Maryland Malfeasance II

by Russ Roberts on January 17, 2006

in Regulation, Work

In its ongoing effort to make the workplace less friendly to working people, the Maryland legislature voted today to raise the minimum wage in Maryland to $6.15, overriding a veto by Governor Ehrlich.

This vote comes quick on the heels of its earlier decision to make Maryland a less hospitable place for Wal-Mart to do business.

Both of these pieces of legislation make it harder for low-wage, low-skilled workers to find work in Maryland.

The opening of the Washington Post story treats the debate over raising the minimum wage as a worker vs. business struggle:

The Maryland General Assembly today voted to raise the state’s minimum
wage by $1 an hour, brushing aside concerns by Gov. Robert L. Ehrlich
Jr. (R) that the move would hurt small businesses.

For those of you keeping score at home:

Good Guys: Maryland General Assembly that cares about the poor.
Bad Guy: Governor Ehrlich who cares about business.

Or:

Friend of the worker: GA
Friend of business: Gov

You have to go farther down the page to find out that the Governor actually cares about workers:

In his veto message last spring, Ehrlich called passage of the bill
"a bad decision that elevates politics over economics and ultimately
hurts the people it claims to help."

He argued that small
businesses would either have to raise costs for consumers or fire
low-wage workers, arguing that "more than half of minimum wage workers
nationally are of high school or college-age, and minimum wage jobs for
them are a means by which to enter the labor market and acquire skills
necessary for career advancement."

Here’s the Governor’s statement from last spring.  It closes with this observation:

I believe that each working person deserves an appropriate wage that
reflects his or her work, skill level, and productivity. Accordingly, I
believe employment and education provide the necessary foundation for
future success in life. Raising the minimum wage reduces employment
opportunities for those who need it most, thereby limiting an
individual’s training, experience and skills.

For the above stated reasons, I do not believe Maryland should break
from its long history of respecting the federal government establishing
a minimum wage. Accordingly, I have vetoed House Bill 391.

It is a bad week for Maryland.

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{ 9 comments }

Ivan Kirigin January 17, 2006 at 3:17 pm

Perhaps Maryland should just mandate that consumers purchase goods from select businesses deemed by the government to need more sales.

__

This is all pretty sad.

Aaron Krowne January 17, 2006 at 3:21 pm

Forget hoping that California slips into the sea… how about the People's Republic of Maryland instead? (No offense to all my good friends there… we'll send you a boat =)

Matt McIntosh January 17, 2006 at 3:29 pm

Silly governor. He actually wants to help people, rather than just looking like he's helping people while mostly just hurting everyone. You never have a long career in politics that way.

Randy January 17, 2006 at 4:33 pm

I think the assumption of the legislature, is that the rich people who own Walmart will immediately dip into their own pockets to come up with the cash to pay the mandated wage and benefits increases. They may end up paying some of it, but they will do everything in their considerable power to keep from doing so. First, they will hire less workers, reduce wage increases, raise prices, and perhaps even lay off workers, close stores, or bypass building new stores. Then, and only then, will they dip into their own pockets. This is the fatal flaw in progressive schemes. They always do the regressive damage first.

Mr. Econotarian January 17, 2006 at 5:19 pm

I think the minimum wage increase will not have much effect as there are so few workers whose market-clearing wages are actually below the minimum wage, especially in a vibrant economy like Maryland's.

No doubt there will be some marginal layoffs though.

The Wal-Mart mandated health care issue is more dangerous, because it changes the nature of all low-cost retailing. I'm really curious whether Wal-Mart will mount a successful legal opposition, or if they will have to leave the state, or what.

medusa January 18, 2006 at 7:49 am

I, too, must note that the minimum wage hike won't be terribly significant. First, most kids make more than minimum wage at their jobs. I would be hard pressed to name anyone who makes minimum wage, in fact.

Second, which no one has mentioned, will be the growth of the black market, that is, undocumented and untaxed labor. In my area this has been significant, and hides much of the effects of the new regulations. Further, it is in some sense a boon because the "under the table" worker makes more than the minimum wage worker, wages being equal.

Bat One January 18, 2006 at 12:32 pm

It has been a while since a policy of this level of economic foolishness was put in place. And in the interim, things have changed a bit, including the very public display of information via blogs such as this one.

Perhaps then, a concerned economics writer with ties to the area and more than a passing interest in both the economic well-being of that area and the soundness of economic policy might feel inclined to track this issue and report to his readers periodically on the actual impacts of both the WalMart health care initiative and the minimum wage increase.

In a sense, conservative are still behind the liberal left in learning to fully utilize the political applications of the internet. Real reporting of the actual effects of policies such as these, rather than merely bemoaning their passage, could go a long way to correcting the disparity.

gene berman January 22, 2006 at 9:00 am

It's too bad the governor fudged his response, "passing the buck" in expressing that he'd rather just follow the federal minimum mandate. In essence (though he probably knows better), he's stating publicly "The idea of a minimum wage law is a good thing and it ought to be uniform among the several States" instead of expressing an economically-informed opinion on the subject itself. After all, if minimum wage laws are "good" economically speaking, it should follow that variance in those laws according to differing economic conditions in different jurisdictions is likely also a good thing. (And here insert the somewhat tired but no less true argument "Why not $20–or even $100?").

faultolerant January 25, 2006 at 11:15 am

One thing I think we're missing here, as has been threatened, is that Wal-Mart is not about to leave Maryland. Period.

The company may not create as many jobs as previously expected, may not locate new centers there (Like the proposed distribution center) or may even hold steady or reduce the payroll. However, their greed knows no bounds and they will remain a player in Maryland. That market is too big for them to cede it to anyone else.

I'm certain that played a part in the willingness of the Leg to override the Gov's veto. The simple fact that they can bash Wal-Mart and know that Wal-Mart isn't going anywhere. If Wal-Mart *was*, indeed, prepared to walk out of that market, the decision *may* have been different.

Again, I'm no fan of Wal-Mart at all. I'd just as soon see every store on fire as to shop there. However, in this one, limited, small instance, Wally World is the one being wronged – and, in a sense, hoist on their own petard.

If they had – or would – close up shop and move away, it would put the Fear of Bentonville in most legislatures. Wally is too greedy to do that, so they're going to continue to be the punching-bag-of-choice by wrong-headed Liberals.

Ultimately, I perceive Wal-Mart and their hordes of highly trained legal sharks, will prevail, and this law will be overturned, if nothing else, on the preeminence of ERISA rules over the states. It'll cost Wally a fortune in legal costs, but it may set a valuable precedent for other states. This may be one time when the Federal level *should* trump the State level.

Of course, if you're a true Libertarian, and believe in very strict limitations at the Federal level, you wouldn't *want* ERISA to trump the state's right to be stupid.

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