Minimum wage rise is OK'd by Md. Senate

Assistance for low-income workers is seen as blow for business interests

Governor is hinting that he will opt for a veto

General Assembly

April 07, 2005|By David Nitkin and Jamie Smith Hopkins | David Nitkin and Jamie Smith Hopkins,SUN STAFF

For the second straight day, the Maryland Senate approved legislation to help low-income workers while dealing a blow to business interests, sending Gov. Robert L. Ehrlich Jr. a measure yesterday that would raise the minimum wage by about 15 percent to $6.15 an hour.

The bill - opposed by the governor - was approved on a veto-proof 30-16 vote a day after the Senate adopted a plan to tax large companies that fail to spend at least 8 percent of their payroll on health care for workers. That measure would in effect apply to just one company: the retailing giant Wal-Mart.

Together, the measures either reinforce Maryland's reputation as a progressive state where working-class values rule, or as a business purgatory where liberal lawmakers run amok, depending on one's political bent.

FOR THE RECORD - An article in Thursday's editions incorrectly estimated the percentage by which the minimum wage would increase under legislation approved by the General Assembly. The minimum wage would increase by 19.4 percent, to $6.15, under the bill.

"It's been a phenomenal year for working families," said Jamie Kendrick, executive director of Service Employees International Union Maryland/D.C. State Council, which represents 30,000 health care and other employees. "I don't think we could be much happier."

But for state Sen. E.J. Pipkin, an Eastern Shore Republican who has led days of debate against both measures, the majority view of the Democrat-controlled General Assembly is badly misguided.

"We're sending the wrong message about jobs and job creation in the state of Maryland," Pipkin said. "One thing we know for sure, no matter what we do here in the legislature, when you make something more expensive - jobs - you get less of them."

This week's votes highlight a sharp divide in Maryland politics. The first GOP governor in a generation, Ehrlich was elected in 2002 as an anti-tax, business-friendly Republican who promised to change the state's economic climate and rein in profligate public spending.

But Democrats appear to be banking on a coalition of labor, minority groups and other traditional allies as they to try to reclaim the governor's mansion in 2006.

Ehrlich has in the past expressed disappointment at the lobbying strength of business groups, chiding them a year ago that they needed to "get dangerous" in Annapolis.

"Many of our members did talk to their legislators about both the minimum wage and the payroll tax issue," said Kathleen T. Snyder, head of the Maryland Chamber of Commerce. "Many members of the legislature just don't understand what it takes to run a successful business."

Passage of the wage increase had been expected for months. Legislative leaders offered it as a consolation prize of sorts to liberal interests who had asked the Assembly to override an Ehrlich veto of a bill passed last year requiring a $10.50-per-hour "living wage" for workers under state contracts.

The Senate approved a minimum wage bill several weeks ago that included an exemption for businesses that provide health insurance for employees. But yesterday, senators agreed to a House version that stripped the exemption. The bill now goes to the governor, who has hinted at a veto.

"The governor hasn't taken an official position, however has stated that he believes this is a federal issue and has concerns about the negative impact on small business," said Shareese N. DeLeaver, a spokeswoman.

Maryland's current $5.15 hourly minimum wage is at the same level set by the federal government, and was last raised in 1997. Several states - including New York, Delaware and District of Columbia -are higher than the federal minimum. Virginia, Pennsylvania and New Jersey are at $5.15 per hour.

About 55,000 of Maryland's 1.3 million hourly wage earners collect less than $6.15 an hour, according to legislative analysts.

At Elaine Ezell's AAA Antiques Mall in the Anne Arundel County community of Hanover, that includes about three-quarters of the 19 employees. Ezell said she might have to cut staff or reduce her store's hours to compensate for increased cost.

"I'd like to see the credentials of every last legislator to see how many of them have actually operated a small retail operation and see what we face," Ezell said. "It's very frustrating."

But Steve Hill, director of the liberal-leaning Maryland Budget and Tax Policy Institute, said the wage bill won't have a negative effect on the economy.

"Every claim made by the opponents of the minimum wage has been debunked by years of research," he said. "It doesn't hurt small business because their employee retention improves when employees make more money."

Business interests promise to lobby lawmakers against trying to override vetoes next year.

Ellen Valentino, state director of the National Federation of Independent Business, said she saw an increase in business activism this year, prompted by the governor's call to arms and by alarm about the bills. But clearly, she said, businesses did not get dangerous enough.

Jeff Levin, general manager at Fields of Pikesville, a business that includes a restaurant, greeting cards and cosmetics, said the governor has to go directly to citizens to convince them that the bills put Maryland at a disadvantage and could put people out of work.

"We in the private sector are looking for a governor, for our governor, to do that, and so far we are disappointed," he said. "Political leadership, a la Ronald Reagan, is what is required. And he's not doing it."

Sun staff writer Andrew A. Green contributed to this article.

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