As the state’s minimum wage hike to $12 took effect Jan. 1, small business advocates are concerned about the burden it puts on independent retailers trying to maintain operations amid the rising cost of labor.
“Each dollar increase for a full-time minimum wage job costs the employer $2,239 per year. Over the past three years the wage has gone to $12 from $9 an hour, which means the employer’s cost has gone up by $6,717 per minimum wage job,” David Clough, state director for the National Federation of Independent Business (NFIB) in Maine, said in an email response to The Center Square. “That does not include additional costs of other wage increases for workers who earn more than the minimum. The impact has been much more significant than people may realize.”
Clough noted that at $12 an hour, a new Money Wise report shows Maine now is tied for the fourth highest minimum wage in the nation.
Businesses have struggled to adapt to the wage hike laws of the last few years, Clough said.
“Some may not survive," he said. "They don’t have the customer base or flexibility to support the mandated cost increases. Dozens of small business owners have testified in Augusta over the past two years about the hard choices and struggles they experienced adjusting to the $10 and $11 wage levels of 2018 and 2019. They told legislators about raising prices on customers, cutting hours of workers, eliminating some jobs, redirecting money into wages that had been planned for employee benefits and business investment, and about small businesses that are being closed.”
Small businesses aren’t looking for government subsidies to help them meet payroll expenses, Clough added.
“This does not solve anything and instead leads to more complication, more government interference, and perhaps more mandated employment costs,” he said.
In addition to the higher minimum wage, businesses will soon be subject to a higher salary threshold for payment of overtime, as well as Maine’s Paid Leave Law, requiring employers to pay up to 40 hours of time off a year to full and part-time workers.
Paid leave laws in other states are narrower than Maine’s in scope, Clough said.
“The impact of the new Maine leave law will be significant, but nobody knows yet how significant. The Maine Department of Labor plans to issue proposed rules in April and adopt final rules by August. The Maine law likely would have been much worse for all employers but for the actions of Governor Janet Mills.”