The proposal, if passed, would impact every employer differently — voters would do well to consider those impacts before they make a decision. However, like the assumptions made in support of the statewide Question 1 proposal, Portland’s proposal also makes certain presuppositions.
The largest is that a minimum wage should itself be a living wage. Or, put another way, if a job does not pay enough to support a single adult living alone, it is not a job worthy of existence. That is a pretty shocking proposition. It might even surprise the unsurprisable Bill Belichick.
In 1975, “Billy” was hired by the Colts for $25 a week. He took the job because he had a passion for football and sought to learn a skill. It isn’t a perfect example, since $25 a week was way below the federal minimum at the time — I guess the Colts are cheaters? — but it dramatically demonstrates the progression in earnings as people’s skills develop. Would any aspiring coaches like the opportunity to work with Coach Belichick on the cheap? That apprenticeship would probably pay dividends in the future.
Jobs are also valuable for young people proving themselves as their adult lives begin. In summers and winters during high school, I worked for minimum wage — $5.15 back then — and earned raises as time went on. Jobs teach responsibility, imbue a work ethic, and take up idle time that may otherwise lead to trouble.
My winter employer was one of Maine’s ski businesses. If they had been required to pay my friends and me a wage necessary for an adult to live alone, they would have either gone bankrupt or not hired us. How many jobs are on the line in Franklin County now because of Saddleback’s troubles? Think they would be booming if they paid 16-year-olds $15 an hour?
Some might object on the grounds that Franklin County and Portland are different economies. So let’s consider how this referendum would impact some of the types of employers in Portland.
Really large businesses — think grocery stores and national banks — will simply absorb the cost. The question is whether the increased labor cost leaves enough of a margin for their continued operation. They are big enough that they probably will simply pay it and pass the cost on through their massive pricing models. So far, so good, right?
On the other hand, small Maine businesses — the ones everyone supports — oppose the referendum nearly 2-to-1. They do not have the scale to blithely bury the increased cost. This is especially true for those caught in the franchise trap, like Play It Again Sports. Many of us who grew up in Southern Maine got our first skis, skates, sticks, or other sports equipment there. Yet because a native Mainer and Army veteran made the “mistake” of signing a franchise agreement, that small business may need to let people go.
Professional firms probably won’t face much impact, since their personnel are well-paid. Or, in the case of some businesses, they do not have employees; they independently contract with their “service providers.”
Non-profits will see increased costs, with hospitals raising their charges to private insurers — MaineCare and Medicare sure aren’t paying. This will lead to higher costs for businesses trying to do the right thing by providing full-time jobs and offering health insurance. For those studying at UNE and other private schools? Tuition is going up, since work-study is taxable employment. Either the cost of gross tuition will increase or financial aid will decrease, resulting in the same net effect on students.
And last, the public sector. Because of quirks in Portland’s charter, the city will not be required to abide by this law. Certainly the City Council could vote to increase wages, but even the mayoral candidate who supports the initiative believes taxes are already too high. It is hard to envision a scenario where the council votes to increase the cost structure of the city and raise the taxes necessary to pay for it. So we will be left with one set of rules for the private sector and a different set for government.
The proponents of this referendum come from a well-meaning place. But their arguments are based in macroeconomic theory, not on-the-ground reality. Debate theory until you are blue in the face, but this referendum will help large businesses crush small businesses. Who is better equipped to handle a significant cost increase: Rosemont Market or Whole Foods? Play It Again Sports or Dick’s Sporting Goods?
The proposal is cribbed nearly verbatim from Seattle, home to Starbucks, Microsoft, and Amazon — all Fortune 500 companies. Portland’s largest employers are hospitals. It sets the ordinance in stone for five years, abandoning the ability to act and react as circumstances dictate. And even Jim Wellehan, lauded by President Obama on wage issues, thinks this proposal goes too far. The simple fact is most Maine employers want to do right by their people — they live here, too. It’s good business, and it’s the right thing to do. Let’s give them the opportunity to do right instead of forcing them off a cliff.
So I’ll say it again: Ethan Strimling and Mike Brennan are right. One of them will be Mayor on November 4th. Let’s hope Portland follows their lead on Nov. 3.