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Maryland’s minimum wage is going up in 2023, but fewer people than ever actually earn so little now

Maryland labor organizers pushing for $15 minimum wage
Rachel Baye
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Maryland labor organizers pushed for lawmakers to increase the tipped minimum wage in March 2019 amid the larger wage hike fight.

Maryland workers who earn minimum wage should see a bump in their next paycheck after the New Year. The state minimum wage is increasing from $12.50 to $13.25 for any business with at least 15 employees.

Minimum wage paid by businesses with fewer employees will increase too, from $12.20 to $12.80 an hour, according to state law.

But the economic reality statewide has changed since 2019, when the legislature approved that wage hike as part of a gradual increase from $10.10 to $15 an hour in 2025 for businesses with 15 or more employees and 2026 for smaller businesses.

A recent rapid rise in inflation combined with coronavirus pandemic-driven workforce shortages has meant that many Maryland employers struggle to find workers willing to work for minimum wage, said Tracy Lingo, staff director of Unite Here Local 7, the labor union that represents hotel, food service and casino workers in Maryland.

Even the new minimum wage taking effect in January seems insufficient, she said.

“What workers are facing in terms of food costs and gas costs and housing costs — you know, $13.25 just really doesn't cover that,” Lingo said.

She said none of her union’s members earn less than $15 an hour, and recently some employers, such as food service providers at Baltimore/Washington International Thurgood Marshall Airport, have asked the union to reopen workers’ contracts so they can increase wages.

“I've been in the labor movement over 20 years, and I've never seen a situation where employers come to the union and ask to re-bargain mid-contract,” Lingo said, “but what employers are finding is they just can't find people and they can't keep people with the wages.”

About 2% of Maryland workers — roughly 50,000 individuals out of 2.5 million workers statewide — earn minimum wage and are likely to be directly affected by the increase, according to an estimate by Ethan Kaplan, an economics professor at the University of Maryland.

“Maryland is the highest per-family income state in the country,” Kaplan said. “Then you add to that this boom in wages, and particularly, the boom has really been highest for low-wage workers.”

Because of that boom, the earning gap between low- and high-wage workers has, in the last year or two, shrunk more than in the prior 40 or 50 years, Kaplan said. So there are now fewer people earning minimum wage.

The minimum wage increase also does not apply to tipped workers, such as restaurant servers, for whom the minimum wage is $3.63 before tips. Also excluded are gig workers, such as Uber and Grubhub delivery drivers, and other people classified as independent contractors.

That said, the minimum wage going up will also affect people who are already above it, “as employers try to keep their wage ladders consistent when the lowest workers are seeing increases,” said Sebastian Martinez Hickey, a research assistant at the Economic Policy Institute.

The Washington-based think tank estimates that because of this indirect effect, about 150,000 Marylanders — about 6% of the state workforce — will see a raise in 2023.

Even more Marylanders could see wages go up if incoming Gov. Wes Moore makes good on his campaign promise to raise the minimum wage to $15 an hour in 2023, nearly two years ahead of the schedule required by state law.

Eric Luedtke, Moore’s recently named chief legislative officer, said the new administration is not ready to make any specific announcements about the minimum wage yet.

“The rise in inflation and the potential for a recession next year make clear that we have to think differently about the minimum wage, and we have to think differently about how we approach increases to it,” Luedtke said in a recent interview. “We're looking forward to those conversations internally as we develop the agenda and potential conversations with the legislature.”

Past debates in Annapolis about the minimum wage have included the question of tying wage increases to inflation, as 13 states and Washington, D.C. already do.

Rachel Baye is a reporter for WYPR's newsroom. @RachelBaye
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