O'Malley pledging a `living wage'

Business groups wary of support, see harm to state's economy

General Assembly

February 02, 2007|By Andrew A. Green and Laura Smitherman | Andrew A. Green and Laura Smitherman,Sun reporters

Gov. Martin O'Malley revived an issue dear to labor leaders and liberal groups in his State of the State speech this week when he deviated from his text and promised to back "living wage" legislation, a proposal that would force companies doing business with the state to pay workers upward of $11 an hour.

Unions poured hundreds of thousands of dollars into O'Malley's campaign, and they contributed volunteers who worked to get voters to the polls for the Baltimore Democrat. In the first days of his term, the governor - who made a symbolic statement by inviting AFL-CIO President John Sweeney onto the State House steps with him for his inauguration - is demonstrating why he won labor's support.

Business groups, many of whose members supported Gov. Robert L. Ehrlich Jr. in last year's election, are wary of O'Malley's support of the living wage and other labor issues, saying they will hurt Maryland's economy.

Nevertheless, O'Malley - in backing living wage legislation, focusing on Maryland's minority business program and pushing an "agency fee" bill to strengthen state employee unions' bargaining power - has shown that he is determined to use the state's influence as an employer to further a progressive agenda.

"During the campaign, Governor O'Malley heard time and again from working families who were struggling to make ends meet as the cost of living continues to go up, but paychecks remain stagnant," O'Malley spokesman Rick Abbruzzese said. "The governor is committed to improving the quality of life for Maryland families."

Democratic lawmakers have pursued the measures before, but they were stymied under Ehrlich. The Republican governor vetoed a living wage bill and fought with unions. And bills he pushed to reform minority business programs dissatisfied many minority contractors.

"Working families" was perhaps the most oft-repeated phrase in O'Malley's campaign last year, in which he pledged to reverse Ehrlich's stances on wage laws and other issues.

"It's like night and day," said Sean Dobson of Progressive Maryland. "Working families now have a friend in the governor's office."

All this doesn't sit well with business groups, who counted Ehrlich as a long-awaited champion in a state government they believed had been hostile to their interests.

O'Malley's pledge to support living-wage legislation was a surprise given the state's budgetary woes, said Ronald W. Wineholt, vice president of government affairs for the Maryland Chamber of Commerce. The state is expected to face a $1.3 billion gap between spending and revenues next year.

"By setting an artificial wage floor, you undermine the whole purpose of competitive bidding," Wineholt said. "If someone is willing to provide a service at a certain price, why should the state say, `Your bid is too low; we must pay you more.'"

O'Malley hasn't outlined the specifics of the living wage legislation he would push, but a bill that passed two years ago mandated a $10.50-an-hour minimum wage for government contractors. Backers are now pushing for an $11.95 wage.

State fiscal analysts were unable to estimate how much the 2004 proposal would have cost. According to an analysis of that bill by the Department of Legislative Services, the increase in state contracts for facilities, maintenance, security, foster care and other services probably would range from $4.5 million to about $11 million.

Robert O.C. Worcester, president of Maryland Business for Responsive Government, said the workers most affected by job cuts stemming from such wage requirements would be entry-level employees.

The idea is "uniformly opposed by business," Worcester said. "By artificially and arbitrarily setting wages, you have unintended and, more often than not, undesirable consequences."

Proponents argue that the effect on the state budget and economy would be minimized because workers would earn more and take less advantage of government assistance programs. Small businesses would benefit, too, proponents say, because the workers would spend more in the local economy.

Whether the living wage proposal would win support in the General Assembly is unclear. House Speaker Michael E. Busch, an Anne Arundel Democrat, said that when lawmakers considered whether to override Ehrlich's veto of the 2004 bill, they decided that expanding the minimum wage instead would help more people.

In 2005, the legislature increased the minimum wage to $6.15 an hour. Ehrlich also vetoed that bill, and lawmakers overrode him.

Montgomery County Del. Herman L. Taylor II, a Democrat who is sponsoring the living wage bill, said he hopes that O'Malley's victory will change the dynamics for workers.

"It's not just what we do with this particular bill and the impact on families it's going to have, but the statement overall that we should not continue trying to exploit individuals for the benefit of companies to make profits," Taylor said.

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