Maine Wage Hike Could Eliminate Thousands of Jobs

$12 wage wins support of sex shop, one-man band; opposition from academic

Flickr user 401(K) 2012
August 11, 2015

A Maine proposal that would create a $12 hourly minimum wage could eliminate nearly 4,000 jobs, according to a forthcoming study.

The Employment Policies Institute, a free market think tank, found that the 60 percent hike would eliminate 3,700 jobs over four years.

"If voters and legislators are interested in the real impact of a dramatic wage hike, they should speak with the retailers and restaurants whose employees will bear the negative impact of these higher labor costs," EPI research director Michael Saltsman told the Washington Free Beacon.

Activists successfully placed a referendum supporting a $12/hour minimum wage on the ballot for the 2016 election. The state has a $7.50/hour minimum wage on the books now, just above the federal $7.25 hourly minimum.

EPI and researchers from Miami University and Trinity University analyzed the employment prospects in the state using the standards set forth by the Congressional Budget Office review of wage laws. Saltsman said that the referendum’s results would mirror other academic studies, which have found job losses accompanying major spikes in labor costs.

"Decades of research, not to mention business owners' personal experience, confirm that higher minimum wages mean fewer jobs," Saltsman said.

Activists behind the referendum are courting support from the private sector to boost their case. The Maine Small Business Coalition (MSBC) circulated a petition among entrepreneurs in the state and found more than 150 business owners willing to sign.

Rachael McDivitt said she signed the petition because she has "worked on both sides of the [$12/hour] wage" and it "was a constant struggle." She quit her $17-an-hour job to open up Twisted Knickers, a sex and lingerie shop in rural Presque Isle.

"Things people look at as menial truly aren’t—they’re the building blocks of any company," she said.

McDivitt does not have any employees, but said that if she does expand she would be happy to offer any employees a starting wage in line with a $12 an hour. She dismissed reports that wage increases can inspire job reductions.

"I think it’s a lot of fear mongering," she said. "I think it’s great. A lot of people who disagree with it are out of touch."

The petition also drew the support of Michael Parent, a multi-instrumentalist, "internationally renowned storyteller" and one-man band. Parent told the Washington Free Beacon that he supports the wage because lower income workers "can barely manage in minimum wage jobs and have no spending money at all." He also said he thinks it will help the bottom line for entrepreneurs.

"Those business owners who are worried about the raising of the minimum wage have to have faith that, with the rise of the minimum wage, there will be more disposable income among folks who wish they had more for what they do, and everyone, even business owners, would benefit," he said in an email.

Parent said that he did not employ anyone and is open to, but doubtful of, the possibility that higher wages could lead to job losses.

"Since I don’t have any employees myself, I’m open to the possibility that I’m missing something here. But I probably am not," he said.

MSBC did not return request for comment.

Saltsman said that the observations of many academics and policymakers do not bode well for Maine employers and prospective entry-level workers.

"While Maine's self-employed movie makers and one-man bands surely have useful opinions on a number of topics, raising the minimum wage isn't one of them," he said.

The EPI study will be published Aug. 19.

Published under: Jobs , Maine , Minimum Wage