by Thomas A. Firey
Maryland Public Policy Institute
February 14, 2014
Lawmakers in Annapolis and Washington, D.C. are considering raising the minimum wage, which currently is $7.25 an hour under both Maryland and federal law. Supporters of an increase argue that it would help the working poor by boosting their income; opponents argue that it would weaken employment for low-skill and first-time workers by artificially raising labor costs. However, substantial evidence demonstrates that raising the minimum wage would weaken employment for low-income and new workers. Indexing the increased wage to inflation, which is part of the Maryland proposal, would be especially harmful to those workers’ employment prospects. Some policy activists may accept those negative effects in return for other perceived benefits of raising the wage, but if policymakers are concerned about the welfare of the working poor, they should look to increasing the earned income tax credit, a far more efficient and progressive policy tool.