The Fair Wage Act Would Benefit 175,000 Workers in Maryland
By Jasmin Aramburu and Christopher Meyer
Most Marylanders agree that working hard should leave you and your family with enough to afford the basics. However, too often workers with minimum – or below minimum – wage jobs take home wages that cannot support a family, let alone appropriately compensate for the duties their jobs require.
Although Maryland has made strides to an economic recovery following the initial impact of the COVID-19 pandemic, inflation has been a major economic concern in the past year, particularly for workers whose income cannot keep up with the rising cost of living. Strengthening and accelerating the minimum wage in Maryland would make an important difference to the workers who keep local communities going and benefit children for decades to come.
In 2019, the Maryland General Assembly laid the groundwork for a $15 minimum wage statewide by 2026, with most workers reaching $15 by 2025. However, this law was the product of a series of compromises that delayed wage increases for most workers and set the stage for the purchasing power of the minimum wage to erode in the long term. In the years since, rapid inflation has increased the urgency of raising wages.
The Fair Wage Act, Governor Moore’s proposal to strengthen Maryland’s minimum wage, would be a major step forward for Maryland workers. The bill would accelerate the minimum wage to $15 by October 1, 2023, and index the wage to inflation for future years. The fact is, workers in Maryland cannot get by on low wages. Between housing, food, clothing, and other essentials, there is nowhere in Maryland where even a single adult, working full time and not caring for children, can afford a basic living standard on less than $15 per hour.[i] That cost only increases for workers supporting a family. The governor’s proposal would benefit about 126,000 children and increase wages for approximately 175,000 workers.
Additional impacts of the Fair Wage Act include:
- On average, affected workers would see their wages increase by $0.74 per hour, equivalent to $1,070 per year.
- Altogether, Maryland workers would take home an additional $47 million during the last three months of 2023, equivalent to $187 million on an annual basis. Total wage gains would likely be substantial in future years as well.
- The Fair Wage Act protects the value of the minimum wage in the long term. Without inflation adjustment, the purchasing power of the minimum wage will likely fall below its current value of $13.25 per hour by mid-2028.
A stronger minimum wage makes Maryland’s economy more just and inclusive. Here’s who would benefit:
- 71,000 white workers (6% of all white workers)
- 64,000 Black workers (10%)
- 26,000 Latinx workers (11%)
- 7,600 Asian and Pacific Islander workers (6%)
- 6,100 workers belonging to other racial or ethnic groups (10%)[ii]
Additionally, among those who would get a raise:
- 58% are women
- 43% have family income less than double the poverty line
Lawmakers can strengthen the governor’s proposal further by expanding its protections to include workers who are left out or receive only limited protection under current law, including agricultural workers, tipped workers, and youth workers.
The Fair Wage Act By the Numbers
The Fair Wage Act would boost incomes for about 175,000 workers by an average of $0.74 per hour, equivalent to just over $1,000 per year for a typical low-wage worker.
A stronger minimum wage would benefit workers of every background, and would be especially meaningful for women and workers of color, who today are often held back by structural barriers built into our labor market.
| Fair Wage Act Highlights
See appendix for full demographic analysis. |
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| Who Would Get a Raise? | How Many Workers? | How Much on Average? | How Much Altogether? | |
| Hourly | Annual Equivalent | Oct.–Dec. 2023 | ||
| Overall | 174,500 | $0.74 | $1,070 | $47 million |
| Women | 100,900 | $0.75 | $1,066 | $27 million |
| Black Workers | 63,800 | $0.76 | $1,151 | $18 million |
| Latinx Workers | 26,300 | $0.68 | $1,142 | $8 million |
| Workers of Color Overall | 103,800 | $0.74 | $1,135 | $29 million |
| Age 20+ | 138,500 | $0.66 | $1,033 | $143 million |
| Parents | 31,900 | $0.61 | $1,008 | $32 million |
| Full-Time Workers | 69,700 | $0.57 | $1,268 | $88 million |
| College Graduates | 14,600 | $0.55 | $769 | $11 million |
| Family Income < $25,000 | 46,100 | $0.71 | $1,125 | $ 52 million |
| Family Income < 200% Poverty Level | 75,900 | $0.73 | $1,101 | $21 million |
| Source: Economic Policy Institute Minimum Wage Simulation Model; see Technical Methodology by Dave Cooper, Zane Mokhiber, and Ben Zipperer. https://www.epi.org/publication/minimum-wage-simulation-model-technical-methodology/
Notes: Workers’ average total wage increase for the last three months of 2023 equals one-quarter of the annual equivalent average wage increase. The actual 12-month increase is less because the minimum wage is scheduled to increase to $14.00 on January 1, 2024. Full-time workers are those who usually work at least 35 hours per week. College graduates are workers with an associate’s, bachelor’s, or postgraduate degree. |
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Inflation Adjustment: Relief Today, Security Tomorrow
One of the most crucial elements of Gov. Moore’s Fair Wage Act is the provision to protect the purchasing power of the minimum wage in the long run. As has become all too clear in recent years, price increases can eat away at wage gains, especially when a perfect storm of global crises accelerates inflation.
That’s why a growing number of states are now indexing their wages to inflation to ensure wages keep pace with the cost of living over time. Nineteen states and the District of Columbia are currently indexing their minimum wages to inflation or will begin indexing in the near future, including Virginia, New Jersey, Connecticut, and Ohio.
The Fair Wage Act ensures that workers’ standard of living does not slide in the long run by adjusting the wage floor for inflation, beginning in July 2025. Inflation adjustment is based on the consumer price index for the Washington metropolitan region, capped at 5% per year. The bill allows but does not require the Board of Public Works to cancel the annual adjustment if Maryland employment declines over a 12-month period.[iii]
Without scheduled inflation adjustments, our wage law essentially bakes in gradually declining real wages over the long term, forcing workers to hope politicians will take action as they watch their standard of living decline. Under current law, the purchasing power of the minimum wage is likely to drop below its current value of $13.25 per hour by mid-2028.[iv]
Lawmakers are likely already facing intense pressure from corporate lobbyists to remove inflation adjustment from the Fair Wage Act. Doing so would drastically weaken the bill’s power to build up Maryland workers and families.
Long-Lasting Benefits for Children and Families
The Fair Wage Act would benefit Maryland families and children for decades to come. A large body of research shows that when families earn enough to afford the basics, the benefits ripple out to nearly every part of their lives. A 2013 systematic review of academic literature linked higher family incomes to:[v]
- Fewer families struggling to put food on the table
- Increased spending on children’s clothing, reading materials, and toys
- Fewer behavioral problems, less physical aggression, and less anxiety among children
- Improved academic and cognitive test results, and more years of schooling completed
Adequate wages are also linked to individuals’ and families’ physical health:
- An analysis of every birth record in the United States between 1989 and 2012 found that after states raised their minimum wages, babies in those states had a longer average gestational length and were less likely to be born underweight.[vi]
- The same study found that people who became pregnant following a state minimum wage increase were more likely to obtain adequate prenatal care and less likely to smoke during pregnancy.
- Another analysis of birth records found a link between state minimum wages and birth weight as well as lower infant mortality.[vii]
- In 2016, the American Public Health Association issued a policy statement officially calling for a higher minimum wage.[viii] The statement documented multiple links between income and health and noted that “current metrics for setting minimum wages inadequately capture the basic necessities for living in full health.”
A Stronger Minimum Wage Will Support Communities in Fighting a Future Recession
As Maryland communities combat increasing costs for food and other basic necessities, maintaining consumer demand is key to preventing further economic crisis, especially if the Federal Reserve continues its campaign of aggressive rate hikes designed to slow job and wage growth. The Fair Wage Act will make this job easier. More than anyone else, families living paycheck to paycheck quickly cycle every dollar of income back into the local economy by buying essentials.[ix] A higher minimum wage means higher incomes for precisely the families who will spend that money fastest. This, in turn, means stronger sales at local businesses, which allows them to hire more workers.
Contrary to the assumption that minimum wage increases will drive inflation, analyses by the Economic Policy Institute have found that price growth since the beginning of the pandemic has been largely driven by profits, not labor costs.[x] It is doubly important that consumers are able to keep their purchasing power through a stronger minimum wage.
The Fair Wage Act also has potential to draw more people into the labor market and make it easier for businesses to hire. While a wide range of factors including care responsibilities and transportation access can push people out of the paid workforce, a higher wage standard would make Maryland a more attractive place to work in the long run, potentially leading to more applications for positions at local businesses.
Finally, the most rigorous economic research finds that minimum wage increases do not meaningfully affect levels of employment:
- A study published in 2019 examined 138 state minimum wage changes between 1979 and 2016. The study found no evidence of any reduction in the total number of jobs for low-wage workers and no evidence of reductions affecting subsets of the workforce such as workers without a college degree, workers of color, and young workers.[xi]
- A 2016 meta-analysis of 37 studies on the minimum wage published since 2000 found minimal employment effects, particularly for the vast majority of workers affected by the minimum wage who are at least 20 years old.[xii]
- A study published in 2016 assessed a range of statistical methods used in the literature to estimate employment effects of the minimum wage.[xiii] Analyses using a diverse set of credible approaches find negligible effects on employment. The authors identified analytical problems with methods that found negative effects, calling into question the suitability of these methods for distinguishing the effect of the minimum wage from preexisting labor market trends.
A Minimum Wage that Leaves No One Behind
Passing Gov. Moore’s Fair Wage Act would represent a major step forward for Maryland workers, families, and communities. Lawmakers should build on this foundation by extending full minimum wage protections to workers who are left out under current law.
By having more inclusive minimum wage laws that benefit different types of workers, Maryland can address long-standing economic disparities produced by inequitable policies, and strengthen lower-income – and many other – communities’ well-being.
Agricultural Workers
When Congress established the federal minimum wage in 1938, lawmakers specifically denied protections to agricultural workers, who at the time were predominantly Black. This was one of many compromises included in New Deal legislation to secure the support of racist southern Democrats.[xiv] While the demographics of agricultural workers have changed, their work remains vital to Maryland communities and our economy. It is past time to correct this historical injustice and grant agricultural workers minimum wage protection.
Including agricultural workers in the minimum wage increase would benefit another 1,200 workers and 950 additional children.
Tipped Workers
Another group of workers who would see outsized benefits from a uniform $15 minimum wage is those who are paid partly in tips. As a result of a carve-out known as the tip credit, Maryland’s current minimum wage does not apply to tipped workers the way it does for other employees. Nationwide, most tipped workers are food service workers such as servers, bartenders or restaurant hosts.[xv] Because tipped workers cannot rely on a stable, decent wage, they are often at the mercy of customers for adequate pay.
While sexual harassment occurs across all industries, it is more prevalent in the accommodation and food services industry, where women represent a majority of workers often in low-paying jobs.[xvi] As such, tipped workers are at a higher risk of being mistreated or reprised for standing up for themselves either against employers or customers through lower tips. By applying the minimum wage uniformly, we can guarantee tipped workers receive equal treatment and are paid fairly for their work.
Guaranteeing the full minimum wage to tipped workers would increase wages for an additional 47,900 workers and increase family incomes for 27,890 additional children. It would also bring in $130 million in additional total wages in the last three months of 2023, more than tripling the dollar impact.
Young Workers
Finally, we should guarantee young workers the full minimum wage. The minimum wage bill of 2019 weakened protections for youth workers by allowing employers to pay 85% of the state minimum wage to workers under 18, regardless of whether they stayed at the job for more than 6 months. The law previously allowed companies to pay the same wage rate to workers under 20, but only for the first 6 months on the job. Youth worker earnings may serve as a lifeline for many struggling families who rely on extra income to stay afloat, especially during difficult economic turns. Because young workers are often employed in industries like leisure or hospitality,[xvii] their job security is most at risk as seen through the pandemic. In fact, the nationwide unemployment rate for workers 16 to 19 years old is 10.3% or three times that of the overall rate (3.4%).[xviii] Guaranteeing the full minimum wage for young workers would allow them to continue supporting their families, contribute to their education, and promote economic security for future generations.
Due to data limitations, estimates of the quantitative impact of strengthening protections for young workers are not available.
The Impact of Leaving No One Behind
The impacts of including both agricultural and tipped workers are estimated below.
| Maryland Minimum Wage Highlights: More Inclusive Options | ||||||
| Who Would Get a Raise? | How Many Workers? | How Much on Average?
Annual Equivalent |
How Much Altogether?
Oct.–Dec. 2023 |
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| Extend Protections To … | Agricultural Workers | Ag. & Tipped Workers | Agricultural Workers | Ag. & Tipped Workers | Agricultural Workers | Ag. & Tipped Workers |
| Overall | 175,700 | 223,600 | $1,069 | $3,160 | $47 million | $177 million |
| Women | 101,500 | 130,300 | $1,066 | $3,176 | $27 million | $103 million |
| Black Workers | 63,900 | 73,700 | $1,151 | $2,503 | $18 million | $46 million |
| Latinx Workers | 26,700 | 33,900 | $1,139 | $3,457 | $8 million | $29 million |
| Workers of Color Overall | 104,300 | 126,900 | $1,134 | $2,957 | $30 million | $94 million |
| Age 20+ | 139,400 | 179,000 | $1,033 | $3,228 | $36 million | $144 million |
| Parents | 32,200 | 41,500 | $1,005 | $3,267 | $8 million | $34 million |
| Full-Time Workers | 70,300 | 92,100 | $1,267 | $4,209 | $22 million | $97 million |
| College Graduates | 14,700 | 24,600 | $768 | $4,361 | $3 million | $70 million |
| Family Income < $25,000 | 46,400 | 55,400 | $1,126 | $2,851 | $13 million | $39 million |
| Family Income < 200% Poverty Level | 76,300 | 92,900 | $1,102 | $2,915 | $21 million | $68 million |
| Source: Economic Policy Institute Minimum Wage Simulation Model; see Technical Methodology by Dave Cooper, Zane Mokhiber, and Ben Zipperer. https://www.epi.org/publication/minimum-wage-simulation-model-technical-methodology/
Notes: Full-time workers are those who usually work at least 35 hours per week. College graduates are workers with an associate’s, bachelor’s, or postgraduate degree. |
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It is clear that the minimum wage approach with the most impact is the one that includes both agricultural and tipped workers. Not only would thousands of families and children who live paycheck to paycheck quickly use new income to pay for necessities, strengthening the minimum wage would also boost sales for Maryland businesses and boost the state economy.
Appendix: Detailed Impact Estimates
| Fair Wage Act Impacts by Selected Worker Characteristics | |||||||
| Workers Experiencing Wage Increase | Wage Increase (2022 $) | ||||||
| Total Workers | Total | % of Group | Group % of Total | Total
Oct.–Dec. 2023 |
Average
Annual Equivalent |
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| Total | 2,396,000 | 174,500 | 7.3% | 100% | $47 million | $1,070 | |
| Gender | Men | 1,203,000 | 73,600 | 6.1% | 42% | $20 million | $1,074 |
| Women | 1,194,000 | 100,900 | 8.5% | 58% | $27 million | $1,066 | |
| Age | 16 to 24 | 279,000 | 92,700 | 33% | 53% | $27 million | $1,173 |
| 25 to 39 | 804,000 | 47,200 | 5.9% | 27% | $13 million | $1,074 | |
| 40 to 54 | 757,000 | 16,500 | 2.2% | 9.5% | $3 million | $824 | |
| 55 or older | 556,000 | 18,200 | 3.3% | 10% | $3 million | $753 | |
| Under 20 | 76,000 | 36,000 | 48% | 21% | $11 million | $1,210 | |
| 20 or older | 2,321,000 | 138,500 | 6% | 79% | $36 million | $1,033 | |
| Race / Ethnicity | White | 1,286,000 | 70,700 | 5.5% | 41% | $17 million | $974 |
| Black | 638,000 | 63,800 | 10% | 37% | $18 million | $1,151 | |
| Latinx | 244,000 | 26,300 | 11% | 15% | $8 million | $1,142 | |
| Asian/Pacific Islander | 166,000 | 7,600 | 11% | 4.4% | $2 million | $939 | |
| All others | 63,000 | 6,100 | 4.6% | 3.5% | $2 million | $1,172 | |
| Workers of color | 1,111,000 | 103,800 | 9.3% | 59% | $29 million | $1,135 | |
| Family Status | Married parents | 593,000 | 12,200 | 2.1% | 7% | $3 million | $860 |
| Single parents | 212,000 | 19,700 | 9.3% | 11% | $5 million | $1,100 | |
| Married, no children | 626,000 | 16,100 | 2.6% | 9.2% | $4 million | $918 | |
| Unmarried, no children | 965,000 | 126,400 | 13% | 72% | $35 million | $1,105 | |
| Parents | 805,000 | 31,900 | 4% | 18% | $8 million | $1,008 | |
| Work Hours | Part time | 134,000 | 32,400 | 24% | 19% | $5 million | $575 |
| Mid time | 299,000 | 72,300 | 24% | 41% | $20 million | $1,100 | |
| Full time | 1,963,000 | 69,700 | 3.6% | 40% | $22 million | $1,268 | |
| Education | Less than high school | 186,000 | 42,500 | 23% | 24% | $12 million | $1,165 |
| High school | 545,000 | 64,400 | 12% | 37% | $18 million | $1,121 | |
| Some college, no degree | 488,000 | 53,000 | 11% | 30% | $13 million | $1,014 | |
| Associates degree | 174,000 | 8,700 | 5% | 5% | $2 million | $869 | |
| Bachelor’s degree or higher | 1,003,000 | 5,900 | 0.6% | 3.4% | $1 million | $622 | |
| College graduates | 1,177,000 | 14,600 | 1.2% | 8.4% | $3 million | $769 | |
| Family Income | Less than $25,000 | 162,000 | 46,100 | 28% | 26% | $13 million | $1,125 |
| $25,000 to $49,999 | 329,000 | 27,000 | 8.2% | 15% | $7 million | $1,056 | |
| $50,000 to $74,999 | 356,000 | 23,500 | 6.6% | 13% | $6 million | $1,044 | |
| $75,000 to $99,999 | 329,000 | 18,900 | 5.7% | 11% | $5 million | $1,055 | |
| $100,000 to $149,999 | 518,000 | 26,400 | 5.1% | 15% | $7 million | $1,094 | |
| $150,000 or more | 687,000 | 25,800 | 3.8% | 15% | $7 million | $1,014 | |
| Source: Economic Policy Institute Minimum Wage Simulation Model; see Technical Methodology by Dave Cooper, Zane Mokhiber, and Ben Zipperer. https://www.epi.org/publication/minimum-wage-simulation-model-technical-methodology/
Notes:
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Notes
[i] Economic Policy Institute 2018 Family Budget Calculator with inflation adjustment by MDCEP, http://www.epi.org/resources/budget/
[ii] Including but not limited to American Indian/Alaska Native workers and multiracial workers. Data limitations prevent reporting estimates for individual groups. Note that this category is particularly heterogeneous and aggregate estimates do not necessarily reflect the experiences of individual subgroups.
[iii] Allowing the Board of Public Works (BPW) to cancel scheduled inflation adjustments would likely do more harm than good, for two reasons. First, the provision exposes workers to potential wage losses driven by changes in the political climate without regard for workers’ needs. This could lead to a situation similar to 2005, when then-Gov. Ehrlich fully defunded and attempted to dismantle the state agency responsible for enforcing worker protections, or 2015, when then-Gov. Hogan abruptly canceled the planned Red Line light rail project. Second, canceling inflation adjustment during an economic downturn would make things worse by depriving families of much-needed income, further depressing sales at local businesses, and compounding job losses. Note also that the bill increases BPW’s power to deny workers scheduled wage increases compared to current law. Empowering BPW to cancel routine inflation adjustments changes this power from temporary to permanent and jeopardizes the current purchasing power of the minimum wage, not just substantial increases. Additionally, the bill explicitly removes the guardrail limiting BPW to a single cancelation.
[iv] MDCEP analysis of Congressional Budget Office May 2022 Economic Outlook
[v] Kerris Cooper and Kitty Stewart, “Does Money Affect Children’s Outcomes? A Systematic Review,” Joseph Rowntree Foundation, October 2013, https://www.jrf.org.uk/sites/default/files/jrf/migrated/files/money-children-outcomes-full.pdf
The systematic review methodology involves defining in advance how researchers will identify relevant studies, as well as quality control measures to ensure that only studies with credible methodologies are included. This methodology protects against researchers cherrypicking studies that support their viewpoint.
[vi] George Wehby, Dhaval Dave, and Robert Kaestner, “Effects of the Minimum Wage on Infant Health,” Journal of Policy Analysis and Management 39(2), 2019, https://onlinelibrary.wiley.com/doi/abs/10.1002/pam.22174
[vii] Cooper and Stewart 2013.
[viii] “Improving Health by Increasing the Minimum Wage,” American Public Health Association, November 2016, https://www.apha.org/policies-and-advocacy/public-health-policy-statements/policy-database/2017/01/18/improving-health-byincreasing-minimum-wage
[ix] Christopher Carroll, Jiri Slacalek, Kiichi Tokuoka, and Matthew White, “The Distribution of Wealth and the Marginal Propensity to Consume,” Quantitative Economics 8(3), 2017, https://onlinelibrary.wiley.com/doi/10.3982/QE694
[x] Josh Bivens, “Inflation, Minimum Wages, and Profits,” 2022, https://www.epi.org/blog/inflation-minimum-wages-and-profits-protecting-low-wage-workers-from-inflation-means-raising-the-minimum-wage/
[xi] Doruk Cengiz, Arindrajit Dube, Attila Lindner, and Ben Zipperer, “The Effect of Minimum Wages on Low-Wage Jobs,” The Quarterly Journal of Economics 134(3), 2019, https://academic.oup.com/qje/article/134/3/1405/5484905
[xii] Paul Wolfson and Dale Belman, “15 Years of Research on US Employment and the Minimum Wage,” Labour 33(4), 2019, https://onlinelibrary.wiley.com/doi/abs/10.1111/labr.12162
[xiii] Sylvia Allegretto, Arindrajit Dube, Michael Reich, and Ben Zipperer, “Credible Research Designs for Minimum Wage Studies: A Response to Neumark, Salas, and Wascher,” ILR Review 70(3), 2017, https://journals.sagepub.com/doi/10.1177/0019793917692788
[xiv] Juan F. Perea, “The Echoes of Slavery: Recognizing the Racist Origins of the Agricultural and Domestic Worker Exclusion from the National Labor Relations Act,” 72 Ohio State Law Journal 95, 2011, https://lawecommons.luc.edu/cgi/viewcontent.cgi?article=1150&context=facpubs
[xv] Christopher Meyer, “What a $15 Minimum Wage Would Mean for Maryland,” 2018, http://www.mdeconomy.org/minimumwage/
[xvi] Jocelyn Frye, “Not Just the Rich and Famous: The Pervasiveness of Sexual Harassment across Industries Affects All Workers,” Center for American Progress, November 2017, https://www.americanprogress.org/issues/women/news/2017/11/20/443139/not-just-rich-famous/
[xvii] Elise Gould and Melat Kassa, “Young Workers Hit Hard by the COVID-19 Economy,” October 2020, https://www.epi.org/publication/young-workers-covid-recession/
[xviii] “Table A-10. Selected Unemployment Indicators, Seasonally Adjusted.” U.S. Bureau of Labor Statistics, February 3, 2023. https://www.bls.gov/news.release/empsit.t10.htm
