The new law honors the hardworking service workers in our city while making sure that all participants can prosper.
With federal and state governments stalled, the Portland City Council listened to residents, economists and other knowledgeable people, then stepped up and enacted a higher minimum wage. As Gov. LePage has said on other subjects, important decisions should be left to the government operating closest to the people.
On Jan. 1, 2016, Portland’s minimum wage for all workers will rise from the state minimum of $7.50 to $10.10. A year later, it increases to $10.68 and annually thereafter will increase with the cost of living.
With the council vote, Portland became one of just 20 of the nation’s 20,000 municipalities to adopt a wage above prevailing state and federal minimums. No other municipality in New England or the Eastern Seaboard outside Washington, D.C., has done so.
What we know is that a higher minimum wage will put more money in the pockets of the lowest paid workers. It will help families make ends meet and get more money circulating in the local economy. For some employers, it will require an adjustment and their concerns were expressed and considered. This increase, however, puts the minimum wage back in line with historic levels adjusted for inflation. The raise was overdue. The new wage is in line with research showing a minimum wage set at 60 percent of area median wages yields economic benefits but forcing wages higher than that stifles employment. The median hourly wage in Portland’s region is $17.32, well below the national median of $24.99.
We need to be aware of the limits. Portland cannot simply compel high wages and prosperity. The good news for Portland workers: When the new law is implemented, our cost-of-living-adjusted minimum wage will jump from the sixth lowest to the 12th highest in the country. The new law also enables underpaid workers to bring a legal action for lost wages by making violators responsible for court costs and attorneys’ fees.
At final passage, one provision got disproportionate attention. The “direct” or “base” wage for tipped workers is the amount an employer must pay a tipped worker no matter how much that worker eventually makes in tips. The state’s base wage is $3.75, substantially higher than the federal $2.13 that prevails in 19 states. In fact, about half the country has a state base tipped wage of less than $3 per hour.
A majority of the council decided not to increase the base tipped wage. The law in Portland will require that all workers, whether tipped or not, young or old, be paid at least the minimum wage. When tipped workers do not receive enough tips to earn the new higher minimum, employers must make up the difference. Employees retain all tips.
Over the months of discussion, I talked with tipped workers. Many report consistently making more than the minimum wage. Of those whose tips leave them short of the new minimum wage, most said that their employers make up the difference as required by law.
If Portland raised the base wage, only two groups of employees would see any more money: 1) those already making more than the new higher minimum wage; and 2) any tipped workers whose employers do not follow the minimum wage law but would follow the base wage provision. I was not persuaded that city government should force businesses to give raises to people who make above the minimum wage in order to try to outmaneuver law violators.
During public debate, some residents called into question the whole system where tipped workers must depend on the whims of customers for much of their compensation. Others pointed to other workplace hazards and indignities. We heard moving testimony on these matters.
Those testifying made good points. Clearly, achieving just outcomes at work remains unfinished business no matter what we do regarding the minimum wage.
What Portland achieved on the minimum wage demonstrates leadership. A raise was plainly needed. We could no longer leave the workers waiting for Congress or our governor to do the right thing.
We took the time to enact an ambitious increase without taking unprecedented economic risks for a small city, one with a vital and very important service sector. Portland’s new minimum wage law honors the hardworking service workers in our city while making sure that all participants can prosper and contribute to making a vibrant economy.