The County Council is getting ready to reconsider Councilmember Marc Elrich’s bill to raise the minimum wage to $15 per hour that was vetoed by County Executive Ike Leggett, who outlined changes to the bill that he would like to see. Elrich’s bill was one vote short of being able to override Leggett’s veto.

As we are heading into an election year, there is a lot of political pressure around the issue and I imagine something will emerge from the Council. Rather than focus on the politics, however, what are the questions that councilmembers and voters ought to consider?

Direct Impact on the County Budget

For all of the controversy over the effect of a wage increase on the County’s economy, it remains surprising that little thought has been given to the potential impact on the county budget. Marc Elrich argues that it shouldn’t be much:

Probably not much if any [impact] on the County’s own budget. County employees and those who contract for the County have to pay a living wage which this year is around $14.50. So any inflation would get you to $15 in two years at the most.

The PFM Study on the minimum wage was widely discredited as junk science but nonetheless outlined the argument for why a higher wage could cost the county money:

[A $15 minimum wage] would likely present a significant cost to the County both in terms of adjusting employees’ pay to reflect a higher wage floor and to avoid wage compression in relation to that floor, but also through the resulting increases in additional compensation dependent on the base rate of pay (e.g. overtime) and in the County’s pension liability for eligible employees, due to increases in base earnings.

The fiscal impact statement for the bill is rather Delphic:

This legislation, as well as this fiscal impact statement, does not address the issue of wage compression in the County. Any action taken to address this issue would have a significant fiscal impact, which would be difficult to determine at this time.

Seems like it would be good to have a healthy discussion of budgetary impact to make sure we don’t have a repeat from 12 years ago with the county government racking up wage bills that it couldn’t afford in advance of an election. Elrich makes a good case but would the County need to have a higher floor to compete with the private sector?

Should the County Leave It to the State?

Libertarians argue that there should be no minimum wage because individuals should have the right to make contracts at any mutually agreeable wage. Assuming that this ship said long ago in Montgomery County, the question still remains if it wise for the County to enact its own rate substantially different from the state and double that of Virginia.

Del. Bill Frick, a candidate for county executive, has argued we should have a higher minimum wage but it should be done by the State:

Minimum wage policy, however, is more effective as a state policy than as a local one.  Maryland has a Department of Labor, with the statutory power and duty to enforce minimum wage and other employment laws. Montgomery County does not. Just as zoning and land use decisions belong at the County level instead of the state, I believe employment regulation is better in the hands of the state . . .

Additionally, statewide action eliminates risk of losing business to either Howard or Prince George’s Counties, though not DC or Virginia. At-Large County Council Candidate Seth Grimes argues that the county needs to act because the state hasn’t:

The self-sufficiency standard varies widely across Maryland, [so] legislators outside high-cost counties including Montgomery might see a higher minimum as less of a priority than we in Montgomery do. Montgomery County especially needs a higher minimum, but statewide action has failed. Yet Mr. Frick would let a specious search for “more effective” policy hold us back from needed local action.

Still, the county has spent much time focused on areas outside of its core services and regulated in areas, such as pesticides, where it has little enforcement capacity. Frick raises the broader question of whether the County Council spends too much time on issues that should be legislated on in other arenas rather than the nuts and bolts of county government.

Tomorrow morning, 7S continues with a discussion of the impact of minimum wage increases on employment in Part II.