BANGOR, Maine — Some members of the business community praised the city’s decision to increase the minimum wage locally, calling it an example the rest of the state should follow in order to help workers. Others interviewed Tuesday said the move overstepped local authority and could put the city at economic risk.
The City Council voted 7-2 Monday night to boost the minimum wage in Bangor effective the first day of 2017, when it will jump from the statewide rate of $7.50 per hour to $8.25. The next year, the wage will increase to $9 per hour. In 2019, it will rise to $9.75, increasing in subsequent years based on the consumer price index.
“I feel great about it, I think it was the right decision,” said Zeth Lundy, who co-owns Central Street Farmhouse and Maine Cloth Diaper Co. in downtown Bangor with his wife.
Lundy said that because state and federal officials have failed to take action to increase the minimum wage, Bangor had to take the lead. The step should send a strong message to other communities and leaders in the state that it’s time for similar action, Lundy said.
“Workers matter more than $7.50 an hour,” said Lundy, who employs six workers in addition to himself and his wife. Lundy said starting wages at his businesses are well above the state minimum wage.
The most common concern voiced by opponents of the wage hike is the economic fallout that could stem from Bangor venturing out on its own, becoming the second city in the state and only one in the area to boost its wage. That could put Bangor businesses at a disadvantage and potentially drive companies away from the city, they said.
Glenn Wilson, a public accountant in Bangor for the past 40 years who also owns River City Commercial Cleaning, spoke out against the increase during Monday’s council meeting. His accounting office represents about 300 businesses in the area, a quarter of which are in Bangor. His clients are worried, Wilson said Tuesday.
“It’s going to be a struggle for them. It’s really going to be a struggle,” said Wilson, adding that he crunched numbers to determine how the increase would affect about 20 of his client businesses.
One of those businesses, which he declined to name but said was a small restaurant with five employees, brought in $26,800 profit last year, with its owner paying himself or herself an average of about $12.89 per hour.
After Bangor’s new wage takes effect, costs will increase by $6,600, according to Wilson. That owner will be making about $9.69 per hour, but still will assume all the risks and liabilities associated with owning a business.
Wilson also criticized the fact that Bangor’s minimum wage will include tipped employees, such as wait staff. Wilson said he interviewed five friends who are waitresses at different restaurants in Bangor, and that they brought in between $16 and $20 per hour with tips included under their current wages. The wage or tipped credit is set by state law at 50 percent of the state minimum wage of $7.50 per hour. Under Bangor’s ordinance, the tipped credit will be 50 percent of the municipal minimum wage — or half of $8.25 when the first increase takes effect.
“You can see the inequity of the proposal as far as the owners are concerned,” Wilson said. He worries that some could be forced out of business or move to another community where the higher minimum wage isn’t in effect.
Small businesses such as convenience stores and restaurants will be hit hardest by the wage hike, Wilson said. He also said surrounding communities could lose workers who leave for the higher Bangor wage.
If a statewide ballot initiative to increase Maine’s minimum wage is successful next year, Bangor’s new ordinance will be moot — replaced by a higher minimum wage that will apply across the state.
The question, spearheaded by the Maine AFL-CIO and Maine People’s Alliance, asks Mainers whether they want to increase the statewide minimum wage to $12 per hour by 2020. Specifically, the measure would increase the minimum wage to $9 in 2017, $10 in 2018, $11 in 2019 and $12 in 2020.
Most Bangor city councilors have expressed confidence that Mainers will support the push to increase the state’s minimum wage for the first time in seven years.
Some business leaders expressed concern about Bangor’s decision to not wait for the statewide vote.
“The Chamber’s position has been that we believe the minimum wage should be set at the federal or state level, rather than at municipal levels,” Renee Kelly, chairwoman of the Bangor Region Chamber of Commerce’s executive committee, said in a statement Tuesday. “We want to create a level playing field for our member businesses who compete with businesses statewide and beyond.”
“We will continue to work with municipal leaders going forward to create a strong business environment and to help our members understand the implications of this decision,” she added.
The Chamber hasn’t discussed whether it will support the statewide ballot initiative, according to Kelly.
Jim Wellehan, president of Lamey Wellehan, which has about 100 employees working in six shoe stores across the state including one in Bangor, applauded the city’s action. He said he believes the minimum wage increase could pose difficulties, but businesses will find ways to adapt.
Wellehan said it’s unfair for a business to pay someone so little that they need state support to buy food.
“You can’t eat, bring up your children and find a place to live at $7.50,” he said.
Wellehan believes businesses will be able to adapt and should seek help from the city’s economic development staff if they’re struggling. He said businesses could find ways to cut costs and save energy.
“Business is not easy,” he said. “Our business has struggled like every other business has.”
Wellehan said he is one of the sponsors of the statewide ballot initiative. He said his lowest-paid employees make $12 per hour, but also can earn bonuses and other benefits.
Bangor is not alone in making the local minimum wage plunge. In September, Portland’s City Council voted to increase the minimum wage in the state’s largest city to $10.10 — making it the first municipality in the state to surpass the state’s threshold. Portland’s minimum wage takes effect in January.
A citizen-led ballot initiative to raise the Portland wage further — to $15 per hour — failed at the polls last month after strong resistance from the local business community.
Bangor joined about 30 cities across the nation that have enacted local minimum wage hikes, according to the National Employment Law Project. Bangor is among the smallest communities to make the leap, with a population of about 33,000 that grows much larger during the workday. Only SeaTac, Washington, with a population of 27,000, and Emeryville, California, with 10,800 residents, are smaller. Both those communities are striving toward a $15 minimum wage.
“Back in 2011, there were just four U.S. cities with higher local minimum wages,” said Paul Sonn of NELP. “Today, there are 30 and many more looking to follow. The economic experiences of cities with higher local minimum wages have been quite positive. Cities have found that they have improved wages without slowing job growth.”
Follow Nick McCrea on Twitter at @nmccrea213.