Minimum wage on ballot

AUGUSTA — Mount Desert Island’s representatives to the state legislature, Brian Hubbell (D-Bar Harbor) and Walter Kumiega (D-Deer Isle), both voted last week to send a proposed minimum wage hike to a referendum vote this fall.

Both also have said, however, that a provision changing the structure of how credits are applied for workers who get tips could be bad for local businesses. If the ballot initiative passes in November, both legislators say they will seek to overturn that provision in the next legislative session.

The ballot initiative, LD 1661, would increase the minimum wage set in 2009, currently $7.50/hour, to $9/hour in 2017. It would then go up by a dollar per year until it reaches $12/hr in 2020. After that, it would be indexed to the Consumer Price Index for a cost of living adjustment. It was sponsored by the Maine People’s Alliance and supported by the Maine Small Business Coalition.

Under the proposal, the existing tipped worker formula would be scrapped and the tipped minimum wage would rise incrementally until it reaches the same level as the minimum wage for all other workers, in 2024.

“For me, along with many local employers, the tip credit policy is problematic, and I have assured the respective retail associations and chambers of commerce that, should this referendum pass in November, I am committed to repairing that credit,” Hubbell wrote in an email to constituents Sunday.

“The minimum wage going up is fine, we pay our guys that much anyway,” said Desiree Bousquet, owner of Epi’s in Bar Harbor. But a major change to the tipped wage, she said, likely would increase restaurant prices and change customers’ tipping behavior.

“I don’t think people will tip anymore,” she said. “People may not go out to eat as much. Servers were making $20-25/hour. Under this, they’ll be making $12, and they’ll be pissed.”

Fred Link, general manager of the Bar Harbor Inn, and Jim Ash, former general manager of the Bluenose and now of Ashwood Consultants, both said all their hotel and restaurant employees make more than minimum wage. Bartenders and cleaning staff generally receive a higher hourly rate than restaurant servers, Link said, because they’re considered tipped workers but usually receive less tip income than servers.

Ash said a raise is overdue. “Over time, the minimum wage should be adjusted. There was a long period of time when it wasn’t adjusted, and that was wrong.”

The restaurant and hospitality industries are unusual, and it’s difficult to make policy that fits them well, he said. Restaurants have been experimenting with different compensation structures on their own. Some in New York have gone to an hourly wage for servers to match the nontipped wage. Others are looking at bonus pay for cooks on busy days when servers make more tips.

Another challenge of a dramatic minimum wage increase, Ash said, is what’s known as wage compression. A worker with more experience can suddenly find him or herself making the same wage as an entry-level employee. It can interfere with an employer’s leeway to give raises because the allowable range of compensation is smaller. Employees with additional responsibility expect to be paid more than those with less responsibility being paid the minimum.

“We need some kind of unified front here to make sure what is done is fair for everybody,” Ash said.

When an initiated bill like this comes to the legislature, Kumiega said, lawmakers have the choice to pass it, refer it to committee or indefinitely postpone it. If they postpone it, the bill automatically goes on the ballot.

Business groups including the State Chamber of Commerce, Maine Innkeeper’s Association and Maine Restaurant Association put forward an alternative proposal that would include a smaller wage hike and preserve the “tip credit” structure.

“The chamber coalition would like us to refer the bill to committee and open the door to a competing measure,” Kumiega said.

The legislature voted 78-69 on March 17 against sending the bill to committee, closing the door to the business groups’ alternative appearing on the ballot.

“My position is that we should send it to the voters,” Kumiega said, arguing having two competing measures on the ballot would confuse the issue.

“If it fails, then I would think next year the legislature would take up any number of minimum wage proposals, including something very similar. If it passes, come next year we’ll have, I’m sure, a handful of bills to modify it. Either way, it’s going to be a very interesting campaign.”

Liz Graves

Liz Graves

Reporter at Mount Desert Islander
Former Islander reporter and editor Liz Graves grew up in California and came to Maine as a schooner sailor.

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