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OFFICE OF THE GOVERNOR March 8.2019) ‘The Honorable Thomas V. Mike Miler, ‘The Honorable Michael E Busch President Speaker Mayland State Senate Maryland House of Delegates H-107 State House HLI01 State House Annapoie, MD 21401-1991 ‘Annapolis, MD 21401-1991, Dear Mr President and Mr. Speaker ‘As you ktow, when came to ofice in 2014, Maryland's economy was suring. We had lost over 100,000 nbs, many to surounding states. Forty-three consecutive tx increases contributed to crisis of confidence in many businesses, large, and small. Working together, we've been abe to tum things around. We've ‘wown our economy and have done much to restore confidence in the economic future of our state, We sSmply cannot afford to turn back now when we still have much lef todo, Now is ot the time to reverse Course and put Maryland back onthe previous path te economic stagnation ‘think we all share the goal of helping working families enjoy the prosperity of our State and here again, ve have much more work to do. 1 would submit to you that no mater how laudable the goal, we must Careflly consider the policy implications of a dramatic and untested increase in the minimum wege- Although it appears that afew ofthe most unpalatable anti-business provisions have been removed, there ‘are many troubling items in these bills that I fear willbe detrimental bot to our economic future and the ‘ery peopl that we would ike to help. ‘While I've been Govern, Maryland's minimum wage hs increased by amost 40% to $10.10 the highest ja the region. Were the minimum wage to increase to $15 per hour, our sll businesses would be facing an ‘additional 48% increase ~ costs that would make Maryland a much more expensive place to do business. ‘One recent study on the issue of $15 minimum wage concluded that Muyland private sector employment would be reduced by over 99,000 jobs and our state's economic output would decline by more than S61 Uilion over the next decade, This same report estimates that more than bal ofthe job losses would be in small businesses, [am extremely concerned that a dramatic and geographically disproportionate inerease in ‘curminimum wage will negatively impact our competitiveness and harm our state's economy. Ey adding a provision tht the Board of Public Works may suspend the proposed increases one time, the legislature clearly recognizes that @ rapid increase in out minimum wage to $15 will cause a negative cutlow of jobs. Regretful, the bills that I've seen emerge so fr, sill don't account forthe vast difference ‘tween the wage that you contemplate and those of our chief competitors; Virginia, ennsylvania, West Virginia, and Delaware. Small busineses faced with the choice between a $7.25 wage in Virginia or $15 in Maryland will be forced to create jobs in the lower ost location and possibly reduce jobs or eliminte pertions in Maryland. Making Maryland's minimum wage more than double that of Virginia could be too much fr our economy fo bea. How can we place Maryland's workers at risk and Marylnd businesses at so much of a disadvantage? Baltimore City Mayor Catherine Pugh, expressed similar magivings when she vetoed a $15 minimum wage in Baltimore, saying “We dont want to be the hole inthe doughnut” The Mayor's logie isthe perfect analogy to the state asa whole, given the much lower minimum wage mandatet inall ofthe states surrounding Marylend ‘You know that I'm fond of eatchy slogans, but we shouldn't undermine our economic sucess and consign ‘ens of thousands of vulnerable Maryland citizens to unemployment ust so we can join aFight for Fifteen” ‘movement. So many economic studies have concluded that an increase in the minum wage to this amount would cost tens of thousands of jobs. Whats worse, these jobs would come fiom the ranks of the working poor, who would lose hours, benefits and ther livelihoods. Justa the minimum wage would cost Jobs and deny those who need them most an entry into the labor market, the guns fom & minimum wage increase are projected to be unevenly distributed. Its projected that only 20% of any new income would go tw those below the poverty lin, te rest would goto individuals above povery. ‘Accordingly, would lke to offer a compromise to move this discussion forward. Despite my reservations bout a dramatic increase in the minimum wage, I could support a reasonable, phased increase of he rinimum wage by two dollars to $12.10 by the year 2022 if it were amended to include the following rovisons: ‘© First, the General Assembly shouldbe extremely careful 1 not allow an incase to place ws so far above our regional competitors. As this catchy sloganecring has been relatively untested, we cetainly don't know what will happen to jobs when there is such a profound disparity between states and we certainly can't afford to experiment. That is why loud like to see the legislature attach tigger to this legislation that would make any further ineteases above $12.10 effective only if our surounding states reach a combined average of 80% of our wage. 1 would propose that we include Virginia, Delaware, West Virginia, Pennsylvania, and the District of Columbia Jno tis calulation. 1 would note that all of these states withthe exception of the District currently have a wage substantially lower than our current minimum of $10.10 and fr below the proposed rate of $1. '¢ We've recognized in any number of policies and legislation that Maryland isa diverse state with an equally diverse economy. Our living wage statute, More Jobs for Maryland, prevailing wage, and many other programs account for regional differences. Therefore, 1 would propose that we Aiffeentate the minimum wage increase to account for these geographical differences. New ‘York and Oregon curently do this and so should we, We should wark out sn objective system ‘that would recognize local economic conditions, but which would be simple to implement and regulate; businesses already navigate complex end burdensome regulatory requirements across ‘he country. A regional minimum wage in Maryland should not be bureaucratic oF administative nightmare for companies that want to do business across out sate. Towatds this end, yout legislation should also consier additonal provisions to account forthe differences in temporary and seasonal workers, ‘+ Finally, so many of the benefits of an increased wage accrue to those who are already above poverty, while the jb los disproportionstely harms those who can lest afford it U believe that 3 fair and more effective way to help those who are srugeling to gt by without losing jobs would be to increase the state Eamed Income Tax Credit to 60% of the ‘ederal wage, In 2015, we passed legislation to increase this tax credit to provide more discretionary income to working. miles. This further expansion would directly target substantial benefits to the working poor while not harming businesses and jobs that would not survive sucha dramatic and geographically isolated inrease. As you know, your current proposed legislation would cot the state taxpayers ‘more than $250 million to subsidize community service providers who rely on the state for funding. By cutting back your proposed increase, we can easly afford to offer this well documented and effective relief to working families. | hope you wil consider these suggestions in the remaining weeks of the legistive session. My tam, led. ‘by Commerce Secretary Kelly Schulz and Chief Legislative Officer Chris Shank is ready and willing to engage with you and provide you with any addtional information that you may require. Lknow that we all. share the goals of uplifting those citizens who need our help, making Maryland more prosperous, and ‘expanding our economic growth, Is my hope that we cen work together on these bipartisan common sense compromise solutions. Sincerely, Zt