2017 | Opinion

Opinion: A Big Unknown

County officials must assess economic impact before passing $15 minimum wage bill

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Editor’s Note: The following views are those of the writers and do not reflect the opinions of Bethesda Beat staff. 

In 2014, the Montgomery County government—joined by Prince George’s County and Washington, D.C.—raised the regional minimum wage nearly 60 percent—to $11.50 by July 1 of this year. While that may sound like good news for minimum wage earners, the impact of the increase on businesses, local government, taxpayers, and yes—minimum wage earners themselves—is unknown. Why? This is because the county government has not done a serious analysis of the local economic impact of this rapid minimum wage increase. No one knows how many jobs have been lost, how many employees have had their hours or benefits cut, or how many employers have moved out of the county. And no one has assessed the impact these and future increases will have on the county government’s budget. This lack of hard data is a serious missing link.

But that is not stopping a majority of the Montgomery County Council from joining the national Fight for $15 movement to continue increasing the county’s minimum wage through 2020 and beyond. This time, the county is acting alone, without the benefit of understanding the impact of current increases and with little regard to how the new increase would affect the local economy and personnel costs, or even how it may ultimately negatively impact minimum wage earners.

It is not difficult, and in fact is required by county law, to determine what the fiscal impact of proposed legislation would be on county taxpayers. Yet this relatively straightforward analysis has not yet been conducted. Simply put, the county government has no idea how a $15 minimum wage would affect county worker pay scales and the overall personnel budget. Likewise, the council members who are rushing to pass the $15 minimum wage law have no plan to make good on their promise to financially support the many nonprofit organizations on which the county relies and that would be unable to pay the higher hourly wage without impacting service delivery. An analysis of the impact of a $15 per-hour minimum wage in the city of Baltimore concluded the cost to city taxpayers would be $57 million in fiscal year 2021. Despite this information, five of our council members are prepared to put county taxpayers on the hook for tens of millions of dollars of additional government spending.  

As member organizations, we have heard from employers that have cut hours and positions and have significantly reduced health and other benefits, and business owners who have scrapped plans for expansion in the county, because of the council’s previous minimum wage increases. As a result, some of the county’s most vulnerable workers are at the greatest risk, as employers are reluctant to hire the inexperienced and unskilled workers.

These are uncertain times, and our county economy is particularly vulnerable to decisions by the federal government, as well as the vagaries of the broader economy. Our county elected officials have a responsibility to arm themselves with good and reliable data on local economic indicators to make the best decision in the interest of the public. The good news is there is ample time to collect the necessary data to make a responsible and informed decision. The proposed new law would not go into effect until July 1, 2018, which provides a full year to do a full economic analysis. There is no need to rush to make an unsubstantiated decision.

We urge the council and the county executive to calculate the cost to taxpayers before blindly joining a popular national movement. Anything less is irresponsible fiscal management and counterproductive policy making.

The writers are the chief operating officers of their respective chambers of commerce: Marilyn Balcombe, Gaithersburg-Germantown Chamber of Commerce; Georgette Godwin, Montgomery County Chamber of Commerce; Ginanne M. Italiano, The Greater Bethesda Chamber of Commerce; and Jane Redicker, Greater Silver Spring Chamber of Commerce.