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How Would Proposed Hike in Maryland's Minimum Wage Affect Local Businesses?

Local grocery store manager and an economics professor weigh in on topic.

As reported by Germantown Patch on Tuesday, a Maryland lawmaker is introducing legislation seeking to raise the state's minimum wage from its current rate of $7.25 per hour to $10.00 per hour by 2015.

When the Patient Protection and Affordable Care Act, often called Obamacare, was passed by Congress, a number of business leaders, including Papa John's CEO John Schnatter expressed concerns over the negative financial effect the law would have on business.

Curt Grimm, professor at Robert H. Smith School of Business, University of Maryland College Park, said that he expects there to be a "big outcry from the business community—they have to protect their own interests" but is not sure it will rise to the level of resistance to Obamacare.

Regarding the minimum wage increase, MarylandReporter.com quotes the owner of a Pasedena food market who said he "had to lay off employees the last time the minimum wage was increased" and that "a $1 increase in the minimum wage means that he needs to sell $100 more in products.

When asked about how a possible minimum wage increase would affect hiring and retaining employees, Emma Whalen, the marketing team leader at the Whole Foods Market in Silver Spring offered the following statement:

At Whole Foods Market, all of our Team Members start with a salary that is $10 or above, which is above minimum wage. We also have access to an excellent benefits package which includes Medical, Dental and a 401k, to name just a few. Because of this, I don't think that the proposed changes in Maryland legislation will have an impact on our ability to continue attracting an excellent base of TM who are committed to our company and our store here in Silver Spring.

Maryland Sen. Rob Garagiola (D-Germantown) and Prince George’s County lawmaker Del. Aisha N. Braveboy's proposal would phase in the increases, bringing the minimum wage up to $9 in 2014 and $10 in 2015, then indexing it in 2016 to keep pace with cost of living increases.

Prof. Grimm sees the proposal as a good idea, and one that could be a "small step in overcoming income inequality," and "can have a positive effect in increasing consumption and jobs, a counterweight to individual small businesses' [issues]."

Grimm also foresees the potential of "substitution" as a way that business could cope with an increase in the minimum wage.

"For instance, in a restaurant, you could have some sort of electronic device to place an order, rather than an individual taking your order," he said. "It's starting to be implemented, and there's room for a lot more to come—especially in a fast food situation," a business sector that traditionally employees minimum wage workers.

The minimum wage increase bill is slated to be introduced sometime in the next two weeks.

L.A. Wells January 27, 2013 at 04:50 PM
O.K. Prof. Grimm - Replace more employees with devices to do their work. Than the employees won't have any job or income. Is that the answer?
William Moore January 27, 2013 at 06:31 PM
Just shows you the disconnect between the people who provide jobs and have to pay the tab and politicians and academics who have this vision of a "great society" but will happily pay for it with your money!
William Moore January 27, 2013 at 06:45 PM
As the owner of two small businesses I can tell you the biggest effect of raising the minimum wage isn't the wage itself because most employees already make above it. The problem is that when you raise the base wage every person making above it also wants their wage raised to maintain the gap between them and the next person. And that can add extreme expense. One more casualty is young people entering the workforce. As expenses rise, less money will be allocated to take a chance on hiring and training them. I can already see marginal workers being let go in the face of approaching Obamacare. Add an increase in the minimum wage and I guarantee you will see these workers replaced by technology or a business ceasing operations altogether.

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