Baltimore Mayor Supported $15 Minimum Wage Until She Learned What It Would Do to City's Economy

It's no April Fool's joke. Mayor Catherine Pugh vetoes a $15/hour wage mandate, citing economic concerns.

Lloyd Fox/TNS/Newscom

During the 2016 campaign, Catherine Pugh was one of dozens of Democratic politicians calling for the implementation of a $15 per hour minimum wage.

Since being elected mayor of Baltimore in November, though, Pugh has changed her mind about the merits of forcing employers to pay such a high hourly rate. Last week, Pugh announced she would veto a $15 minimum wage bill passed by city council, citing concerns about how it would hurt the city's economy, nonprofits and charities working in the city, and the city government's bottom line.

After doing "some research," Pugh said at a press conference on March 24, "it is not appropriate at this time that I will sign this bill, so I am vetoing this bill."

Pugh said the bill would not be in the best interest of Baltimore's 76,000 unemployed workers and would drive businesses out of the city to the surrounding counties.

Watch Pugh's press conference here:

My Statement on Baltimore City Council Minimum Wage Legislation https://t.co/dZskpLbtXl

— Catherine Pugh (@MayorPugh50) March 24, 2017

The minimum wage increase would drive up costs for the city government too. Over the next seven years, the Pugh administration estimated the bill would cost the city $116 million, including the expense of paying city workers a higher minimum wage, The Baltimore Sun reported.

The minimum wage in Baltimore will increase this year and again next year, along with the rest of Maryland. State lawmakers passed a law last year raising the statewide minimum wage to $9.25 on July 1, 2017, and increasing again to $10.10 in 2018.

"I believe it is in the best interest of the city that we follow the state," Pugh said.

The city council may yet overrule Pugh and implement the $15/hour minimum wage in Baltimore. The Baltimore Sun reports that Council President Bernard Young, who supported the minimum wage bill, has not yet decided whether to hold a vote on overriding the mayor's veto.

Donald C. Fry, CEO of the Greater Baltimore Committee, a regional organization including business and civic leaders, said in a statement that the $15 minimum wage would have "threatened jobs, made Baltimore an island surrounded by counties with lower business costs, and hit the city budget with millions of dollars in higher labor costs it simply cannot afford." Fry applauded Pugh for "demonstrating prudent fiscal management."

Indeed. Raising the minimum wage would not solve Baltimore's economic troubles, and would likely only add to them. While support for a $15 minimum wage has become something of a litmus test for progressive politicians, the true test of any politician should be whether he or she is willing to set aside campaign trail rhetoric that flies in the face of economic reality. Signing the bill would have made progressive pols and activists happy—one Baltimore city councilman called Pugh's decision "beyond disappointing" and a minimum wage activist group said it would remind voters of Pugh's "broken promise"—but there's no honor in following through on a promise to do more damage to an already struggling city's economy.

Pugh's decision to veto a $15 minimum wage bill isn't disappointing in the least. More politicians should learn from her example of valuing economic reality over populist rhetoric.

That's no joke.

Comments

[Diane Merriam]

Quick!! Call a doctor!!! A politician who doesn't want to spend more of the public's money. Even worse, one who may have actually learned some economics.

[Scarecrow Repair & Chippering]

Doctor my ass -- find a cop to arrest her for treason.

[Robbzilla]

She doesn't want to spend more money... after learning that her government would have to come up with another $116 million. Not very impressed with that turn.

[Bellbiv]

So ignorance aside, let's review some facts. 67% of the U.S. economy is driven by CONSUMER SPENDING. SO putting additional money into the hands of the 2,9M workers at or below the minimum wage, puts money into the fastest driver of growth in our economy. If you figure 20 hour work weeks, that's $23B of additional purchasing power added to the economy each year. Meanwhile, spread over the entire adult population, the expense increase equals $2 - $3 a week in added cost to the consumer.

We have had it pounded in our heads for FAR too long that we are the WalMart economy...Rush to low cost and low wages. What makes America great to the right in America is low cost, low wages.

Meanwhile with the advent of Trickle down economics in the 80's more than $23B in wages is being pushed to the Top 2%, so much so that In 1981 the list of the richest 400 Americans included a handful of Billionaires, while today #400 is worth $1.7B and nearly 100 Billionaires do not crack the 400!

The Top 5 alone are worth $325B, or ten times the impact of raising the minimum wage for all minimum wage workers.

Do I think it should jump to $15 overnight? No, but we have to stop this mindless rush to be the low wage leader among the industrialized nations...

[Paper Wasp]

Oh, gosh. Where to start?

...SO putting additional money into the hands of the 2,9M workers at or below the minimum wage, puts money into the fastest driver of growth in our economy.

Ah, but who's responsible for putting that additional money into the hands of minimum-wage workers? That's where we gotta disagree. Is it their employers' responsibility? Is it the consumer's responsibility? Or is it the worker's, to seek out educational opportunities, other jobs, and more valuable (read: rarer) experience that leads to higher pay?

It's the worker's. It's not the job of employers, government, and consumers to improve worker lives. Your "purchasing power" is your own responsibility. Your employer, your customers, and the government do not owe you any right to buy more shit.

[dean777]

the part about the worker seeking education is the key i have worked on the bottom for many years and the truth is you want more money you got to be more employee everybody wants more money and more this and that but no word said about what you are going to give in return you want to lay out for no real reason always be late know nothing of sanitation wont pull your damn pants up and in general just want something for nothing

[Elwar]

Are you against voluntary trade between two people? Or do you believe one person should have his decisions in such a trade dictated by threat of violence?

[Fist of Etiquette]

Poor Balmer, they voted for woke and got a stinking Republican. Where's that state's attorney who fucked up the Freddie Gray case when you need her? She was supposed to be the next mayor, and she doesn't let reality slow her roll.

[TGoodchild]

You are thinking of Stephanie Rawlings-Blake-Mikasa-Dunlop-UnderArmour IV. You know a person is important and competent when she has many names and titles.

[NYC2AZ]

I heard she just picked up an endorsement from Brawndo; it's got electrolytes!

[NCBlueJay]

No, they're thinking of Marilyn Mosby.

[Number 2]

Methinks the real eye-opener for the mayor was figuring out how much the $15 minimum wage would cost her in increased costs for city employees.

It's interesting how quickly progressive and Democrat politicians get religion on employment law issues once they realize that they, too, are employers.

[Stephdumas]

Government is a religion to them. I guess they might even do a prayer to government like Butters each night before they go to bed. https://www.youtube.com/watch?v=q_0F6v1_iy4

[rudehost]

"It's interesting how quickly progressive and Democrat politicians get religion on employment law issues once they realize that they, too, are employers."

I think its more interesting how almost none of them do.

[Fist of Etiquette]

That's almost definitely it. Yes, seldom do that type find it unacceptable that private sector businesses go tits up thanks to the central plan, but when their own budget is busted it's a different matter. I'd be surprised if it doesn't come back with some kind of public worker exception.

[NCBlueJay]

Pugh has been an employer since 1988. She owns and operates a public relations firm and a TV station. I think her $15 minimum wage thing was just campaign rhetoric. She was never going to follow through with it.

[DarrenM]

Same with Hillary. She may or may not have been foolish enough to seriously support it, but there was no way she would have passed it anyway.

[Rufus The Monocled]

"After doing "some research," Pugh said at a press conference on March 24, "it is not appropriate at this time that I will sign this bill, so I am vetoing this bill."

APRIL FOOLS!

[esteve7]

The concept of a minimum wage needs to die. There is literally no economic or moral justification for it, it's just protectionism for more skilled workers.

I'm sure most progs don't know there used to be a different minimum wage for blacks, and it was HIGHER than Whites? You know, to keep those blacks unemployed.

Wait... I bet if you tried to propose that today to fight 'inequality', most leftists would eat it up.

[Johnimo]

I had forgotten that juicy little tidbit of history. What the racists once knew, the left would certainly now embrace as compassion for their fellow (black) democrats.

[SomeGuy]

I am good with minimum wage due to the fact its forcing more automation 😀 It is accelerating us.

[Chocolate Starfish ( . )]

Ah yes, minimum wage for humans but not robots. But what about Cyborgs, augmented humanz and hybrids?

[BYODB]

You forget one central tenant of the Progressive's, which is that Black people are inferior to White people. No, seriously, it's a core belief. You can see it in almost everything they do and say.

It's the soft racism of low expectations all the way down. You can actually see this mirrored in modern feminist thought as well. It's infected everything.

While that may be an improvement for the left, they really haven't moved that far away from the eugenics that tied their movement together. They've just learned to hide it a little better, or conversely maybe people have just become easier to fool. Perhaps both, I'm honestly not that sure anymore.

[DarrenM]

Get rid of the Federal minimum wage. Let states and set their own. Puerto Rico is a mess because of it.

[Johnimo]

All responsible folks become more economically sound of mind, as they age and as they consider all the realities of adulthood. When will it finally occur to them that the best policy is a minimum wage of $0.00 per hour? Oh, the humanity!

[esteve7]

My 13yo cousin said something about the minimum wage, and he seemed to understand when I told him the real minimum wage was zero. If you can't get a job you can't earn anything

[MarkLastname]

You're saying mandatory increase in the price of a thing (labor) reduces demand for that thing?

That's just plain crazy. Right wing voodoo ecenomics right there.

[H. Farnham]

That's not really true though. If an individual is priced out of a job, they're still almost certainly going to "earn" something. Whether it be unemployment benefits, TANF, SNAP, etc. Those government subsidies skew traditional market incentives. Of course, that brings us back to added pressures on government budgets and taxpayers. As was mentioned above, it's amazing how seldom politicians connect the dots on this.

[some guy]

the best policy is a minimum wage of $0.00 per hour

But what if I want to pay someone to let me work for them so I can build up experience?

[Robbzilla]

Do it under the table.

[Bra Ket]

Baltimore will become gentrified and unaffordable either way.

[Princess Trigger]

"After doing "some research,"

SCIENCE!!

[John C. Randolph]

I'm astounded that any democrat politician could 1) understand the effects of a price control, and 2) do the right thing instead of going for the cheap publicity play.

-jcr

[esteve7]

then wouldn't they cease being democrat? Their entire platform is based off of economic illiteracy

[esteve7]

I'm also reminded of a pre-presidential Obama being asked "studies show that increasing X tax actually leads to less revenue, so why do you want to do it?"

".... in the interest of fairness"

So you get that, Taxes arn't to raise money, and raise money in the least economically harmful manner, they are to legislate your morality on everyone else.

Fuck Off, Slavers

[Bra Ket]

which is why it's far more likely the needs of some powerful interest group or donor was the real reason behind this.

[Bubba Jones]

There is mention of nonprofits being hit by this. They might be the real story.

[DarrenM]

You mean "non-profits" like the Clinton Foundation?

[NCBlueJay]

Pugh's background is in business. She has owned and operated her own public relations firm since 1988 and co-owns a TV station. In other words, I don't think she ever really considered a $15 minimum wage. It was nothing more than campaign rhetoric. As a business owner, she would know just how damaging that would be.

[Chocolate Starfish ( . )]

...because she has minimum wage employees running her TV station?

[XM]

Labor costs and business models.

[JohnC80]

Perhaps I'm economically illiterate, but could the choir please explain the reasoning behind this. If a commodity has zero elasticity, raising the price doesn't change the demand. If it has infinite elasticity, demand goes to zero when the price goes up. Everything is between these limits. If this level of minimum wage has a low elasticity, only a few will lose jobs and the benefit to those who don't will exceed these loses. If it has high elasticity, many will be hurt. The 'right thing' seems to depend on something that has not even been mentioned.
I am aware the extra expenses will have to come from somewhere. Could be from consumers or could be from CEO bonuses. Different groups might differ on their preferences for these choices.

[Presskh]

JohnC80, in response to your question, there are a number of possibilities if the minimum wage rises: It could be passed on to consumers, if there is enough demand for the product and other competitors also raise their prices. If it is a highly competitive industry and others won't raise their prices, then some may get laid off and the remaining workers told they must pick up the extra work, in exchange for the increased compensation. Cost savings to make up for the increased compensation, without layoffs, could also mean a decrease or elimination of paid vacation/sick leave, bonuses, or contributions toward retirement or insurance. Finally, substantial non-market increases in the compensation of entry-level jobs, such as fast food, could result in the early permanent end to these jobs, as robots would now become an economically viable alternative. Low-skill jobs are increasingly becoming replaced by automation in the normal free market process of "progress". Government intervention ostensibly to "help" the common man (e.g. buy votes) only hastens this process.

[Longtobefree]

You missed the part where the business closes, and everybody gets a new wage of zero. And the government gets zero payroll tax income, zero sales tax income.

[Bubba Jones]

I think the answer is that "it depends". Much like a union shop.

If profit margins are high, automation is not competitive and the price of labor is low because supply is high, then increasing the minimum wage will transfer income from rich people to poor people.

I think this is the scenario that voters have in mind.

When profit margins are low and automation is available, 3 earning $10 might become 1 earning $20 plus a computer. Both sides will claim vindication.

[Gadfly]

The extra expenses would most likely come from consumers, not CEO bonuses, as most companies are not that top heavy (maybe the tech companies are, but the more employees a company hires the less top-heavy it gets). For example, Wal-Mart, the largest employer in the US, has 1.4 million employees and pays its CEO $19.4 million per year. If the CEO worked for free and gave all his salary to his employees, they'd each get $13.86 more a year, which equates to a pay raise of $0.007 per hour for full-time work. In other words, any discussion of increasing minimum wage by more than a penny an hour is a discussion over whether prices will go up or people will get fired, as the CEO's don't make enough to pay their employees significantly more out of their own pockets.

[JohnC80]

Thank you for introducing some numbers. They seem extremely misleading. Let's suppose the CEO has five direct subordinates who make 50% of his salary. Also suppose that the CEO's direct subordinates have five direct subordinates who make 50% of their bosses' salaries. And so on. If there were seven levels of upper management (or whatever you want to call it), their combined salaries are $7.9B. If the CEO were to work for only $1M per year, a very pleasant salary, and the rest were scaled down, there would be $7.5B to use for other purposes. That represents a increment of over $5K/yr for each employee, if it were parcelled out equally.
If besides his salary, the CEO gets 5x times that in stock options or other remuneration, ... I am sure you can see the point. Perhaps I shouldn't have said 'CEO bonuses', but I didn't expect to be taken literally.

[Ceci n'est pas un woodchipper]

It seems like you've got some preconceived notions about wealthy people and CEOs, and those have been addressed elsewhere. I'll just add that wages are the price of labor in a market and are subject to the same forces of any commodity in any market. Minimum wage laws introduce an artificial floor. In labor, there aren't many jobs with low demand elasticity, but jobs that are tend to be so because the "supply price" is high, e.g. surgeons, or the "supply quantity" is low, e.g. trades, or both, e.g. professional athletes. Something you might notice about those examples is that they tend to be careers in which one has a great deal of leverage in negotiating wages because of high demand and low supply. Another thing you might notice is that these are not careers where a minimum wage would have an impact. That's not a coincidence.

And besides which, you're fixating on CEO salaries because you're thinking of wealth as a zero-sum game, besides not I think understanding quite what CEOs do and why rational people would, as stockholders, opt to pay them so much. But I sense that's not a topic where you'll be open to persuasion.

[Gadfly]

The extra expenses would most likely come from consumers, not CEO bonuses, as most companies are not that top heavy (maybe the tech companies are, but the more employees a company hires the less top-heavy it gets). For example, Wal-Mart, the largest employer in the US, has 1.4 million employees and pays its CEO $19.4 million per year. If the CEO worked for free and gave all his salary to his employees, they'd each get $13.86 more a year, which equates to a pay raise of $0.007 per hour for full-time work. In other words, any discussion of increasing minimum wage by more than a penny an hour is a discussion over whether prices will go up or people will get fired, as the CEO's don't make enough to pay their employees significantly more out of their own pockets.

[Chocolate Starfish ( . )]

What objective are you trying to achieve by doing the "right thing"?

[Jordan]

Could be from consumers or could be from CEO bonuses.

How many small businesses do you think have that option?

[Jordan]

Could be from consumers or could be from CEO bonuses.

How many small businesses do you think have that option?

[Mongo]

You know that Minneapolis mayor did the same thing, Eric? (You're from the Twin Cities, I take it).

Didn't reach the veto stage as the law didn't pass but the mayor ran on it and backed away from it when she got elected.

[Last of the Shitlords]

OT, but Adult Swim is playing a new episode of Rick and Morty on repeat tonight.

[Professor Woland]

And a good episode it is.

[Chip Your Pets]

Connecticut considering weaponizing drones

"Obviously this is for very limited circumstances," said Republican state Sen. John Kissel, of Enfield, co-chairman of the Judiciary Committee that approved the measure Wednesday and sent it to the House of Representatives. "We can certainly envision some incident on some campus or someplace where someone is a rogue shooter or someone was kidnapped and you try to blow out a tire."

Obviously. So obvious in fact that you don't even have to write any restrictions into the law for how the police can use them!

[GiveMeLibertyOrHandouts]

Confucius say: Law where police don't have restrictions is best law.

[GiveMeLibertyOrHandouts]

Confucius say: Law where police don't have restrictions is best law.

[Longtobefree]

I guess there are not enough union workers in the city to force the issue. It is almost never covered that many union contracts have multipliers of the minimum wage to set various pay levels. Minimum wage goes up, union wages go up, union dues increase, union political contributions go up, taxes go up to pay the government minmum wage workers, the whole economy goes up.

[BYODB]

Or, in some instances the Union actually manages to help get a minimum wage increase passed but they exempt themselves from the mandate. Yes, this happens. Go figure.

[Uncle Jay]

RE: Baltimore Mayor Supported $15 Minimum Wage Until She Learned What It Would Do to City's Economy
It's no April Fool's joke. Mayor Catherine Pugh vetoes a $15/hour wage mandate, citing economic concerns.

This is really disappointing.
Baltimore could have joined LA and Seattle in producing more unemployment.
Oh, what could have been!

[David Sims]

In the West Virginia countryside, if you already own your house, you can live on $10/hour from a full-time job. Not well. But you can get by. In a major city, on the other hand, having to pay rent to a greedy landlord... hm. I think that might be painful.

America was designed for the rich, not for the poor. It was designed, furthermore, to keep the poor in harness for the profit of the rich. It is true, though, that trying to fix these circumstances with a minimum wage increase won't work because the rich will simply go where they won't have to pay it. They'll go out of the country, if necessary, in search of new slave-labor drones.

[Presskh]

There is no "design" for the rich. Free-market capitalism is the economic equivalent of nature's survival of the fittest. While it is the most efficient model for producing goods and services, it favors those who best adapt to changing demand for products and services. Those who do not adapt well fall behind.

[JohnC80]

Didn't nature's survival of the fittest involve a lot of stabbing and slashing and starving and stuff. Why do you think the economic equivalent of this is a good thing?

[Azathoth!!]

The 'fittest' are the ones that breed the most and have the most offspring that survive to breed.

So survival of the fittest involves a lot of having sex. Not stabbing, slashing or starving.

[jbsnc]

Someone please briefly explain how so many powerful politicians are so ill educated and ignorant but get elected anyway. I understand the false promises of the election process but is the media that incompetent and/or dishonest and/or unimportant that they have little influence?