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Tuesday, November 5, 2013

Raising the Minimum Wage in Montgomery County

Memorandum

To:        County Councilmembers
Fr:         Councilmember Hans Riemer
Re:        Minimum wage
Date:     November 4, 2013

I agree with Councilmember Elrich, as well as co-sponsors Navarro and Ervin, that the minimum wage needs to rise and that it should be higher in Montgomery County than in the rest of the state due to our higher cost of living.

For your consideration, I am writing to share amendments to Bill 27-13 that I would support in order to accomplish that goal.

In examining this issue, I have reached the following conclusions.
  1. The state must continue to be the primary policymaker for the minimum wage.
  2. The county should apply an increase over the state minimum wage to reflect our higher cost of living.
  3. There should be no changes to weaken the minimum wage, such as exemptions or credits, which do not already exist in state law.
  4. The county-level increase should be phased in after the state-level increase is fully phased in.
  5. The state should continue to have responsibility for enforcement.
There are a variety of measures for how much more it costs to live in Montgomery County. The county's cost of living is roughly 28% higher than the national average. According to the U.S. Census Bureau, the median monthly housing cost for renters in Montgomery County was $1,511 in 2011, which was 24% higher than the state average ($1,153). According to the state's Department of Business and Economic Development, Montgomery County has the highest cost of living in the state. Our minimum wage should be higher than the state minimum to reflect this reality.

Councilmember Elrich's efforts to enact our minimum wage increase in parallel with some other jurisdictions in the area is a positive development. At the same time, we cannot control the actual laws that will be passed in those jurisdictions or how they may or may not be amended in the future, and our laws should not be formally linked.

Some of the exemptions that have been proposed in Bill 27-13 would weaken the minimum wage and would represent a step backwards for minimum wage policy. They include:

  • Bill 27-13 exempts the county government from paying its own minimum wage. That should be eliminated. However, this is likely to create substantial costs for the county government and we should know what they are before proceeding.
  • Bill 27-13 exempts tipped employees and "opportunity employees" (employees under 20 years of age during their first 90 consecutive calendar days of employment with an employer) who are covered by the state minimum wage.
  • Bill 27-13 allows employers to deduct "all or part of the per-employee hourly cost of the employer's share of the premium" for employer-provided health insurance from the minimum wage. This deduction does not exist in federal or state law.

It would be a mistake for Montgomery County to pioneer new exemptions to the minimum wage, which could backfire and undermine worker protections in Maryland or other jurisdictions around the country. These exemptions should be removed from the bill.

I believe it is profoundly important for the core policy-making responsibility to remain at the state level, where decisions can help a much larger population than just Montgomery County. It would be a great mistake for local jurisdictions to fragment this landmark national and state policy, when what we need is to strengthen the policy at the state and national level by increasing the minimum wage. From the perspective of crafting a regional policy, the state is more capable of achieving that goal than local governments.

Our current discussion must be informed by the continuing discussions at the state level, where an increase is being supported by many key legislative decision makers. For the purposes of our current discussion, I believe it is possible that the state will increase to $10.10 over a three year period, but we will not know exactly what they do for several more months.

I recommend that we increase the minimum wage by $1 over the state minimum wage, with a three year phase-in after the state's phase-in is completed: thirty cents in the first year, thirty cents in the second year, and forty cents in the third year. Following along a possible state timeline for phase in of 2015, 2016, and 2017, our additional phase-in would occur during 2018, 2019, and 2020, with the overall amount indexed to inflation, consistent with what has been proposed by state policymakers.

While perhaps some would see 2020 for final phase-in of the wage as far in the future, it is not very long for businesses to prepare for what would ultimately be a 53% increase in the minimum wage, from $7.25 to $11.10.

Additionally, Bill 27-13 designates the county's Office of Human Rights (OHR) as responsible for enforcing the county's minimum wage law. OHR has been dramatically downsized in recent years, with a staff complement falling from 22.5 in FY08 to 8.0 in FY14. OHR has little experience or expertise relevant to Bill 27-13, or to certain provisions such as the healthcare credit employers can take against the minimum wage.

Why should the county government seek to take over minimum wage enforcement responsibilities from the state's Department of Licensing, Labor and Regulation (DLLR)? Since DLLR already enforces the state minimum, it should be an easy matter for them to enforce a higher minimum wage in Montgomery County so long as the county law is identical in all other respects to the state law. Therefore we should direct the county's Chief Administrative Officer to seek an enforcement agreement with DLLR, and if the CAO cannot reach an agreement with the state prior to the start of the county's phase-in period, then enforcement reverts to a county department. For OHR to accept that responsibility, however, it would require substantial changes in its management and structure.

Accordingly, I will ask council staff to prepare amendments consistent with these goals and I will support a final bill that includes them.