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For Immediate Release

Date: 03/27/13

Democrats Deliver Another Blow to Job Creation in Maine

House GOP sides with young workers, small business on wage control bill

AUGUSTA - Well, there they go again. Yesterday, Democrats were telling parents that their kids couldn't go tanning. Now, they're telling struggling small business owners that the wages they offer aren't good enough.

The House this morning voted to advance a bill to further control the wages Maine employers may offer and Maine workers may accept. The bill, LD 611, is sponsored by South Portland Democrat Scott Hamann and pushed by the controversial Maine People's Alliance. If it becomes law, the bill will increase the minimum wage by $1.50—or 17 percent—over three years, bringing it from $7.50 to $9 per hour. The bill would also set the wage control on autopilot, indexing it to inflation each year for the first time in Maine's history. The Maine State Chamber of Commerce estimates that LD 611 would give Maine the fourth highest minimum wage in the nation by 2016, despite its 42nd-ranked GDP per capita.

The Democrats' wage control hike would be the largest of nine such attacks on Maine small business since 2000. During its public hearing, small business owners testified against the measure, saying that Maine is already uncompetitive with surrounding states and that a wage control hike would only increase overhead costs that include rising energy, health insurance, and workers' compensation costs.

Scott Moody posted an analysis on his blog that shows Maine's minimum wage as a ratio of the state's average private sector wage. Maine's ratio placed it seventh highest in the nation. Other New England states ranked 40, 47, 48, 25, and 2. The 2013 Measures of Growth Report ranked Maine's cost of doing business as 10th highest in the nation, echoing Forbes's placement of Maine as 50th for business friendliness.

This, of course, is only the beginning. It reflects the effect of LD 611 on Maine's ability to attract new jobs and for current small business owners to keep their heads above water.

But what's even more devastating is the toll this wage control hike will take on Maine workers—the human impact.

According to Real Clear Markets and research by Harvard economist Gregory Mankiw, 79 percent of economists believe that wage control hikes increase unemployment among young and unskilled workers. These are exactly the Mainers who need to be able to get their foot in the door, gain some experience, or generate some income while training to obtain more skills.

According to the Department of Labor, only 4 percent of wage-controlled workers are single parents will full-time jobs, and over 82 percent had no dependents. Half of them are under age 25 and a quarter of them are age 16-19. About 60 percent work part time. Of wage-controlled workers, only 15 percent still earned the minimum wage after three years and within their first year of work, 65 percent received raises. According to the Heritage Foundation, only 3 percent of the workforce earns the minimum wage.

In short, the wage control hike would kill jobs for young people simply looking to gain experience and unskilled workers looking to get their foot in the job market. If businesses are forced to pay those workers more than they produce in goods or services, they will be forced to eliminate the jobs or operate in the red.

"Increasing wage controls kills jobs for those who need them the most—young people and unskilled workers—while delivering yet another blow to struggling small businesses in Maine," said House Republican Leader Ken Fredette (R-Newport). "We need to set aside emotion and look at the data if we really want to move Maine's economy forward."

"I want to see Mainers earn more, but forcing businesses to pay money they don't have is a feel-good measure that only serves to kill the jobs we're trying to create and hurt young people in the process," said Assistant House Republican Leader Alexander Willette (R-Mapleton). "That's why Republicans support tax and energy policies that put more money in Mainers' pockets while lowering the cost of doing business in Maine."


David Sorensen, Communications Director
Maine House Republicans
Tel: (207) 205-7793