6 Things To Know About Montgomery County’s Minimum-Wage Legislation
When employees can expect wage increases, how the bill gained support and political implications
Advocates for a $15 minimum wage held signs before the Montgomery County Council vote in Rockville Tuesday
The Montgomery County Council on Tuesday voted unanimously to incrementally raise the minimum wage in the county to $15 for employees by 2024. Here are some things to know about the legislation, which has the support of County Executive Ike Leggett.
1. Businesses must pay the wage beginning in 2021, 2023 or 2024
Large businesses with at least 51 employees will have to start paying their employees at least $15 per hour on July 1, 2021. Mid-sized businesses with 11 to 50 employees will have to pay the wage by July 1, 2023, and small businesses, defined as having fewer than 11 employees, will be required to pay the wage by July 1, 2024.
The council gave nonprofits and home health care companies a break. Even if they employ more than 50 employees, they won’t have to pay the $15 minimum wage until July 1, 2023—unless they have fewer than 11 employees. Then, they would have to pay the wage in 2024, like other small businesses will be required to do.
Nonprofits are defined as tax-exempt, 501(c)(3) organizations, while health care companies must be community-based services that receive at least 75 percent of their revenue through state and federal Medicaid programs, according to the legislation. Nonprofit leaders and home health care executives previously told the council it would be difficult for them to pay the higher wage.
The bill would let the county executive halt planned wage increases if the economy declines.
Tipped workers will continue to receive a base wage of at least $4 per hour, but their employers are required to make up any difference if an employee's tips don't equal the minimum wage rate set by the county.
The following job types are expected to be most affected by the wage increase and the number of jobs below come from census estimates for the Frederick-Rockville-Bethesda Metro area–so some jobs are located outside the county.
2. Employees will see incremental increases before wage deadlines
Incremental pay increases will continue for minimum-wage employees under the new bill. The increases began in 2014, after the council approved an initial wage bill in 2013. Since then, the local minimum wage has risen to $11.50 per hour—the rate as of July. Here’s what the hourly minimum wages will be for employees at large, mid-size and small businesses. All increases happen on July 1 for each year noted:
- Large Businesses
- 2018 – $12.25
- 2019 – $13
- 2020 – $14
- 2021 – $15
- Mid-size businesses
- 2018 – $12
- 2019 – $12.50
- 2020 – $13.25
- 2021 – $14
- 2022 – $14.50
- 2023 – $15
- Small businesses
- 2018 – $12
- 2019 – $12.50
- 2020 – $13
- 2021 – $13.50
- 2022 – $14
- 2023 – $14.50
- 2024 – $15
3. Future minimum-wage increases after the legislation’s timeline will be tied to an inflation rate
Hourly wages will continue to increase beyond $15 after each class of business hits the threshold. The council on Tuesday approved an amendment to tie future increases in the minimum wage to the Consumer Price Index for Urban Wage Earners and Clerical Workers for Washington-Baltimore (CPI-W). The CPI-W measures household spending by surveying households on the costs of typical goods and services during a year. The figure is used to gauge inflation and typically rises each year, although during economic downturns it can decrease. The minimum wage will increase at 5-cent intervals based on the rise, if any, in the price index.
4. The legislation passed after the council reached a compromise
The council first took up a $15 minimum wage bill in the spring of 2016. That bill, sponsored by Council member Marc Elrich, called for increasing the wage by 2020. The bill was amended to require large businesses to implement the wage by 2020 and small businesses by 2022, after a pushback from business groups. The bill passed 5-4 in January, but Leggett vetoed it.
After the veto, Leggett commissioned a study to examine the local economic impact of raising the wage to $15 per hour. The resulting study had an error in it that overestimated job losses. The county declined to pay for it and the council later moved forward on a new bill that attempted to address the concerns of the business community.
In October, the bill was modified in committee to implement the wage with businesses with more than 50 employees in 2022 and smaller businesses by 2024. However, council members who supported a shorter timeline backed an amendment Tuesday for large businesses to implement the wage in 2021, mid-size businesses in 2023 and small businesses in 2024. The compromise earned the support of the rest of the council.
5. Montgomery County becomes the second jurisdiction in the D.C. area to approve a $15 minimum wage
The Washington, D.C., Council approved a faster timeline than the county’s when it voted in 2016 to enact a $15 minimum wage by 2020. As of now, D.C. and Montgomery are alone in voting to approve the higher wage in the region. The wage is more than double the federal minimum wage of $7.25 per hour.
In Montgomery County, business groups expressed concern that raising the wage will make the county less economically competitive than neighboring jurisdictions are. In Prince George’s County, the minimum wage is $11.50 per hour and there’s no plan to continue to raise it. Maryland’s state minimum wage—used by all other jurisdictions except Prince George’s and Montgomery—is $9.25 per hour and scheduled to rise to $10.10 next year. The Northern Virginia suburbs use the federal minimum wage.
6. The politics behind the wage increase in Montgomery County
Seventh State blogger and American University government professor David Lublin wrote in a post after the county vote that the legislation’s approval gives the bill’s sponsor, Marc Elrich, a candidate for county executive, a major political victory. For nearly two years, Elrich worked to encourage his colleagues to support the increase and continued to push for the wage increase despite his initial bill being vetoed.
Lublin wrote that Roger Berliner’s vote for the bill might hurt his chances to woo the business community in the executive race—a constituency he’s been trying to bring to his side. Lublin speculated Berliner’s vote might help Del. Bill Frick with business leaders in Frick’s campaign for county executive since Frick has maintained that minimum-wage increases should be approved at the state level.
Council member Nancy Floreen, in her speech before the vote Tuesday, encouraged advocates of the $15 minimum wage to take their fight to Annapolis to lobby state representatives to approve a higher wage statewide. After the vote, progressive and union leaders vowed to press state leaders to approve a $15 minimum wage. In the 2016 General Assembly session, Del. Jeff Waldstreicher (D-Kensington) introduced legislation to raise the wage to $15 per hour, but it received an unfavorable report in the House Economic Matters Committee and died.
One issue with raising the wage statewide is that cost-of-living varies throughout the state. A living wage for a single adult in Montgomery County is estimated to be $32,800, according to MIT’s Living Wage Calculator. In the Baltimore area, the living wage for an adult is $26,600; in the southern Maryland area, it’s about $23,800; and in Western Maryland, the estimate is about $21,100, according to the calculator.