pinscropped.jpg

Monday August 15th the City Council will guide Baltimore for decades ahead, through its action on the $15 minimum wage bill now under consideration. This vote will also set the tone for how Baltimore is perceived on local, national, and international level for decades.

MDMFG (mdmfg.org) would like to add it's voice from the manufacturers of Baltimore City who have asked us with real concerns to speak for their businesses, their employees, and yes even the City itself .

 

We respectfully request the Council to consider the following points,

 

1.     Manufacturers will be less competitive. The result will be significant increases in technology investment or find alternative locations where the costs are more manageable. Manufacturers or products with high labor content are quietly investigating their options now. This legislation will push thousands of people into unemployment and there will be no offsetting increase in the tax base to cover the increased government cost of care.

 

2.     Why would a business employ someone in an entry level position if a simple $30,000-40,000 automation system or robot can replace perform as good or better? The answer is they will not. Automated systems are wide spread, easy to obtain, and sell like a car with credit terms and multiple year payment plans. With this increase in in minimum wage those automated systems will be cost effective. The monthly cost will be substantially less than a employee payroll for the same activity. Ponder that for moment! Now also consider that automation works around the clock, without supervision, breaks, absenteeism or the need for a urine test.

 

3.     At the new cost, why would an employer give a unskilled or marginally skilled worker a chance if they need even simple training? The answer is that they will not. Employers will have no compelling reason to take a chance on an or invest in employees whereas today employers seek to build industry knowledge at the same time they build semi-skilled capabilities. Employer provided training will diminish dramatically as there is much too long a time period for return on the investment. The employer will exclusively choose the most qualified and most highly skilled employee ignoring those at the bottom level. Why? Their hourly cost is the same. 

 

4.     Employees who currently back this bill need to understand the hard truth about the benefits they will lose as their compensation rises. From our perspective with the current benefits calculation as a guide, as the employee compensation rises over 11.00/per hour will they see a larger drop in benefits than rise in compensation? IF SO.....is the entire bill really just a way to lower the overhead of Baltimore City's benefits programs and not to help the average citizen?

 

5.     By unilaterally raising the minimum wage, what is the impact? How is Baltimore to gain new employers and new manufacturing companies? From a business perspective, market forces should create the wage rate not a local government. The government cannot legislate the sustainability of jobs, nor can the government legislate the balance between the minimum skill level for job entry and the cost to increase the sustainability of the workforce.

 

6.     Finally..........  Everyone knows an employee cannot live on the current minimum wage. Forget adding in dependents. Perhaps the sustainable solution is increase the skill level therefore increasing the value of the employee to the manufacturer. Legislation cannot determine nor demand the value calculation.

 

Please understand that this is not a clear cut decision and to suggest otherwise is short sighted. This is a decision that will resonate for decades and one which will both hurt existing manufacturers (driving them into rural locations) and will discourage new manufacturers from setting coming to Baltimore.

 

A large component for solving the social challenges in Baltimore City is to find employment for those who are chronically unemployed and those who are currently unemployable. The solution is training and incentives for employers to invest in their people. The solution is not to raise the cost.  

 

Respectfully,

Scott Macdonald, Partner, Maryland Thermoform

MDMFG.org Leadership Team (Central Maryland)