Gov. Moore wants to increase Maryland’s minimum wage. How would that work?

One of Maryland Gov. Wes Moore’s top priorities is to speed up increases in the state’s minimum wage, bringing it to $15 by October.

Moore’s proposal, called the “Fair Wage Act,” would also set a formula that would result in automatic increases in the minimum wage based on economic factors — rather than needing state lawmakers to vote each time.

Moore, a Democrat, made his pitch to state delegates on Monday, and he will make a presentation to state senators on Thursday. Here’s a look at how the governor’s proposal would work.

Why does Gov. Moore want to raise the minimum wage?

Moore says he’s fulfilling his campaign promises to promote “work, wages and wealth” and to end child poverty in Maryland. More than 150,000 Maryland children live in families with workers who make less than $15 per hour, he said.

“These are people who are doing it right. These are people who are working hard,” Moore told members of the House of Delegates Economic Matters Committee on Monday.

Workers making the lowest wages are often working in difficult conditions, dealing with inflation, trying to improve their lives “and they need a little help to get by,” Moore said.

“Marylanders cannot wait until 2025 for a $15 minimum wage,” Moore said.

Paying workers more will contribute to less employee turnover and more productivity, said Labor Secretary Portia Wu. The higher wage won’t cause job losses, she said. In fact, she said a higher wage can help companies that are struggling to hire and retain workers.

“Higher wages attract workers and help businesses understand that they are investing in workers,” Wu said.

How does Moore want to change the minimum wage?

Back in 2019, when Maryland’s minimum wage was $10.10 per hour, lawmakers approved a schedule for gradually raising the minimum wage to $15.

The current minimum wage on that schedule is $13.25 per hour at businesses with at least 15 workers and $12.80 at smaller businesses.

That schedule requires larger businesses to pay $15 per hour on Jan. 1, 2025 and smaller businesses would have until July 1, 2026.

Moore’s proposal would get rid of that gradual schedule entirely and require all employers to pay $15 starting Oct. 1.

No changes are proposed for tipped workers, such as servers and bartenders. Tipped workers are allowed to receive a base wage that’s less than minimum wage, provided that when tips are included, the total wage meets or exceeds the minimum wage.

What about after Oct. 1?

Moore’s plan would tie future minimum wage increases to the federal consumer price index.

Starting in 2025, there would be an annual minimum wage increase on July 1 based on the growth in the consumer price index. All increases would be rounded to 5-cent increments, and the maximum wage increase would be 5% per year.

If there’s no increase in the CPI, the minimum wage would not change. And if there’s negative employment growth in the state, then the state could hold off on any minimum wage increases by a vote of the state Board of Public Works.

Moore and supporters like this plan because it doesn’t require lawmakers to vote on wage increases, which can be politically challenging and unpredictable. They say that the CPI indexing plan will be predictable for employers, as they’ll know that a potential small increase to the minimum wage would be in the works each summer.

Nineteen states and the District of Columbia have laws indexing minimum wage increases to some measure of inflation or cost of living, according to the National Conference of State Legislatures, though not all have gone into effect yet.

Not everyone is on board with setting up automatic increases to the wage: Senate President Bill Ferguson said last week that the indexing provision may be problematic for senators.

“Indexing is a tough issue,” said Ferguson, who like Moore is a Democrat. “I don’t think the committee is overly supportive at the moment.”

Others have more philosophical objections. Del. Christopher Adams, an Eastern Shore Republican, said voting to increase the minimum wage and then making future increases automatic would “artificially put government in the place of the free market.”

What are the arguments against increasing the minimum wage?

But some say the governor is actually removing predictability for employers by eliminating the wage increase schedule that was carefully worked out in 2019.

“This is settled legislation,” said Del. Seth Howard, an Anne Arundel County Republican. “I’m concerned we’re setting a dangerous precedent in which we go back and get what we didn’t get the first time.”

Others are concerned that forcing an increase in wages will hit employers hard, who already are dealing with inflationary pressures and supply chain issues that make business difficult.

Another concern raised is that employers may think twice about moving to Maryland or expanding in Maryland because their costs for wages will be higher.

The Maryland government will also face increased costs for the workers it pays, including for people who work for developmental disabilities or behavioral health organizations. Moore has put hundreds of millions of dollars into his budget proposal to increase pay for those workers.

Representatives of those organizations are asking lawmakers to adjust the bill so that they can have funding to keep pace with future minimum wage increases.

How does Maryland compare to our neighbors?

The federal minimum wage has remained unchanged for many years at $7.25 per hour.

According to the U.S. Department of Labor, here’s how Maryland’s neighbors stack up, as of Jan. 1:

• Delaware: $11.75
• Pennsylvania: $7.25
• Virginia: $12.00
• West Virginia: $8.75
• District of Columbia: $16.50

The District of Columbia began annual increases based on the consumer price index in 2021, and Virginia will start indexed increases in 2026 when the wage there hits $15 per hour.

What’s next?

Moore’s minimum wage proposal, like the other 2,000-plus bills that have been proposed, must go through the full General Assembly process, which includes committee votes and, if approved by the committees, a series of votes in the full House of Delegates and the full state Senate.

Moore will make a presentation to the Senate Finance Committee later this week.

The governor can expect questions from senators, given the concerns raised by Ferguson. In addition to questioning the automatic future increases tied to inflation, Ferguson said the jump to $15 by October is “significant” and there are worries that the increase could be tougher for rural employers to bear.

Ferguson, speaking to reporters, predicted that a minimum wage bill would move forward, but it may not look exactly as it was proposed by the governor. He said senators are “trying to figure out a way forward that makes sense for both employers and employees.”

Moore has dozens of Democratic lawmakers as cosponsors of his bill, and also has the backing of the labor-led Fight for $15 Maryland coalition and the Maryland Center on Economic Policy, which favors progressive economic polices.

Baltimore Banner reporter Brenda Wintrode contributed to this article. This article has been updated.

pamela.wood@thebaltimorebanner.com