The potential benefits of the recent minimum wage increase could be jeopardized for workers, families, children, and seniors if the proposals to eliminate indexing or reduce minimum wage levels are approved.
Good afternoon, Senator Volk, Representative Fecteau, and members of the Joint Standing Committee on Labor, Commerce, Research and Economic Development. My name is Garrett Martin, and I am the Executive Director of the Maine Center for Economy Policy. I am here to testify in opposition to proposals that eliminate indexing, establish a lower wage rate for younger workers, and/or reduce the wage levels approved by Maine voters last fall.
We all benefit when Mainers’ jobs pay enough to support them and their families, to pay off their debts and to save for college, to absorb unexpected expenses, and achieve a secure retirement. Too many Maine workers struggle just to pay the rent, buy shoes for their kids and keep warm in the winter because their jobs don’t pay enough to make ends meet.
As enacted, the minimum wage initiative will lift wages for one in three working Mainers by 2020, putting economic security more in reach for tens of thousands of Mainers and their families and creating an economy that works better for everyone.
We all benefit when Mainers’ jobs pay enough for them to afford health care and reliable child care that will make them more productive and dependable workers. When Mainers’ jobs pay enough for them to invest in higher education and earn higher incomes over their lifetimes, it will increase demand for goods and ultimately help to grow our economy.
We all benefit when Maine workers’ jobs pay enough to lift them out of poverty and reduce the need for public assistance. The $12 minimum wage will raise pay for the 64 percent of Maine workers (nearly two out of three) who live in households with poverty-level incomes and the 60 percent of Maine workers who live in households with near poverty-level incomes. MECEP projects that increasing the minimum wage to $12 will reduce public assistance by 6.9 percent, allowing the state to target limited resources toward transitioning more part-timers into full-time work, providing more for services to Mainers who are unable to work, and saving taxpayer funds.
We all benefit when Mainers’ jobs pay enough for them to prepare for a secure, dignified retirement. Wage income accounts for nearly 60 percent of seniors’ income in Maine. One in three Mainers age 65 or older who work will get a raise when we increase the minimum wage to $12. Workers who get a raise, especially women, whose lifetime earnings lag those of men, will have more income to save for retirement and increase their lifetime earnings-based Social Security benefits.
We all benefit when Maine kids get a healthy, nurturing start in life. One out of four Maine workers who will get a raise supports at least one child.
Research shows that a $3,000 increase in household income for families currently earning less than $25,000 a year will increase the lifetime earnings for a child in the home age 5 or under by 17 percent. Such a boost in earnings for families with young children will dramatically improve the future prospects for generations of Mainers to come.
The potential benefits of the recent minimum wage increase could be jeopardized for workers, families, children, and seniors if the proposals to eliminate indexing or reduce minimum wage levels are approved.
Indexing
Eighteen states and the District of Columbia have adopted automatic indexing of their minimum wage to the cost of living. To roll back this provision in Maine’s minimum wage law simply ensures that the value of the wage will be consistently undermined by the effects of inflation. Furthermore, indexing actually removes business uncertainty about potential changes in wage policy. It also is more consistent with past practice in Maine. While Maine’s minimum wage did not keep pace with inflation prior to passage of the voter initiative, the legislature increased the state’s minimum wage 30 times since 1959.
Benchmarking Maine’s Minimum Wage to the New England Average
At $9 an hour, Maine’s minimum wage is lower than all but New Hampshire. The simple New England average (calculated by number of states) is $9.59 and will be $9.69 in 2018. The population adjusted average is higher since Massachusetts has an $11 minimum. Even at these levels, low-wage workers still do not earn enough to make ends meet.
Age Adjusted and Training Wage
Reducing Maine’s minimum wage for younger workers is counterproductive especially to young people trying to work their way through college or who contribute significantly to their families’ income. MECEP estimates that young people working at minimum wage account for 12.7% of their household’s income. In addition, lowering the starting wage rate for young people will depress earnings over time.
Maine’s minimum wage increase will help to restore the value of work for tens of thousands of Mainers. It will increase wages for one-third of Maine’s workforce, improving economic security for them and their families. It will make sure that more Maine kids have a healthy, nurturing childhood and grow up to realize their full potential. It is an important step toward an economy that works for everyone, where all workers receive a fair wage for an honest day’s work and where the promise of the middle class is achievable for all Mainers who work hard.
