As Maine 'hazard pay' ordinance sees delay, small business group fears impact once in effect

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Businesses in Maine’s leading city may have earned a reprieve this week when a judge delayed implementation of a hazard pay ordinance, but they still may have to deal with the provision in years to come.

Portland enacted the ordinance to raise the minimum hourly wage to more than $18, a time-and-a-half mandate during states of emergency like the COVID-19 pandemic. Maine’s statewide minimum wage also went up to $12.15 on Jan. 1.

Superior Court Justice Thomas Warren ruled Monday that the wage-increase referendum, which was approved by the city’s voters in November, should be allowed to go into effect – but not until next year.

That means small business owners won’t have to reckon with the sudden shift in worker salaries anytime soon, but without further legal challenges, they should expect it could happen down the road.

“The higher costs of labor mean higher prices for customers, trimming of labor costs through fewer workers or worker hours, and other measures to maintain balance in financial operations,” David Clough, state director for Maine’s National Federation of Independent Business (NFIB), told The Center Square.

Putting more money into the pockets of some workers can mean money out of the pockets of customers and other people associated with the business.

“Some businesses have closed or are relocating jobs to outside of the city,” Clough said. “The coping reactions are consistent with responses small business owners provided a few years ago to NFIB on a survey of a state minimum wage increase.”

While the hazard pay ordinance isn’t expected to impact Maine’s overall economy, the full impact on Portland and surrounding communities remains to be seen.

“The impact is sort of a shock wave because of the suddenness and steepness of the wage increase,” Clough said. “To the extent that the hazard pay is raising customer prices, affecting business operations and reducing worker hours or causing worker layoffs, those negative effects put a drag on economic recovery.”

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