Last week, the Legislature approved a 50-cent increase in the state minimum wage from $7 to $7.50. This is a positive step, but more needs to be done to boost Maine’s incomes and, therefore, reduce its tax burden.
An estimated 26,000 people in Maine earn the minimum wage – 63 percent of them women – and the change will mean they will earn $500 more for the first year and $500 more the next year. The increase is important for those struggling to make ends meet by taking second jobs; for those transitioning from government aid; and for those who are willing to work hard to climb the ladder but need to pay for a car, gas, housing and food. And the wage increase also nudges the pay scale in the $10-$14 per hour range higher.
Sen. Dana Dow, R-Waldoboro, said the Legislature’s focus on minimum wage rather than working to create better jobs provides a false sense of accomplishment. “We need to get people’s wages up where they belong through education and economic opportunities,” he said, according to newspaper accounts.
Sen. Dow is correct. Increasing the minimum wage is the easy part of a greater challenge. The middle class, the demographic sector many would argue is responsible for buying and building houses, starting families, launching businesses, and engaging in civic and social activities vital to community life, is falling behind. A report issued April 9 by the Pew Research Center, “Inside the Middle Class: Bad Times Hit the Good Life,” notes that “Fewer Americans now than at any time in the past half century believe they’re moving forward in life.” In the past five years, 25 percent of respondents said they haven’t moved forward while 31 percent feel they’ve fallen behind.
The report further states that “real median annual household income had not yet returned to its 1999 peak, making this decade one of the longest downturns ever for this widely-accepted measure of the middle-class standard of living.”
According to the U.S. Department of Labor, the average hourly wage was $16.90. In the Bangor area, it was slightly lower, $16.51.
There are no easy ways to raise wages in Maine, but efforts already underway need to be continued and expanded: working to get more high school graduates to earn college degrees; developing bio-tech business; investing in research and development; and improving transportation and communications links.
Government spending critics repeat the mantra that Maine is one of the most heavily taxed states in the nation, but they fail to provide the important context – taxes are high as a percentage of income. As incomes rise, the tax burden will fall. As important as slashing wasteful and inefficient government spending is, state leaders also need to focus on raising wages for all.
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