AUGUSTA — The LePage administration asked lawmakers Tuesday to rein in the multiyear minimum wage increase passed by voters in November in hopes of “retaining businesses and jobs” in Maine.
But Gov. Paul LePage’s proposal, which one union leader described as “deeply contemptuous to democracy,” is unlikely to find much traction among Democrats, who control one chamber of the Legislature.
LePage’s late-filed bill is, in many respects, a repeat of policy debates that have been underway in Augusta for months. Under the ballot initiative endorsed by 55 percent of Maine voters last year, Maine’s minimum wage rose from $7.50 to $9 an hour on Jan. 1 and will increase by $1 annually until it hits $12 an hour in 2020.
LePage’s bill would increase the minimum wage in annual 50-cent increments until it reaches $11 an hour in 2021. Additionally, the governor wants to eliminate the annual cost-of-living adjustments – known as “indexing” – beginning in 2020 and restore the so-called “tip credit” in which tipped workers are paid less than the minimum wage as long as tips cover the difference. It also seeks to change the definition of salaried employees for overtime purposes.
Lastly, LePage’s bill, L.D. 1609, is one of several pending in the Legislature that would allow employers to pay lower “training wages” to workers under 20 for the first 90 days of employment, and lower “youth wages” to workers under 18. Those wages would be either 80 percent of the state’s minimum or the federal minimum, whichever is higher.
Testifying to a legislative committee, Julie Rabinowitz with the Maine Department of Labor focused largely on what she said were the potential economic consequences of a $12 minimum wage and indexing the wage to inflation. Rabinowitz, director of policy, operations and communication at the Labor Department, said the current law “provides no flexibility for varying economic conditions in different regions of the state” and that adopting more gradual increases would help with business retention.
“A number of Maine businesses have testified to this committee that they are able to comply with the initial increase that occurred this year and likely for next year, but they are uncertain about the future increases to $11 and $12,” Rabinowitz told members of the Labor, Commerce, Research and Economic Development Committee. “Some employers even described that they are not opening new businesses or additional locations.”
Peter Gore, vice president of government relations for the Maine State Chamber of Commerce, said putting wages “on autopilot” could hurt the state’s economy, especially as wages hit $11 an hour.
“That’s where a lot of businesses, small businesses who are operating in this state, say ‘That is not a sustainable model for me,’” Gore told lawmakers.
But Matt Schlobohm, executive director of the Maine AFL-CIO, said there are “thousands and thousands of workers where the basic dignity of being able to afford life’s necessities is a tiny bit easier.”
Schlobohm acknowledged that there are some consequences on employers from a higher minimum wage, but said low-wage workers face dire consequences from living in poverty. The Maine AFL-CIO is “literally opposed to every section” of LePage’s bill, which he said attempts to undo everything that was part of a ballot initiative that received more votes than any referendum in state history.
“We have a $9 minimum wage right now, we have an unemployment rate of around 3 percent, we have workers with more money in their pockets,” Schlobohm said. “That’s a good thing. The sky has not fallen and I don’t think it is going to fall in the next three years either. I would hope you respect the will of the voters.”
Earlier this month, the committee voted to make one major change to the minimum wage referendum by reinstating the tip credit in response to a massive showing from restaurant owners and workers.
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