This November, Maine voters will decide whether to raise the state’s minimum wage, now at $7.50 an hour, to $12 an hour by 2020. Supporters and opponents are divided over whether such a boost would stimulate the economy or stall it.
And one provision in particular that boosts base pay for tipped employees is a sticking point for some would-be supporters.
On a weekday fall morning, 22-year-old Tadin Brown keeps busy behind the counter at ‘Coffee By Design’ in Portland making mochas and maple lattes. When Brown started working for the company in 2014, his base pay was $8.50 an hour - one dollar above the minimum wage.
Brown used to live paycheck to paycheck, even though he doesn’t own a car, and lived with his parents for awhile. But now, two and a half years later, Brown is a co-manager and gets paid $12 an hour. Those few dollars, he says, are the difference between foregoing meals to now having a small cushion.
“That’s the biggest difference is I can put things in savings, and plan ahead,” says Brown.
Brown supports raising the statewide minimum wage to $12 an hour, and so does his boss: ‘Coffee By Design’ co-owner Mary Allen Lindemann. She already boosted base pay for her baristas when Portland implemented a $10 an hour minimum wage in January.
“I think we need to have a vision for the state of Maine,” says Lindemann, “…and having a, ‘We should all be able to thrive, not survive,’ mentality.”
Lindemann, who employs 52 people, says she figured out how to cover the cost of increasing wages by asking her employees for suggestions, “And it can’t just be that we’ll raise the price for customers. It has to be how can we run ourselves more efficiently.”
Through those efficiencies and a small cost increase, Lindemann says it was doable. And she says ballot Question 4 gives businesses time to plan. If it passes, the minimum wage will bump up to $9 an hour in 2017 and increase by a dollar per year until it reaches $12 by 2020. After that, it would increase annually according to the cost of living.
Garrett Martin is executive director of the Maine Center for Economic Policy. He says Question 4 will help those who currently earn at or near the minimum wage.
“This initiative will raise wages for roughly one in three workers in the state of Maine,” says Martin, “As well as people who earn slightly more than $12 an hour, because employers will adjust their wage rates to ensure that they’re attracting the workers that they want to maintain a productive business.”
But that’s exactly why some employers are opposed. Tom Davis of ‘Are You Ready to Party’ in Waterville says his employees who currently make $12 an hour will expect a raise if Question 4 passes.
“So they may go up to that $17, $18 an hour, and that’s a huge chunk to take in when you’ve got about 15 employees,” says Davis.
Davis also says he’ll have to raise prices, and that could send customers to his online competition, which will ultimately hurt employees. These kinds of unintended consequences are why the Maine Heritage Policy Center opposes raising the minimum wage.
CEO Matt Gagnon says raising the minimum wage will harm low-wage workers because employers will shed jobs, while the cost of goods and services will increase.
“The reason I don’t like minimum wage so much is because it’s one of those proposed easy solutions,” says Gagnon. “The real solution is improving education, improving the tax environment in the state, improving economic opportunities here, trying to get investment in the state that would have the chance to bring jobs here or grow the businesses that already exist here.”
But some low wage workers say they need money in their pockets now. Seventy-two-year old Kathy Rondone of Augusta says she earns $7.50 an hour working for a company that helps get seniors back into the workforce.
Rondone says, “If something goes wrong with my car, I have to wait two, three, four weeks, until I save up the money to repair it,” while she cuts back on other things, like food. She says living so close to the edge is scary.
Steven Hewins, president of the Maine Restaurant Association, says, “You can be philosophically in favor of increasing the minimum wage, and be against Question 4.” His organization opposes Question 4 because of one particular provision:
“Our members are concerned about the tipped credit portion of the referendum question,” says Hewins.
Question 4 eventually eliminates the tip credit, which allows businesses that employ tipped workers to count those tips toward wages. For example, restaurants can offer servers a base pay that’s half the minimum wage – $3.75 – and only need to pay more if a server doesn’t earn enough in tips to equal the full minimum wage. But Question 4 would increase that base pay for tipped employees by $1 every year until it reaches the adjusted minimum wage.
Says Hewins, “By doubling the salary expense for such a large portion of employees, it’s almost to the point of putting some marginal restaurants out of business.”
Question 4, Hewins says, will force restaurants to cut staff or raise prices. He says it would fundamentally change the hospitality structure in Maine, and could cause servers to earn smaller tips, when currently they’re among a restaurant’s highest paid employees.
Heather McIntosh is a restaurant server in Portland. She says guaranteeing a higher base pay would provide needed stability in a job where her earnings can fluctuate based on the tourism season.
“Yeah, you can make really great money for three months out of the year as a server in Maine,” says McIntosh. “By having a guaranteed minimum wage, you’re not forcing taxpayers to subsidize your workers.”
A legislative committee rejected a bill to eliminate the tip credit in 2015. Voters will have their chance to weigh in on the tip credit – and the minimum wage – on November 8th.
