Montgomery County’s rapid growth has declined relative to our neighboring counties, and residents of the county have noticed an impact on our community. Our business community is also affected as it employs people, pays taxes and funds our schools. Indeed, to have a strong community in which to live and work, we need to have a successful business community.
In response to the influx of new residents, the discussion of raising the minimum wage has become a major legislative issue at our county council meetings. In 2014, Montgomery County passed a bill increasing the minimum wage to $11.50 by July 2017, and a new proposal calls for annual increases to raise the minimum wage to $15 by 2020. Proponents argue that increasing the minimum wage will raise the quality of life for low wage earners. But will these laws result in our business owners leaving the community?
Recently, county and state legislatures have made laws and regulations that negatively affect many businesses prosperity. In May, the state of Maryland enacted laws requiring employers with more than ten employees to force mandatory retirement plan contributions to retirement accounts. And now, the county council is proposing a minimum wage increase that is 50% higher than our current minimum wage. Such an increase could will force some businesses to close permanently or relocate away from Montgomery County.
For many small, labor intense businesses, the predicted labor rate hikes will immediately cause reduction in staff, hiring freezes and higher costs to customers because businesses that compete in these highly competitive industries have small profit margins. Higher labor costs, combined with lower revenue, results in disappearing salary and profits for business owners. If the marginal cost of employees increases, the easy solution is to decrease the number of employees. Simply put, our local hardware store will have fewer employees helping customers find items, and the grocery store will have more self-checkout lines and fewer people to help with your bags.
The dividing line within Montgomery County is already apparent. According to recent statistics, approximately 18% of the county households make more than $250,000 per year. Yet, at the same time, 35% of the students in our county school system receive free or subsidized lunches. With a higher minimum wage, a few low-skilled workers will earn more than they used to, and they will be better off. Those who lose their jobs will be much worse off, therefore, greatly increasing the divide between the “haves” and the “have nots.”
You may be asking yourself, what is the solution to improving the quality of life in Montgomery County? The county should look at new laws and regulations to attract bright, hardworking individuals to Montgomery County. If we have a community of well educated, highly motivated individuals and families, nature’s law of economics will work better to raise the wages of all in our community because of the collective success of the overall community.