making all dog owners legally responsible if their pet bites someone. That thoughtful, moderate step levels the field and strikes a blow for individual responsibility when good dogs do bad things.

Puff-and-Pay

–Decriminalizing marijuana possession. This move is being hailed as the first step toward fully legalizing marijuana. In truth, lawmakers aren’t opening the floodgates.Marijuana smoker

A $100 fine for a first offense is a hefty price to pay for getting caught with pot. A $250 fine for a second offense will put a crimp in most wallets, and a $500 fine for a third offense comes with possible mandatory drug counseling.

That’s quite a penalty for inhaling this carcinogenic weed.

Perhaps the bill will reduce jail overcrowding in large jurisdictions, as some predict, and allow police to focus on serious criminal offenses. Or it could mean a deluge of new pothead offenders. We’re in virgin territory that could well require a re-thinking of this move by the 2015 or 2016 legislature.

Medicinal Pot Smoking

–Medical marijuana. This law could make it easier for seriously ill patients to get relief from their pain, anxiety and/or nausea. Academic medical centers refused to participate in the existing program for fear of endangering their massive federal research grants, so now legislative sponsors are trying a different approach through pre-approved physicians.

Still, drawing up the rules and regulations will be complicated and could take quite some time to complete — at least 18 months. Lawmakers continue their go-slow approach.

Creating a market for marijuana growers could easily spin out of control. Some physicians may abuse the privilege of prescribing this controlled substance. The law may have to be revised yet again in future years to make it effective.

Early Start to Schooling

–Pre-K expansion. Yes, Maryland is enlarging its program to give pre-kindergarten education to underprivileged children. Lt. Gov. Anthony Brown is crowing about this grand achievement.

But wait a minute: Only 1,600 kids will be helped under this legislation. That’s a drop in a very large ocean.

At that pace, Brown will be eligible for Social Security before all the needy kids in Maryland get into this worthwhile program. His claims of a great step forward ring hollow.

Easing the ‘Death Tax’

–Estate tax reduction. O’Malley could still veto this bill to impress ultra-liberal groups that idolize candidates who bash the rich. Keeping this punitive tax on the wealthy would appease the left wing of his party.

Still, there’s no denying wealthy Marylanders are moving to Florida and other states that don’t punish the heirs of an individual who happens to leave relatives great sums of money.

Both Miller and Busch recognized Maryland was losing many of its best and most committed civic leaders as result of this soak-the-rich policy.

House Speaker Mike Busch

House Speaker Mike Busch

They pushed through changes that will make the state’s estate tax identical to federal limits – but only gradually over the next five years.

It’s a nod to the business community from top lawmakers based on practical realities. It’s also a pullback from O’Malley’s perpetual, liberal business-bashing.

All of these measures indicate that the state’s legislature remains stubbornly moderate in tone, fearful of moving too quickly or too aggressively on social issues. Rarely do Maryland’s legislative leaders fully embrace the knee-jerk crusade du jour. They keep worrying about the unintended, negative consequences.

Cooler heads prevailed in Annapolis this session. Though the legislature is increasingly dominated by liberal Democrats, it’s a positive sign that caution remains an integral part of the Maryland General Assembly’s DNA.

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Is a Higher Minimum Wage Counter-Productive?

By Barry Rascovar

March 24, 2014 — Since it’s an election year, Democratic politicians in Annapolis are eager to pass an increase in the minimum wage. Gov. Martin O’Malley is poised to promote a higher minimum wage law in Maryland as part of his incipient campaign for national office.

But is it a good idea? Will there be unintended consequences in the form of job reductions?

That could well be the case, based on a recent Texas A&M economic study. It’s also the findings of a February study by the Congressional Budget Office.

Minimum Wage Increases

Minimum Wage Increases

Bottom Line: A jump in the minimum wage by 10 percent (Maryland’s proposal is 13 percent in Year One and a cumulative 39 percent over three years) will have a significant negative impact on future job hiring.

The non-partisan CBO forecasts that a federal hike in the minimum wage from $7.25 an hour to $10.10 an hour could mean a likely loss of 500,000 jobs nationwide, although there’s a chance the job loss could top one million.

The Texas A&M study may be more relevant in that it looked at new job creation in the year following previous minimum wage hikes. “Net job growth falls in response to an increase in the minimum wage,” it concludes.

Tom Firey of the Maryland Public Policy Institute figures this could mean the loss of 25 percent of all newly created jobs in Maryland if the General Assembly ups the minimum wage.

His adds: “In this miserable economy, the last thing we need is to further handicap job growth and business start-ups.”

All this is fascinating data and under normal circumstances the facts and figures should prove persuasive.

Not for politicians in an election year, though. Not when labor unions and liberal advocacy groups are going overboard promoting a higher minimum wage as the Second Coming.

Minimum Wage protester

But beware of the side effects: Higher consumer prices, a contraction of small retail businesses and unemployment for many now employed at the minimum wage rate.

The trade-off: help for the lowest salaried workers, who would see their pay (before taxes) go up by 3 percent.

Yet raising the minimum wage amounts to a shotgun approach: Only 19 percent of those who would receive this raise come from households below the poverty threshold of $15,730 for a family of two and $23,850 for a family of four.

Indeed, 29 percent of those benefiting from a $10.10 minimum hourly wage would come from households earning three times the poverty level ($46,190 for a family of two, $68,450 for a family of four).

An Alternative Route

A far better way to deliver financial support to the lowest-paid workers is increasing the federal and state earned income tax credit. One hundred percent of that money winds up in the hands of a low-wage worker earning less than $15,000 annually (the cap is $54,000 for a couple with three children). It’s a highly effective income supplement for low-wage workers.

That’s not going to happen in Maryland because a more generous EITC means a big hit to the governor’s budget, whereas raising the minimum wage socks it to small businesses primarily, not the government.

Yet given Maryland’s shaky economic recovery, lawmakers in the Senate are beginning to have second thoughts about sharply raising the state’s minimum wage. After all, Maryland lost nearly 10,000 jobs in January. Passage of the governor’s bill might accelerate those job losses.

It’s a Catch-22 for liberal Democratic lawmakers. Advocates standing on the sidelines promote this bill as a huge boost to the economy. Yet no impartial economic study comes to that conclusion.

Middleton’s Demand

Now a key senator, Thomas McLain (Mac) Middleton from Charles County, has thrown a new issue on the table. The governor’s bill ignores the plight of workers who care from the state’s developmentally disabled. They’d end up earning less than the new minimum wage.

Middleton won’t move the governor’s bill until this oversight is addressed. Developmental workers — 18,000 in community settings — deserve far more in wages than they’re paid ($9.82). They perform some of the most emotionally trying work in society tending to 25,000 developmentally disabled people in Maryland.

Even more egregious, the state pays its own developmental workers in rural state residential facilities much more. That fundamental inequity makes no sense except in terms of saving money when the state budget is formulated.

O’Malley’s minions are negotiating with Middleton and likely will find a way to satisfy the senator. Yet this problem is just the tip of the iceberg.

How many other job categories within state and local governments will have to be adjusted because of a $10.10 minimum wage? Is it affordable?

Passage Coming

There’s no doubt a modified version of O’Malley’s bill will be approved.

It may not have all the bells and whistles far-left advocates and the governor desire, such as an automatic cost of living increase and a big boost in salaries for tipped workers.

The path to $10.10 might be phased in more slowly. More exemptions might be added to cover college students working the summer beach season in Ocean City.

In the end, though, Maryland lawmakers will put a higher minimum wage on the books — even though it may not make sound economic sense and might prove the wrong way to address this dilemma.

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Do-Gooders Know Best

By Barry Rascovar

For MarylandReporter.com

Feb. 2, 2014 — RAISING THE MINIMUM WAGE is all the rage among liberal Democrats and liberal advocacy groups. Listening to them it’s clear a much higher minimum will dramatically close the income inequity gap.

Nirvana is just around the corner.

All this is well intentioned. Yes, there is a widening gulf between America’s very rich and the middle and lower classes. Yes, the nation’s minimum wage needs adjustment. Those at on the bottom of American society need extra financial help.

But is the nearly 40 percent jump in the minimum wage proposed by President Obama and his wannabe successor, Maryland Gov. Martin O’Malley, the solution?

Obama State of the Union Address

President Obama’s State of the Union Address — “Raise the minimum wage”

Will prosperity sudden blossom, job-growth flourish and the poor take home enough pay to cover all expenses?

Sadly, the answer is “no.”

Indeed, a rapid and steep rise in the minimum wage may result in the Law of Unintended Consequences coming into play – fewer job opportunities, layoffs, cutbacks in hours worked, higher consumer prices and more delays in business expansion.

O'Malley State of the State Address

Governor O’Malley at State of the State Address — “Raise the minimum wage”

Put yourself in the small businessman’s position.

She employs mainly low-wage workers at two or three retail locations. Wages already eat up most of her revenue. Now those wages are going to rise by over a third.

Chance are this business person will take steps to curb her new overhead – letting some workers go, reducing hours for other employees and raising prices, if competition permits.

Some small businesses may be so hard hit that they can’t  stay open. Even larger operations might see profits dip substantially, forcing them to put growth plans on hold.

Negative Impact From Doing Good

Do-gooders could end up harming the very people they seek to help.

It is encouraging that House Speaker Mike Busch and Senate President Mike Miller recognize caution is required in approaching the minimum wage issue.

One size may not fit all businesses in various parts of the state.

Behind the counter jobs at minimum wage.

Behind the counter jobs at minimum wage.

A $10.10 minimum rate in impoverished and isolated Garrett County goes much further than in Montgomery County, but Garrett business owners may not be able to afford such a large wage boost.

Ocean City’s part-time summer employment base attracts college students, not folks looking for full-time work. Boosting their pay by nearly 40 percent doesn’t help the poor at all. It may, though, force some small entrepreneurs to close up shop.

A Better Method

There’s a far better way to help men and women struggling at the bottom of the economic ladder. It’s called the earned income tax credit – a targeted wage supplement that rewards the working poor.

So why isn’t O’Malley proposing a major boost in Maryland’s earned income tax credit? Because it would require him to pay for it and cut tens of millions from other agencies and programs.

It’s far easier for O’Malley – as he has done throughout his terms as governor – to beat up on the business community and demand the private sector help the poor. It  becomes a private-sector burden rather than a burden on O’Malley’s budget.

There shouldn’t be a debate over raising the minimum wage gradually over a number of years. It’s too low now.

Deceptive Political Mindset

But liberal politicians have seized on this issue as an easy answer to the nation’s persistent slow growth. It isn’t.

They ignore the real purpose of minimum wage jobs – to get young people  starter jobs so they can learn about showing up regularly and on time, to provide supplemental wages for older folks, and to assist those whose full-time job doesn’t pay all the bills.

In most cases, these positions are not for those seeking permanent employment. They are entry-level jobs.

High turnover is expected. The work doesn’t require much brain-power. The jobs are designed to be a start or a supplement, not a career.

Cautious Approach Needed

Attacking income inequality is far more complicated than simply doubling or tripling the minimum wage.

Attacking the business community for pointing out the obvious flaws in this liberal crusade doesn’t help matters, either.

There’s little doubt O’Malley will get a modified minimum wage proposal through the General Assembly this session.

Yet a slow and cautious approach is advisable.

The next group of elected Maryland officials needs to focus more on designing programs that actually stimulate and encourage economic growth.

O’Malley and his liberal followers seem to have fallen into the political trap of calling for superficial solutions that do not come close to resolving the exceedingly knotty problems confronting society.

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Read other commentaries by Barry Rascovar at www.politicalmaryland.com.