A remarkable thing happened last year: The number of Maine children living in poverty declined sharply. Last year, 33,000 Maine children — or 13 percent — living in a household that earned less than the poverty level. In 2016, 44,300 children, about 17 percent — lived below the poverty level. Poverty rates dropped for Maine adults as well, but the decrease wasn’t as large.
The Maine economy continued its slow recovery in 2017, but that alone can’t explain the significant drop in poverty. The biggest economic change in 2017 was an increase in the state’s minimum wage, which rose from $7.50 to $9 an hour after Maine voters approved a referendum to raise the state’s minimum wage. The wage increased to $10 an hour this year.
As research predicted, the wage increase was most helpful to the state’s lowest wage earners.
Census Bureau data shows that last year’s income growth in Maine was concentrated among the lowest-paid workers. Maine’s growth among these households outpaced the nation and New England, highlighting that more than the national economic recovery was a play.
Income for the poorest Mainers rose much faster for these workers than for any other group. Compared to 2016, household incomes for the bottom quarter of Maine workers were 10 percent higher in 2017, even after adjusting for inflation, according to analysis from the Maine Center for Economic Policy, a left-leaning group. The data also show shrinkage of the percentage of Maine households at the lowest income levels as households advanced up the income ladder. For example, in 2016, nearly 23 percent of Maine households earned less than the poverty level. In 2017, 21 percent of households were in this bracket. The 2017 federal poverty level was $24,600 for a family of four.
The poverty data is bolstered by U.S. Department of Labor statistics that show wages grew across the board for Maine workers in 2017, the first year of the $1 minimum wage increase. As expected, the largest gain was among the lowest-paid workers, who saw the largest increase in earnings in the more than 15 years that the department has tracked this state-level data.
At the same time, overall employment and the average number of hours worked also grew in Maine, dispelling warnings that the minimum wage increase would depress hiring and hours.
Maine Republicans tried to weaken Maine’s minimum wage law, but failed during the legislative session that ended last month. This new data bolsters the case that Maine’s law is working.
The message that minimum wage increases help workers, with minimal negative impacts, is resonating elsewhere. After facing criticism for its low wages and poor working conditions, Amazon this week announced that it would increase its minimum wage to $15 an hour. The new wage takes effect Nov. 1.
The Seattle-based company also plans to lobby Congress to increase the federal minimum wage, which has been $7.25 an hour for a decade.
As the Maine experience shows, such an increase will especially benefit workers at the lowest income levels. This is an important step in reducing poverty for American families.
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