LePage Does the Math on Proposed 2016 Minimum Wage Increase

By:  Governor Paul LePage

Fort Fairfield Journal, July 20, 2016

   The minimum wage was never intended to be a living wage. It is a starting wage for low-skilled workers. But a ballot question in November asks voters to treat it as a living wage.

   Over time, labor activists have confused the minimum wage with a living wage so they could boost union contracts. That’s because well-paid union workers get another increase when the minimum wage goes up.

   Raising the minimum wage hurts our lowest-skilled and hard-to-place workers. Twelve dollars an hour is a lot of money to pay a 16-year-old with no work skills. Raising the minimum wage will increase labor costs for local businesses, which will surely lead to layoffs. And when an employer has to lay off a worker, it is the worker with the least skills who is cut first.

   This proposal will take away the incentive for employers to pay higher wages for good workers.

   If the wage automatically goes up every year, there is no need to give raises above the minimum wage.

   The wording of the ballot question is misleading, calling this a “cost of living increase.” A teenager living with their parents does not need a “cost of living increase.” They need more job options and more flexible hours—but the legislature has repeatedly blocked these efforts during my administration. We should be making it easier for employers to hire low-skill workers, not harder.

   Most importantly, this proposal would change the labor costs of an entire industry that is critical to Maine’s economy. Tipped workers make on average far more than the minimum wage. But the law allows the employer to take a tip “credit,” which lowers the overall payroll and payroll taxes. When an employer has to pay each worker the full minimum wage, labor costs rise sharply. To cover those costs, menu prices would increase by as much as 20 to 25 percent.

   There’s only one way for a restaurant to remain competitive and lessen the impact on the customer’s wallet: eliminate tipping. Now those workers will see a significant decrease in pay.

   Furthermore, if this referendum were to pass, Maine will have the highest state-wide minimum wage in the country. It doesn’t provide for any flexibility to address economic differences between northern and southern Maine or other parts of the country.

   Finally, arbitrarily increasing the minimum wage will hurt the elderly and others on fixed incomes. The dramatic rise in labor costs will force businesses to increase prices on all goods and services. Fixed incomes will not increase, but the elderly will suddenly have to pay more for everything they buy. This is the wrong way to go. Maine needs to work on increasing a real living wage with good career jobs, not artificially raising the bottom of the pay scale. No matter how high you raise it, it’s still the bottom.

   A better plan is to eliminate the income tax, which would put money back into Mainers paychecks. It’s the biggest wage increase they can get. Mainers deserve better than a higher cost of living.