What’s Wrong with Maine’s Proposed Minimum Wage Increase?

By Ryan Young | October 26, 2016 | 2:43pm EDT
(AP Photo/Don Campbell)

Maine is one of several states with a minimum wage increase on the election ballot this year, along with several cities and other smaller jurisdictions. These don’t attract nearly as much attention as presidential or congressional races, but they are at least as important. Minimum wage laws affect real people, both positively and negatively. And most of those people are at the bottom of the economic ladder.

Ballot Question 4 on this year’s Maine ballot gives voters two choices. A no vote keeps the state minimum wage at $7.50 per hour, just above the $7.25 federal minimum. A yes vote would increase it to $12.00 per hour in gradual steps through 2020, and index it to inflation thereafter.

The trouble is that most people see the positive, and stop right there. Increasing the minimum wage would give some people raises, so let’s pass it! It’s an easy way to reduce poverty. No wonder minimum wage hikes are very popular. But those supporters ignore tradeoffs that hurt other people.

What about them? Hour cuts, firings, higher youth unemployment, fewer on-the-job perks such as free parking and employee discounts, higher consumer prices, and more are all among those tradeoffs. Those can eat into a single mom’s budget just as much as a higher minimum wage can help another single mom. Who counts more, and why? These questions are rarely asked. They are even more rarely answered.

Every individual is free to decide for themselves whether the minimum wage’s tradeoffs are worth it or not. It’s an ongoing debate that will never end. What will also never end is that tradeoffs exist. Many pro-minimum wage activists ignore or deny that fact. This is to the detriment of the quality of debate, and to the detriment of the people minimum wages hurt.

Ryan Young is the Competitive Enterprise Institute's fellow focusing on regulatory and monetary policy and financial regulation. He also hosts CEI’s weekly podcast and writes the popular “Regulation of the Day.”


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