Portland’s minimum wage experiment helped prove arguments on both sides of the issue


Many of you around Portland may have seen a recent article by the Christian Science Monitor passing through your social media news feeds over the last day or so.

The national publication dropped into Maine to take a look at how the city’s new minimum wage — $10.10 per hour as of January 1 — has affected people inside Portland and around the region.

It’s sometimes valuable to have an outside organization like the Christian Science Monitor parachute in and take a look around. It provides a fresh set of eyes and the resulting coverage can be interesting to see.

It’s worth a read, and can be found by clicking here.

For my part, I want to focus on a handful of somewhat anecdotal takeaways included in the CSM piece.

And, spoiler alert, the narrative across those takeaways is this: The arguments you heard about raising the minimum wage in the city, both for and against, turned out to pretty much be true.

Of course, this all takes place against a backdrop of a statewide debate over raising the minimum wage. The progressive Maine People’s Alliance is campaigning for a November referendum that would raise the wage to $12 by 2020 across the state.

Portland businesses are attracting more and better qualified applicants

Brandon Lee, a supervisor at Big Sky Bread, told the Monitor he’s seen more and more job applicants from surrounding communities, where the minimum wage is still at the state’s number of $7.50 per hour. And perhaps even more encouraging, those applicants are more experienced, which the CSM notes makes them “easier to train and more likely to stick around,” cutting into the sometimes expensive –and understated — costs of staff mentoring and turnover.

“You immediately see better candidates,” Lee told the Monitor. “They want to get a job downtown.”

But some are also cutting hours to avoid the extra payroll

One argument you hear against raising the minimum wage — and we heard here in Portland leading into the City Council’s decision to do so — was that businesses will have to raise prices or reduce employee hours to absorb the extra costs per-worker.

Colleen Kelley, owner of Silly’s restaurant, told the Monitor she typically hires extra staff for the busier summer season. But last August, in part in anticipation of the looming wage change, decided only to open the eatery five days a week instead of six, as it had been previously.

One fewer day per week allowed her to keep her staff at 26 people, and avoid hiring more people at what would soon be higher wages.

“I’m not going to pay teenagers $10 an hour to make milkshakes,” she told the Monitor, which reported that according to at least one study, a 10 percent rise in the minimum wage can be expected to cause at least a 1 percent drop in teen employment for reasons just like this.

Those bigger paychecks are going right back into the economy

A common argument in favor of raising the minimum wage is that workers who make more spend more. So instead of just sapping businesses of money by driving up payroll costs, higher minimum wages can serve as an infusion of money by increasing the amount of customer dollars in circulation.

Back at Big Sky, 20-something employee Jessica Rogers said getting a wage bump up from $8.50 an hour, which she had been making before the new ordinance went into effect, allows her to go out on the town more and stay out later.

Laundromat worker Lorena White told the Monitor something similar, saying she went up from $7.75 per hour to $10.10, a 30 percent raise basically overnight. If you’ve managed to keep it together at $7.75 an hour — which is impressive in its own right in a city where the Department of Labor considers the living wage between $12-$13 per hour — then you can really start to spread your wings a little at $10.10.

“I can pay the bills and have a little extra for me,” she told the Monitor.

What works in Portland may not work everywhere

This drifts back into the hypothetical, as employers and employees most everywhere else in the state haven’t had to actually deal with a minimum wage increase, but a recurring theme in the feedback received by the Monitor was that, yes, the sky hasn’t fallen in Portland since the wage was raised. But it still might if the minimum wage is increased in less urban and less prosperous places.

Greg Dugal — head of the Maine Restaurants Association and the Maine Innkeepers Association, sister industry groups — said that while downtown Portland restaurants and shops are predominantly locally owned, higher class establishments that can absorb the added costs, lower margin businesses and nationwide chains found elsewhere in the region won’t be able to take the increased costs in stride.

Linda Parker, a Winthrop sandwich shop owner, told the Monitor she pays her three part-time workers less than $10 per hour and that $12 an hour would put her business off balance.

“There’s only so much you can put up prices before people don’t come back,” she told the CSM.

For those pondering a statewide minimum wage increase, it’s probably fair to note that Portland has its share of national chains and lower margin businesses as well.

Seth Koenig

About Seth Koenig

Seth has nearly a decade of professional journalism experience and writes about the greater Portland region.