New law bumps up wages in Maryland. Critics say the impact will be minimal.

At the beginning of this year, thousands of Marylanders saw a rise in the minimum wage. Despite the increase, advocates say that it remains insufficient for the state’s workers.

As of Jan. 1, the state minimum wage increased to $15 an hour from $13.25 at companies with at least 15 workers and $12.80 at smaller companies. Minimum wage for tipped workers, such as servers and bartenders, remains $3.63.

Maryland was already on track to gradually increase the minimum wage, but plans were accelerated last year when Gov. Wes Moore signed the Fair Wage Act of 2023. The legislation was designed to directly lift the salaries of 163,000 workers, benefitting 120,000 children in Maryland, according to a spokesperson from Maryland’s Department of Labor.

“I’m thankful to Gov. Moore because he came in and accelerated this bill by a year, which then helps families across the state, especially those concentrated in Baltimore City,” said state Sen. Cory McCray, a Democrat who represents East and Northeast Baltimore.

He explained that lawmakers had laid the groundwork in 2019 with Senate Bill 280, which called for increases in the state’s minimum wage annually until it hit $15.

While state legislators moved a large percentage of people in the right direction, for tipped workers, the state went the wrong direction, McCray said.

“While everybody else in the state of Maryland was moving ahead, these folks [tipped workers] stayed the same, because not only did they not get to the 50% increase, but their wages were halted and remained,” McCray said, referring to a failed effort to increase the minimum wage for tipped workers to the current federal minimum of $7.25.

Saru Jayaraman, president of One Fair Wage, a national organization dedicated to ending subminimum wages across the country, said the increase is still not enough.

“Maryland is behind a lot of other states that went to $15 almost a decade ago, and way behind what it actually costs to live in Maryland,” Jayaraman said.

The Massachusetts Institute of Technology’s living wage calculator, which lays out the hourly rate an individual must earn to support a family, shows that a worker supporting a household with one adult and two children in Maryland requires a minimum wage of $41.44 an hour.

Jayaraman also noted that Maryland has one of the largest gaps between the overall minimum wage and the subminimum wage for tipped workers, which is nearly a $12 gap.

“That’s one of the biggest gaps of any state in the United States,” she said.

While tipped workers in Maryland can have a base wage as little as $3.63, their total pay and tips must equal at least $15 an hour. If they don’t, employers have to make up the difference.

In a statement, the Department of Labor said it expects, over time, “the number of workers earning below $15 per hour will decrease as employers compete for workers in a tight labor market. The Fair Wage Act ensures that all Maryland workers can access rising wages, and our continued growth leaves no one behind.”

Critics of the minimum wage increase have also raised concerns, especially about its effects on the state’s small businesses.

“This wage increase couldn’t come at a worse time for small businesses,” said Mike O’Halloran, the state director at the National Federation of Independent Business, citing the negative impacts of inflation and higher prices for goods.

When the Maryland General Assembly passed Senate Bill 280, larger businesses with 15 or more workers would not have received a $15 rate increase until Jan. 1, 2025, while smaller businesses had until July 1, 2026. O’Halloran said the full year and a half would’ve allowed businesses to prepare and absorb the increased labor costs.

“To add on top of that, an unexpected increase in the cost of labor, particularly for the smallest of businesses, those who have 14 or fewer, is all being treated the same regardless of size when it comes to the state’s minimum wage,” O’Halloran added. “This is going to impact our small businesses particularly hard.”

Penelope Blackwell

penelope.blackwell@thebaltimorebanner.com

Penelope Blackwell is a Breaking News reporter with The Banner. Previously, she covered local government in Durham, NC, for The News & Observer. She received her bachelor’s degree in journalism from Morgan State University and her master’s in journalism from Columbia University's Graduate School of Journalism.

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