The fine print on Maine’s minimum wage question matters to you

Here’s a November prediction: Portland will vote in favor of Question 4, the minimum wage referendum.

And you know what? If it passes, it will have almost no effect in the Portland area. We all know the City Council passed its own minimum wage ordinance. However, places like McDonald’s and Wal-Mart in Scarborough and Falmouth are already above Portland’s minimum wage, advertising $11- or $12-an-hour positions — the rising tide of a strong job market has lifted the boats.

That is, of course, a great thing. As unemployment falls, competition for good people increases. Competition leads to better offers — wages, flexibility, benefits — for new employees.

In short, the market works.

Other places in the state haven’t seen that same growth. So, in order to try and help people, the minimum wage question was put on the ballot.

Unfortunately, as with all the referendum questions, the devil is in the details. The actual underlying legislation does three different things. Those distinctions are often lost in the 30-second soundbites offered by proponents.

A supporter of Question 4 holds a sign in support of raising Maine's minimum wage at a Bangor event in June. Micky Bedell | BDN

A supporter of Question 4 holds a sign in support of raising Maine’s minimum wage at a Bangor event in June. Micky Bedell | BDN

First and most notably, it increases the statewide minimum wage to $12 over the next few years. The arguments for it are couched in language everyone supports — working hard should lead to self-sufficiency. Who doesn’t believe that?

Yet laws apply to everyone equally. So, when it calls for a “living wage,” who do we mean? That number is different for people at different stages in their lives. If you believe MIT, the hourly “living wage” for an adult living alone is $10.38. For two adults — be they roommates or a couple — living together and both working? It’s $8.68. For a single parent? $22.19.

And for a 16-year-old kid in Hampden? Well, there is a lot of talk about the economic impact of minimum wage increases. The studies are muddled. Some find it to not have much impact on a labor market if the increase is modest. Others find it to have “negative employment effects.” You can find data to support most conclusions.

However, one area where the research swings greatly in a single direction is the impact on youth employment. The punchline? It reduces job opportunities for teenagers. So those Hampden students looking for their first job will probably get displaced, especially if they don’t have family connections to help them get hired. That makes it harder for them to get work experience, which makes them less competitive when applying for jobs later in life.

It goes without saying that an increase in the minimum wage does nothing for — or, in the worst case, actually harms — those who are unemployed in less prosperous areas of our state. Or on Social Security. Or working in the “gig economy” as independent contractors not subject to employment laws, whether driving for Uber or on a per-job basis with some creative agency.

If Question 4 were solely about the dollar amount of the minimum wage, we could have a clean debate on these issues, and it would probably pass. Yet the proposal attempts to bootstrap two additional issues into the statute books on its coattails, creating additional effects that aren’t getting the attention they deserve.

The second part of the question eliminates specific wages for men and women who receive tips. If it passes, many restaurants say they will end tipping and have the house take the income, paying it out instead as wages. Maybe the entire American tipping tradition is wrong and we should instead move to straight wages like European nations; that might be a conversation worth having.

However, eliminating tipped wages is a massive cultural change, not a simple revision to our law. It shouldn’t be done in an up-or-down, “oh, by the way” vote as an addendum to some other proposal. It deserves its own debate, especially for areas that are not tourist meccas.

The third and last piece of Question 4 ties the new minimum wage to inflation, never before done in Maine. The proponents’ argument is that, had LBJ done so in 1968, the minimum wage would be over $11 today. They’re absolutely right. But if FDR had tied the wage to inflation in 1938 when it was established? Today it would be $4.28 and no one would work a minimum wage job; the economy has grown beyond it.

Like taxes, economic policy and employment law are complicated. There isn’t a silver bullet solved through a ballot question. Yet there is danger when a large portion of the state — the Portland area — can vote for it and remain insulated from many of the consequences. And there is danger when the debates focuses on the headline — $12 minimum wage! — and ignores the fine print on tips and inflation.

Referendums are bad ways to make law, and Question 4 is no exception. Vote “no” and let’s send the Legislature back to work.  After all, that’s why we hire them.  For $12,000 a year, we can expect them to do their job.

Michael Cianchette

About Michael Cianchette

Michael Cianchette was the chief counsel to Gov. Paul LePage from 2012-2013 and deputy counsel from 2011-2012. A Navy reservist, he was deployed to Afghanistan from 2013-2014 as a trainer and adviser to the Afghan National Police. He is an alumnus of the Leadership Maine program and holds a BA in economics and political science from Boston College along with a JD and an MBA from Suffolk University. He works as in-house counsel and financial manager for a number of affiliated companies in southern Maine.