PORTLAND, Maine — Portland’s decision to raise the minimum wage within its city limits is already having ripple effects in other municipalities as more city councils weigh whether to boost salaries for the lowest-paid workers in their own communities.
In a 6-3 vote Monday, the City Council enacted a new minimum wage ordinance, setting the salary floor in Portland at $10.10 per hour starting in January 2016, followed by another increase to $10.68 per hour in 2017. Thereafter, the wage will be indexed to inflation, ensuring that as the cost of living goes up, so does Portland’s minimum wage. The state-level minimum wage is $7.50 per hour.
Portland became the first city in Maine to enact a local minimum wage when it did so on Monday, but several of Maine’s other largest cities also are looking at the question. With Portland setting the pace, officials in those cities say that issue has a new urgency.
That urgency is perhaps most salient in South Portland, the state’s largest service center, located just across the river from Portland. Officials there support a wage increase but said they had hoped to find a regional solution so as not to create disparate salary scenarios from one community to the next.
South Portland is particularly reliant on business property taxes, perhaps more so than any other municipality in the state, said City Councilor Tom Blake. The city’s revenue stream is about a 50-50 split between business and residential taxes, he said.
“So when another nearby city changes their minimum wage, it really impacts our community,” Blake said. “We have so many service workers in our community because we’re a huge service center. It might make it harder for our employers to fill their employee base” as those workers seek higher-paid jobs in Portland.
Linda Cohen, South Portland’s mayor, said the city still hoped to work through the Greater Portland Council of Governments — a coalition of 27 towns and cities in the area — to establish a regional wage structure that helps the lowest-paid workers and maintains stability across municipal borders.
Blake, like Cohen, is a member of the Greater Portland Council of Governments’ General Assembly, and he also is on its executive committee. But he said he thought it would be a bridge too far to get all the group’s towns and cities to agree, and that South Portland would likely have to act alone.
In Bangor, the City Council is scheduled to take up a proposal by Councilor Joe Baldacci to increase the minimum wage. As Portland did, Bangor would index the wage to the consumer price index, ensuring that as the cost of living goes up, so does the minimum wage.
Baldacci said Tuesday that even though Portland is about 130 miles away, its wage increase puts pressure on Bangor to act.
“It should affect us,” Baldacci said. “There are a number of people who are dead set against doing this, so I’m not sure anything will have a major impact on them. But if we’re serious about keeping young people and young families in Bangor, wages are a factor.”
During Portland’s minimum wage debate, people representing businesses — especially restaurants and hotels — said the move would hurt their bottom line. With the increase passed, many will be looking to Portland as a petri dish, looking for signs of side effects to the new policy.
Ed Wolak, chairman of the Maine Franchise Owners Association, said in an email that he’s not opposed to increases in the minimum wage, but that he thinks they should be applied evenly and phased in gradually.
“Small businesses must be able to manage their cash flow so as to [ensure] that they stay in business,” said Wolak, whose franchise network The Wolak Group, owns and operates more than 85 Dunkin’ Donuts locations in Maine, New Hampshire and Vermont.
Wolak said he thinks a statewide minimum wage increase would be “less of a challenge” for small businesses and that over the long-term it will have an effect on job growth in Portland.
Chris Hall, CEO of the Portland Regional Chamber of Commerce and a former lobbyist at the State House for the same, said while the chances for a state-level minimum wage increase are slim, the proposal might have a chance at the ballot box. The progressive advocacy group Maine People’s Alliance is teaming up with the Maine AFL-CIO to enact such a statewide increase by referendum in 2016.
“As much as the State House can be in gridlock, it doesn’t mean the state can’t act through the voters,” Hall said. “And I’m positive they’re going to get a chance to do that next fall.”
Joel Johnson, an economist at the Maine Center for Economic Policy, said questions about the future of the state’s minimum wage laws — and the potential for increases in Portland’s neighboring communities — may put a halt to any short-term decisions by Portland businesses to cut staff or relocate.
“When you consider the little bit of uncertainty as far as the state landscape goes, with the ballot initiative coming up, and just the fact that these things generally take time to play out, it’s hard to see in the short run at least, a lot of businesses relocating to Westbrook or South Portland,” he said.
Besides, he said, the types of business most likely to be affected by a minimum wage increase don’t really have the option to just up and leave. For most of those businesses, being in Portland is a crucial piece of their business plan.
“When you look at the sectors that are predominantly affected by this policy in Portland, you’re looking at retail, leisure and hospitality businesses. These are very location-specific businesses,” he said.
