Maine businesses reeling from COVID-19 impact wary of proposed federal wage hike
(The Center Square) – A potential doubling of the federal minimum wage is raising concerns among Maine businesses already struggling to survive after the COVID-19 economic downturn plus an unusually harsh winter.
The $1.9 trillion stimulus package, including the wage increase, could be voted on by the U.S. House soon.
With a current minimum wage of $12.15 an hour, Maine already has one of the highest minimum wages in the country. A $3 increase would cause businesses to adjust operations, Peter Gore, executive vice president of the Maine state Chamber of Commerce, told The Center Square.
“Some will have to increase prices, or do some combination of the business being open fewer hours, having fewer employees, and raising prices, that would be the impact in Maine at the $15 an hour minimum wage,” Gore said. “I think businesses in certain parts of state would close their doors at $15 an hour because they just can’t do it.”
Gore noted that earlier this month projections released by the nonpartisan Congressional Budget Office (CBO) show the $15 minimum wage could cut 1.4 million jobs from the U.S. workforce by 2025.
“Higher wages would increase the cost to employers of producing goods and services,” the CBO report states. “Employers would pass some of those increased costs on to consumers in the form of higher prices, and those higher prices, in turn, would lead consumers to purchase fewer goods and services. Employers would consequently produce fewer goods and services, and as a result, they would tend to reduce their employment of workers at all wage levels.”
Gore noted that while the higher wage may look appealing, there are wide-ranging ramifications.
“Whatever Congress does, they should take the time to figure out what the unintended consequences might be, and figure out a way to offset the impact on small businesses instead of imposing new costs,” Gore said. “These aren’t normal times for any small business; this has been a bleak, dark winter, and businesses need to make decisions right now about whether they can operate in the spring and summer.”
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