Minimum Wage Proposals Could Help Thousands of Families in Baltimore, Montgomery County

May 3, 2016 by Kristina Li in Blog, Economic Opportunity

Many hardworking Maryland families struggle to pay bills and put food on the table because they are not paid enough to cover the basics of life. Many of these families are forced to rely on public assistance to cover the gap between what they earn and what they need. In response, leaders in Baltimore City and Montgomery County are considering proposals that would build greater economic security for people facing this predicament.

Baltimore City Councilwoman Mary Pat Clarke introduced a bill last month that would raise the minimum wage in the city to $15 an hour by 2020, helping more than 25 percent of the Baltimore City workforce. In Montgomery County, County Councilman Mark Elrich introduced a similar bill that would benefit almost 16 percent of workers in the county. A few years ago, Maryland lawmakers set in motion a statewide increase in the minimum hourly wage to $10.10 by 2018,  improving the wellbeing of thousands of working families in Maryland as well as injecting half a billion dollars into the local economy. Raising the minimum wage to $15 per hour in higher-cost areas of the state such as Baltimore and the DC suburbs is a logical next step.

With the current minimum wage, state and local governments are essentially subsidizing employers who pay low wages, as 56 percent of public assistance recipients are in a household where at least one person works. The state alone spends more than $1 billion a year providing health care and cash assistance to low-wage working families. Ensuring that people are paid enough to meet their basic needs by raising the minimum wage could change that for many Maryland families.

As more states and jurisdictions around the country enact higher minimum wages, there is a growing amount of credible research showing that raising the minimum wage is good for the economy. Analyses by the Economic Policy Institute and the National Employment Law Project find that the immediate benefits of raising the minimum wage would be more disposable income for typically cash-strapped workers, lower employee turnover — which would lower the employer’s costs — and broadened economic activity as more working people have more money to spend at local businesses.

The federal minimum wage is $7.25 per hour, less than half of what Alliance for a Just Society estimates it takes for people to support themselves – also known as a “living wage.”[i] In Maryland, the state minimum wage is only a little bit higher, at $8.25 per hour and on July 1 it will increase to $8.75. However, that is only 40 percent of the estimated $20.27 an hour needed in Maryland for one person to afford food, housing, and other necessities. At the current minimum wage rate, a worker would have to clock in over 98 hours a week in order to provide for themselves. This number grows when that worker has children or other family members to care for.

In Baltimore City, one in four households live below the federal poverty line, which is an income of $20,090 a year for a family of three. In the city, the $8.25 minimum hourly wage is far below the $25.48 an hour a single parent with one child needs for rent, food, utilities, transportation and child care. In Montgomery County the living wage for a single parent raising a child is $26.92, and while the minimum wage in Montgomery County is $9.55 an hour (rising to $11.50 an hour in 2017), the gap between the living and minimum wage in the county is a staggering $17.37.

By raising the minimum wage, struggling parents and working adults will feel the biggest relief. More than one quarter of all affected Marylanders are parents. If legislation is enacted, more than 210,000 Maryland children will have a parent that receives a raise. The proposed changes could significantly aid women as well, as they make up 58 percent of those who would benefit. Creating better lives for Maryland children and their families is investing in Maryland’s future. Supplying parents with more income to feed, educate, and care for their children is essential to keep Maryland moving forward.

Maryland can become a better place to live if more jobs pay wages that pay the bills.

 

[i] A national living wage for a single adult is $16.87 per hour, based on a weighted average of living wages across the country.