peveiopment Corpraton ‘MEMORANDUM. 10: ovomble President and Members ofthe Cy Council ‘Aitetion: Natawan Avstn, Executive Secrelay OM: Winton C80/7) DATE: emg, 207 ie SUBIECT: City Council BIINo. 17-0018 Labor and Employment City Minimum Wage City Counc Bill 17-0018 proposes to establish a minimum wage rte for Baltimore City forthe years 2019-2023 treates exceptions that include tipped workers and small employes and it rate a wage ‘commission and establishes penalties for noncompliance, The current ill has a longer implementation Schedule, identifies smal employers and places them on a separte wage and implementation schedule, and exempss employers of tipped workers fom the sane quirements as other businesses, Initial, the Balkinore Development Corporation (BDC) took no position on City Council Bll 16.0655, ‘Since its nrodueton, BDC has hard from more busios, large and ssl sto how the approval of hi bill will adversely affect their businesses and ability to maintain and hire staf. BDC opposes the proposed. ‘il ast is eure dated sits approval wil have a negative impact onthe Baltimore business cavironmeat. Fist the Wage Commission, as consrcted, is uneqally weighed. Second, the minimum ‘wage requirement, absent an equivalent regional or State requirement, wil havea disproportionate impact ‘on Balin residents and Baltimore businesses. Third, the inrease may provide a greater benefit to ‘workers commuting into Baltimore City and substantially increase competition for hourly job in Baltimore City. Lastly, bused upon a survey of Baltimore businesses (See Appendix) to this repr, this bill would most likely lad to increased prices for goods and services, reduced employment opportniies and posible relocation or closure of some businesses. ‘Minimum Wage Commission Authorization nour previous respons, we outlined the constuction of the Wage Commission at point of concer. In this bil, his concer remains. Having only ne representative from the busines community asa member ‘ofthe Comission is unbalanced and gives the perception that business concoms wil nat be equally ‘considered. Business owners wil ulimatey be responsible for implementing the requirements and providing proof of such, and this, should have equal representation on the Commission Additionally, the Comission ls ben rane vera sighs inte form of oversight, nvesytion and Pelt esasment. Given the unbalanced representation ofthe commission, such increased powers ‘could be construed as highly intrusive and burdensome to business owes. Investigative powers should ‘be limited to and governed by legislation, not through regulation. $5. Charios St Sute 2100 Baltimore, MU 21202 ALU. 70S DHA.AI6SF SalGimormeveopnant onCity Count Bll 17-0018 Labor and Employment City Minimum Wage Pager Wage Requirements Wile the proposed bil wl ise the wages of people working in Baltimore City it also will rovde a cater benefit to peopl who commute ito the City to work. The lgiltion doesnt tke into ‘consideration werk residency, only lation of employment within Baltimore City, Crreatly, nearly 60% of those wio work inthe City live inthe County ‘The proposed bil, in isolation ofa regional or Site equivalent, will make obs In Baltimore Clty more ‘tractive not ut 1 Cy residents, but to workers in wrounding counts, thereby ncreting ‘competition for shes obs, which could inadvertently impede employment for the exact adlence i was imtended to benefit. The increased compertion for Balimore City jobs coud lead to more residents ‘commuting ouste the Cit for employment. The current legislation wil effectively inereae competition Jor Baltimore Chy residents seeking employment opportarits. Aste minimum pay sales increased in Baltimore Cin, comparable jobs within the City of Baltimore my pay as muchas 4846 more than the rest ofthe State. {ol seckers, previously not incined to travel othe City of Baltimore fom the aljacent counties, will ‘more Tikely fo do so if the minimum wage proposed by this Bil goes no effet. Te increase in the ‘minimum wage will atrct ob seekers from surounding couate, creating greater competion for Baltimore City jobs, and adversely affecting City residents, who ae also sacking he same employment In aditon, increasing the minimom wage wil pt financial burden on small businesses, which could lead toa reduction in the overall numberof jobs a busines can maintain and harper busines growh and ‘expansion. Businesses ae also more likely to offetthe increase inthe rice for labor by increasing the ‘roe oftheir goods and services, which wil educe the competitive poston of Balinore-based ‘companies to thso in the seme industry inthe surrounding counties. Coat of labor i one ofthe key factors in a busiess location decison. Th adoption of his bil increase the likelihood ofa businest locating in one of Bakimore City's adjacent counties, rather than selecting a location within the City limits. nado, te eretion of addtional business costs to submit annual proof of compliance will only drive businesses into ether counties. Highly competitive sector of retail, services and hospitality, both large and sal, will fel the greatest negative impact of the minimum wage increse. ‘A disproportional higher minimum wage isolated to Baltimore alone will pt City business at 2 ‘competitive disadvantage to those in other municipalities and counties inthe immedi region, Businesses in he City area face substantially higher taxes than surrounding jurisdictions. A large gap in both mes and wages puts Baltimore a futher disadvantage in the atrcton of new busineses and the retention of existing busineses. That disadvantage is most apparent fo those businesses near Jurisdictional ine, wich is almost half ofthe Citys rete with 80 or more employees ‘65. Charest Sute 160 Baltimore, MO 21201 410.857.9905 ) 410.897.4968" "ios ov sopnont con(City Comme Bal 17.0018 Labor and Employment ~ City Minimum Wage Pages Compettve Disadvantage Despite its visions, the bil in Subrie 3 Section 2B(B) Exception Not Applicable to Chan: roves ‘asinsses with two (2) or more locations nationally from the protections of Subvle Seton 224) Exceptions Small Employers. Wit this removal from the excetio, any business wit secord location regardless of whether they bave fewer tan 0 employees andlor generale less than $400,000 in anial 175s revenue would be required pay their employees $15 an hour by July 1, 2022 a opposed to uly 1, 2026, For smal employers, this requirement ray discourage new developmen, busines expersion and twain, Based ona surey of Baltimore businesses regarding the potential increase in tbe Clty minimum wage, the majority of businesses, despite whether they supported the increase oF no, ced that hey would most Tikely have aise prices and redice staff, cx Kyron Banks sedrbbtfenn/ nt ‘345. chates St, Suite 1400 Baltmors, M1 2%201 4}0.87 #303? 4208978949" alinoredevelonneAppendix ‘Survey on Babimore Cy Proposed Minimum Wage Increase — Key Findings ‘otal of 322 firms located within 14 Baltimore City's RBDLs and Main Streets respoaded tothe survey (response rt of 15%), Opinion of resyonding fms to the proposed legislation: © 25% offims surveyed supported increasing te minimum wage to $15/he © 39% did ne support the increase © 36% didnot take a position Opinion of responding firms tote proposed legislation by industry: 61% of Clothing Retail suppor the increase 73% ofProfesiona/Technical services dd ot support the increase 72% ofRestaurants did not support the incense 72% of Food Retai/Grocery store dd not support the increase 52% of Personal Service fms (barbers, ba, al slons, and drycleaners) support the increase ‘When asked thehow the proposed legislation would impact her operations (total of 322 fis): = 27% sid the increase would have no impect on their opertions 310% sid they would reduce esting aff hours 29% wauld aso prices of goods and services 27% woul hire fewer workers 21% would terminat current workers 17% would close their business 109% weuld relocate their business out ofthe City Impact ofthe proposed legislation i te busines suppor the increas (ltl of 79 firms) * 489% said the legislation would have no impact © 249% woald aise their prices 20% would reduce existing staff hours = 13% would ire fewer workers‘Do You Suppert Paying a Minium Wage of $1Stir? at Repsee tn an te an a a A |a 3 1 “su ieee eg B34 > 2 0 Boo 4 noo20 3 7 9 6 9 1 8 m2 ok we 1 4 s 0 of ww o1 8 eos Impact of Minimum Wage of $1S/hr on Firms sete ab eukiWe Total Firms Reduce Staff Hous Raise Prices No Impact, Fle Fewer Workers Lay off Curent Workers Close My Business ‘Don't Know Whet Will Happen Relocate My Busiess Raise Wages for Saff Currently Making More than $1 Other ‘Not: Finns were alowed to elet mulip responses Raeeeasg of Total 30.1%