ELLSWORTH — Come Jan. 1, Mainers working for minimum wage will be seeing a little more cash going into their pockets each hour.
Across the state, the minimum wage will be increased to $11 per hour, up from $10 in 2018.
The minimum wage will increase again in 2020 to $12 per hour, at which point wages will increase based on a formula tied to the cost of living.
Tipped employees will also see their wages increase from $5 to $5.50 per hour.
The increase is the result of a law approved by Maine voters in 2016 — when the state’s minimum wage was $7.50 per hour. The law has progressively raised the wage each year.
The increase places the state’s minimum wage at 63.1 percent of Maine’s median hourly wage of $17.41.
“Raising the minimum wage has been part of a long, grassroots effort, and I think the results so far have been pretty amazing,” said Mike Tipping, communications director with the Maine People’s Alliance, an organization that advocated for the 2016 ballot initiative. “We’ve seen wages go up, employment go up, reductions in child poverty, and families across the state that have a little more money each month.”
In Hancock County, where the November unemployment rate is down slightly from one year ago at 3.6 percent, reactions from businesses are mixed.
“Basically, I think most businesses knew this was coming, so I don’t think this is going to come as that much of a shock,” said Gretchen Wilson, executive director of the Ellsworth Area Chamber of Commerce. “Right now the labor market is so tight that plenty of businesses already offer above the minimum wage.”
At Ellsworth’s three Dunkin’ Donuts locations, for instance, openings are already advertising pay for new jobs at $11 to $11.50 per hour.
“In the summertime, we’ve seen baggers at both Hannaford and Shaw’s making more than minimum wage,” Wilson said. “Because of the fact that we already don’t have enough of an employable workforce, with what you would call minimum wage jobs — cashiers, hotel desk clerks — you have to have some benefits to recruit employees.”
In Blue Hill, Merrill & Hinckley grocery store owner John Bannister was not enthusiastic.
“Two words: not good,” said Bannister when asked how increasing the minimum wage would affect small businesses. “You get squeezed on every front, and the only place you can cut back is labor.”
That there are two differing views on the impacts of raising the minimum wage is not surprising. One can find economists on both ends of the spectrum to argue the same points.
But a brief issued in September by the Maine Center for Economic Policy showed that the minimum wage increase may have already had a positive effect in reducing poverty in Maine.
Using data from the U.S. Census Bureau, the brief showed that in 2017, wage growth in Maine was highest among workers with the lowest wages, and that income for the poorest Mainers rose quicker than for any other group.
“Compared to 2016, household incomes for the bottom quarter of Maine workers were 10 percent higher in 2017, even after adjusting for inflation,” wrote James Myall, a policy analyst with Maine Center. “This was significantly higher that the 2 percent real-terms increase for median household incomes in Maine.”
Still, small business owners such as Bannister say higher wages will ultimately lower productivity, because the only solution for dealing with higher wage costs is to cut back hours.
“It becomes extremely difficult for small stores like us to compete,” Bannister said. “Unless you already have a high markup or a high volume of sales, you suffer, and you either raise prices to pay for labor or have to cut back.”
While unemployment has decreased since the minimum wage began to rise, the Ellsworth Area Chamber of Commerce shared the sentiment that some small businesses may end up cutting back on hours.
“I think some business owners are going to go without help,” Wilson said. “Maybe you see a downtick in the amount of time it takes for someone to fill an order. That comes down to the minimum wage, or the wage they have to pay to a part- or fulltime person.”
Still, Tipping said the benefits of higher pay ultimately outweigh fewer working hours.
“It’s not a living wage, but it’s enough that people can save a little. Even having 20 more dollars in your checking account at the end of each month can have a huge impact on someone’s life.”