Poverty and the Minimum Wage

Question 4 on the November ballot in Maine will ask whether Maine should raise its minimum wage. The proposal is to increase minimum wage from $7.50 to $9 in 2017 and then by $1 each year until 2020, when it will cap out at $12 per hour. This would be the highest wage in New England. The question of raising the minimum wage has been a topic of controversy among Mainers, with opponents warning of job loss and proponents citing the very real problem of poverty in Maine.

Those opposed to raising the wage include the Maine Heritage Policy Center, a conservative political group. Citing estimates by the Congressional Budget Office, the group claims that 3,832 Maine jobs would be lost if employers were forced to pay higher wages. Another opponent is politician Rick Snow, who suggested that a higher minimum wage would exacerbate the opium epidemic, as it would give people more money to spend on drugs. Perhaps unsurprisingly, his harsh words outraged Question 4 proponents.

Advocates for raising the minimum wage cite statistics about the working population in Maine. In response to the claim only teens and young adults work minimum wage jobs, David Farmer of the Bangor Daily News wrote that one third of working parents in Maine would receive higher wages if Question 4 were to pass. A single parent working full time at the current $7.50 minimum wage earns only $15,600 per year—less than the federal poverty level for a family of two. Almost a quarter of Maine residents receive Supplemental Nutrition Assistance. Proponents claim that the minimum wage increase would help poor Mainers afford better healthcare and childcare, as well as increase the demand for consumer goods and improve the economy.

While these are compelling arguments, the minimum wage increase would not address poverty as well as it could. More than half of the working-age poor in Maine do not work, so they would not benefit from an increased minimum wage. These people would only be affected by the increased prices and decreased hiring caused by a higher minimum wage, with low-skilled workers feeling the brunt of the impact. Additionally, there are diverse economic conditions throughout the state of Maine. A standardized minimum wage might not be what’s best for certain areas of Maine that are already struggling with unemployment.

Waterville is comprised of many small businesses, which are especially vulnerable to an increase in minimum wage because they have less capital and less flexibility in dealing with paying their employees higher wages. Many small businesses could be forced to close, decreasing job availability and harming the economy. An increase in the minimum wage is not the best way to deal with the problem of poverty in Maine, and might have unintended consequences that hurt the economy more than help it.

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