• State Labor Department Warns Maine Lawmakers Of Proposed Wage Increase

    During a legislative hearing Monday, Democrat lawmakers and the Department of Labor in Maine argued over an increase in the minimum wage.

    At the hearing, lawmakers heard testimony for seven different bills intended to raise the minimum wage in the state. Though the bills had slight differences ranging from the amount the wage will increase to whether it would be indexed to inflation, supporter argued any increase will greatly help workers rise above poverty. However, opponents argued the wage increase could cause companies to cut jobs, especially for low skilled workers.

    “Families are struggling to get by,” Democratic state Rep. Scott Hamann declared. “No one that works full time should have to raise a family in poverty.”

    In his testimony, Hamann claimed that raising the minimum wage would not negatively impact employment. Julie Rabinowitz, the director of communications for Maine’s Department of Labor, argued the opposite is true and that the people most likely to lose their jobs are low skilled workers.

    “The Department is opposed to these bills,” Rabinowitz noted during the hearing. “Raising the minimum addresses the symptom, not the cause of poverty.”

    The true cause of poverty, Rabinowitz argued, is a shortage of skilled workers, many of whom are young and need low paying jobs to enter the workforce which will help them in building up skills and experience. Rabinowitz warned that a wage increase will limit opportunities, making it less likely that these workers will build up their skills through a job.

    “Low skilled workers will be the first to be cut,” she continued. “The majority of people earning the minimum wage are under 24 years old.”

    Rabinowitz argued the best way to help workers is through skill training programs rather than a higher minimum wage that could compel employers to hire less and even just automate their services through computers.

    Nevertheless, Americans for the most part overwhelmingly support raising the minimum wage. According to Gallup, upwards of 76 percent of people favor raising it to $9 an hour while 22 percent opposed the idea. Studies on the subject have shown varying results.

    According to a recent study by the National Bureau of Economic Research, employment for low skilled workers falls as the minimum wage goes up. The study titled, “The Minimum Wage and the Great Recession” found that the 40 percent federal minimum wage increases between 2007 and 2009 reduced employment and income growth for low skilled and younger workers, relative to those workers in states where the new wage increase had less of an effect.

    However, a report from Center for Economic and Policy Research found that an increase of the minimum wage does not have much impact on employment.

    “Two recent meta-studies analyzing the research conducted since the early 1990s concludes that the minimum wage has little or no discernible effect on the employment prospects of low-wage workers,” the report found. “The most likely reason for this outcome is that the cost shock of the minimum wage is small relative to most firms’ overall costs and only modest relative to the wages paid to low-wage workers.”

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