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Phil: In last week’s column on Portland’s rent control initiative, you mentioned that raising wages will also be on the ballot this fall. I offered to explain to you what it means to run your own business in a future column and I didn’t want to keep you hanging on. So, this week, let’s see if I can teach you how to look at this from the eyes of the private sector.
Ethan: I am sitting at your feet with pencil in hand.
Phil: Pretty sure kids today have traded in their pencils.
Ethan: Good point. I am sitting at your feet with my voice activated 16G digital recorder. But let me first give some context for our readers about what we’re talking about. This November, there will be a referendum in Portland to raise the minimum wage to $15 an hour over the next four years and to pay essential workers time and half the next time we have a pandemic. Another referendum, titled a “Green New Deal for Portland,” has a provision that will ensure construction workers on taxpayer-funded projects are paid the prevailing wage for their area.
Phil: Got it. I think I can explain this in one simple equation: “Increased mandated expenses (wages and taxes) + same revenues = bad for business.”
Ethan: Typical business school math. Nothing about the workers.
Phil: When you mandate higher employment costs, payroll taxes will also rise. In turn, prices for the consumer must as well. But if the consumer is unwilling to pay that difference, it is not just the business owner who gets hurt, it is the worker. And remember, when you force wage increases at the bottom, you are forcing increases all the way up. That may be your goal, but ultimately a few regulators, rather than the market, are determining who survives.
Ethan: No, the playing field is still level, and study after study after study has shown that reasonable increases in the minimum wage have never had the negative impact you describe. In fact, look at Maine. From 2016 to 2020 our service industry had some of the best economic growth in our history, and yet it was during those years that the mandated minimum wage increased from $7.50 to $12 an hour.
Phil: Perhaps that was due to a growing economy in which most employers were already paying well above those rates due to consumer demand? Unfortunately, when the pandemic tide of economic devastation is behind us, how many of those employers will still be able to bring workers back at those artificially inflated wages?
Ethan: You can’t have it both ways, Phil. You guys claim raising minimum wages in times of growth will stop the economic train. And then when times are bad, you say raising wages will impede our ability to get out of the hole.
Phil: That’s because both are true. Increasing wages above what a business can earn, in good times or bad, hinders economic growth. But the same could be said to you. If increasing wages in good times is easily absorbed, why aren’t you pushing for wage cuts during bad times?
Ethan: Because wages do get cut in bad times, just not below a basic standard of living. How do you expect anyone to survive on $12 an hour anywhere in Maine, let alone Portland? Without the last minimum wage increase, it’s possible that almost 10,000 children would still be living in poverty.
Phil: When did the employer become the human services department? If you want to pay people based upon how many dependents they have, that is an entirely different policy debate.
Ethan: Interesting idea, but if we simply provide universal child care and basic nutrition programs, you serve the same goal. But the point is workers should be paid a liveable wage so that they can afford to live where they work. Instead, almost 50 percent of Portland families can’t afford the rent they are paying and about 3,000 workers live in poverty.
Phil: Your solution is to force the consumer to pay more via the ballot box. I’m advocating for a solution to be implemented by the customer.
Ethan: Well, I do hope you feel better. We only have three more refrenda to discuss between now and Election Day.
Phil: Oy vey. I’ll start drafting up my lesson plans now.
Phil Harriman served as a town councilor and state senator from Yarmouth. Ethan Strimling served as mayor and state senator from Portland.