A few weeks ago, Greg Dougal and Adam Lee each presented their viewpoints on Question 4, the minimum wage referendum, at the Maine Society of Association Executive Point-Counterpoint event.
Dougal, executive director of Maine Restaurant Association and Maine Innkeepers, warned against the proposed wage increase as being too radical at this time. Lee, chairman of Lee Auto Malls argued that it would bring more money to workers in Maine with little impact upon businesses.
While I can certainly identify with Lee’s perspective that the wage increase would bring more money to workers in Maine, I found it to be more hopeful than realistic since it would only benefit those workers who manage to keep their jobs.
As Dougal pointed out, the proposed $12 increase has some restaurants already estimating a doubling of their menu prices. Such an increase would alienate customers and reduce the number of workers employed by restaurants; the end result would be fewer customers, fewer workers and less business in general… and all of it will cost you more.
According to Lee, “a little bit of inflation does not hurt industry.” But according to Dougal’s calculations, the wage increase will cost employers “60% for non-tipped employees and 260% for tipped employees.”
Increasing the cost of workers by these levels would be detrimental to businesses here. Lee suggests that “raising wages will help us attract people” to Maine, but you need jobs to attract people.
The only way jobs could be saved is if prices go up to compensate, and as Dougal pointed out: “our menu prices will have to be higher than anywhere else in New England.”
Inflated prices mean customers will go away. This wage increase will not attract people so much as force them out, either by putting employees off the payroll or consumers out the door to better deals in other states.
Lee insists it can’t be too bad since the increase would happen over several years, but Dougal points out that when it does arrive, Maine would have the third highest minimum wage in the nation. That’s before the tipped workers’ wages even catch up to the new ceiling with non-tipped wages.
Question 4 is a problem which literally just keeps growing and growing, because under this proposal, the minimum wage doesn’t have a ceiling. Under Question 4, it would be tied to the government’s analysis of yearly inflation, which just keeps on going up under the control of bureaucrats each year.
Dougal’s warning that “teen unemployment in Maine is already almost 20 percent” and that “if this passes, that will continue to increase” is alluding to the already difficult situation in the economy, which will become utter chaos under this law as it literally reduces the number of employees’ businesses can afford to hire.
Lee says the wage increase will “reduce the use of public assistance by 7 percent,” but more people out of work means more dependents on the state, unless they leave the state since they can no longer afford to live here. With more people out of work, one must wonder where all the taxes to pay for public assistance are going to come from?
As Dougal says, salaries in Maine are not fixed by the government; the minimum wage is just that, the minimum. Raising the minimum to such a high level rather than letting businesses naturally adjust risks throwing the whole system out of kilter. This kind of wage increase is so radical, even New York State did not enact a similar increase in its rural regions.
Wanting to help workers is a good thing, but jeopardizing jobs in the process isn’t the right approach.
Lee doesn’t “think it’s going to put everyone out of business.” At least he thinks someone will survive this, but when he says “the sky is not falling,” I have to wonder upon whom he expects this will fall, because it looks to me like it’s falling right on Maine.