MHPC Releases Question 4 Report on Minimum Wage

September 28, 2016 Posted by Krysta West - No Comments

AUGUSTA- Today, The Maine Heritage Policy Center (MHPC) released a new report, Unintended Consequences: How the minimum wage hike in Question 4 would kill jobs, raise prices and hurt Maine’s most vulnerable at a press conference in Augusta.

Speakers at the event included Liam Sigaud, policy analyst for MHPC, Nick Isgro, Mayor of the City of Waterville, Carolyn Brodsky, President & CEO of Sterling Rope Co., Richard Snow, owner of Maine Indoor Karting and David Clough, Maine State Director for NFIB.

In the report, MHPC lays out the economic consequences of enacting the highest minimum wage in New England. Faced with unsustainable labor costs, many businesses–particularly in the hospitality and retail industries–will have no choice but to reduce employment and increase prices.

Using research by leading economists, MHPC estimates that more than 14,000 jobs would be lost and prices for goods and services would markedly increase, adding $2,850 in annual expenses to the average Maine family’s budget.

Nick Isgro, Mayor of Waterville, said at the MHPC press conference, “If you look at Waterville as a whole, the majority of our businesses are small family owned operations that run on thin margins and thrift. From clothing stores, to bakeries, to car washes, there are people working now that won’t be working if this law passes. The many high school and college students working part-time and building their first work skills are going to be out of luck. I’ve even talked to some business owners that are going to have to decide if they can even stay open.”

Perhaps most important, MHPC’s report demonstrates that Question 4 would do nothing to reduce poverty in Maine. Partly, this is due to the fact that the majority of poor adults in Maine do not work, and so do not stand to benefit from a minimum wage increase.

According to the report, only a fraction of minimum wage workers actually live in poverty. In fact, most are teenagers living with their parents, second- or third-earners in a household, or students working part-time. In Maine, the average household income of workers who would see their wages rise under Question 4 is $57,000. That’s 235 percent of the poverty line for a family of four and nearly 17 percent more than the median household income.

Question 4 is not well targeted to help the poor. Instead of helping our most vulnerable citizens, an increase in the minimum wage would create more hardships for many low-income families by reducing job opportunities and increasing the cost of basic necessities.