Living Wage Law In Effect

Maryland's Living Wage law goes into effect today effectively trashing the labor market in some ways.

One of the most significant pieces of legislation passed is the nation's first "living-wage" law, which will set a higher minimum wage for those employed by state contractors.

The law sets minimum wages for employees of government contractors at $11.30 an hour in the Baltimore-Washington area and $8.50 an hour in rural areas.

"Monday is a historic day for working families in Maryland," said Thomas E. Perez, Maryland's secretary of labor, licensing and regulation. "Maryland is the first state in the union to enact a statewide living-wage law and, as the richest state in the union, I think we are in a good position to set the tone for other states."

The law was praised by Progressive Maryland, a liberal coalition of business and religious groups that has lobbied for such a measure for years.

"The bill is a huge improvement over what came before it," said Sean Dobson, executive director of Progressive Maryland. "Workers who are employed by state service contracts can now get paid enough to live without having to use food stamps.

The "living wage" bill will not be a boon to the Maryland economy. While it only applies to state govenrment contractors, it's effect will be felt across the entire economy. Let's take a small example.

My wife works at the University System of Maryland Hagarstown Complex. I don't know if they contract out teh custodial services, but let us say they do. Let's say that the company that is contracted paid its employees a going rate of $7.50 a hour last month. Starting today, they must pay $8.50 per hour since Hagarstown is in the "rural" part of the state. Where does that extra $1.00 per hour come from--that's right, the taxpayer. As a government agency, USM gets its funding, in part from tax payer money. The remainder comes from student tuition, of which the students are overwhelmingly Marylanders. The contractor is not going to simply eat the extra dollar in pay, he is going to pass it on to his customers, i.e. the state of Maryland and others.

So that $1.7 billion budget deficit predicted for this upcoming year, probably going to get bigger.

Oh, let's also not forget the inflationary pressures of enforced higher wages. With more money in their pocket, these workers are going to spend more, driving prices up for everyone, including themselves. Add in the increased sales tax these workers are going to have to pay and the pressure will soon come to up the living wage in the rural zones.

Oh, let's also not forget some changes that are bound to come as a result of $2.80 difference in the minimum wage law in the "rural areas" and the Baltimore Washington Corridor. $2.80 more an hour for work in those counties will make those jobs more appealing, driving further development not in the rural zones but in the already overcrowd B-W corridor. Those people, who can't afford to live in the area, will commute to the area, adding to overcrowding on the roads (and demand for more roads) and oh, yeah will have to pay the increased gas tax that Uncle Marty is looking to pass.

This just makes so much sense!!!