New data from the federal government shows that Maine’s higher minimum wage is working as intended, especially when it comes to putting more money into the pockets of the state’s lowest-paid workers.
Given this evidence, there is no reason to rollback the minimum wage law, as the Maine Senate is still considering. The Maine House has rejected such a move.
Despite warnings from businesses that an increase in the state’s minimum wage would depress employment and harm the state’s economy, a referendum to raise the wage was passed by voters in November 2016. Under the new law, Maine’s minimum wage will be increased by $1 a year until reaching $12 an hour in 2020. After that, the minimum wage will be indexed to inflation. Before the November 2016 vote, Maine’s minimum wage was $7.50 an hour. It is now $10 an hour.
In January, about 59,000 workers in Maine got a raise, which will result in nearly $80 million in additional money that will flow through the Maine economy.
U.S. Department of Labor statistics show that wages grew across the board for Maine workers in 2017. As expected, the largest gain was among the lowest-paid workers, who saw the largest increase in earnings in the more than 15 years that the department has tracked this state-level data.
At the same time, overall employment and the average number of hours worked also grew in Maine, dispelling warnings that the minimum wage increase would depress hiring and hours.
Yet, there is still an effort to rollback portions of the law. The Senate passed an amended bill that would slow the rise of the state’s minimum wage from $1 a year to 50 cents per year. The minimum wage would not reach $12 an hour until 2022. The House has rejected all changes to the current law. The bill faces further action in both chambers because they are in disagreement.
The amended Senate bill is much better than earlier versions of the bill, which would have reduced the current minimum wage to $9.50 and hour and raised it by 50 cents a year until it reached $11. The original bill would also allow a lower minimum wage for teen workers and a “training wage” for workers between 18 and 20 for the first three months they are on a job, the length of Maine’s summer tourist season.
But there is no reason to slow down the scheduled increases in Maine’s minimum wage, which have already helped lift Mainers out of poverty and have put more money into the state’s economy.
There is long-standing national evidence that increasing the wages of low-wage earners is one of the best ways to stimulate the economy, because these workers spend their money on goods and services. Wealthier individuals tend to invest or save money they receive from raises or tax cuts. Every extra dollar that goes to a low-wage worker creates $1.21 worth of economic activity, according to respected economic models. Every dollar that goes into the pockets of high-earning Americans adds just 39 cents to the national economy.
That’s why so many economists argue that raising the minimum wage is one of the best ways to boost the economy.
Maine’s early experience bolsters this argument. Raising the state’s minimum wage helped the economy and low-wage workers. Reversing or slowing these benefits makes no sense.
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