Wednesday, June 22, 2016

Businesspeople on MoCo Council's quest for $15 minimum wage: "That's a lot of extra Slurpees to sell"

Small business owners already struggling to profit in the moribund Montgomery County economy told the County Council last night that things will go from bad to worse if the minimum wage is hiked to $15. A bill to do just that, and tie future increases to inflation, is now on the table. Surrounding counties and Virginia do not have a minimum wage that steep.

$15? "That's a lot of extra Slurpees to sell," said Peter Gragnano of the Suburban Washington Franchise Owners Association. The hike could make a bad labor market for African-American youth in the County even worse, warned small business owner Stacey Brown. A 2015 survey I reported on showed that in Montgomery County, only 8.7% of black high school students surveyed are employed, and only 30.7% of black high school dropouts have been able to obtain employment.

Montgomery County's young black high school graduates are also being hard hit, with only 39.7% of those surveyed currently employed.

Attaching the minimum wage to inflation - which the bill would do beginning in 2021 - would also be a bad idea, another businessman testified. If inflation spiked as it did in the late 1970s and early 1980s, he predicted, "there won't be a way to wash a dish in a restaurant." Since the last minimum wage hike, touchscreen ordering kiosks have appeared in some County fast food restaurants, replacing cashiers.

Last night's testimony was enlightening in providing some more hard numbers on Montgomery County's floundering private sector economy. According to Maddy Voytek of the Maryland Retailers Association, Montgomery County has lost 2141 retail jobs since the turn of the century (around the same time the core members of this current Council were first elected). She said adoption of the $15 wage would "devastate our economy."

Montgomery County's restaurant sector has "slowed since 2012, and remains flat," reported Melvin Thompson of the Restaurant Association of Maryland. But things are tough all over, as County Council apologists like to tell us, right?

Wrong! Frederick County's dining sector grew by 5.4% in 2015 alone, Thompson said. How about our arch-rival Fairfax County, where Councilmember George Leventhal says he has to go to find a really good restaurant, because there aren't any in MoCo? The dining sector in Fairfax grew by 6% during that same year.

As wages go up, one person familiar with industry statistics testified, Montgomery County residents are being shut out of jobs here as Frederick and Carroll County workers seek our higher wages. They then take that money back to those jurisdictions, where they enjoy a far-lower cost of living, he said. Those counties then enjoy the tax and spending money benefits of Montgomery County retail and restaurant jobs, while putting more cars on our roads during rush hour.

Ilaya Hopkins, VP of public affairs for the Montgomery County Chamber of Commerce, said there are several problems with the proposed increase. First, it provides a "one-size-fits-all" solution to a diverse economy and labor market. Second, the potential impacts haven't been fully studied. And third, it further handicaps Montgomery County in its competition with other local jurisdictions where it is cheaper to start and operate a business.

The failure of the County's Nighttime Economy Initiative, after which there are fewer nightclubs in Bethesda than before it was implemented, is only one challenge for restaurant and bar owners. A previous wage hike, multiple new regulations and fee hikes, and a costly County liquor sales monopoly already make doing business in the hospitality sector here more challenging than in Northern Virginia.


  1. I came here looking for reviews of World of Beer, Panera Bread, Samovar, and all the other restaurants that opened in Rockville the last few months. All I could find is an entry on how restaurateurs are fleeing the "moribund" MoCo economy. This is blog about the Rockville in Maryland, right?

  2. This is not a review site. Many readers, myself included, appreciate all of the great news that this site brings from this area. You want reviews go use Yelp.l and the hundreds of other review apps and sites. This site is perfectly fine the way it is.

  3. Rockville Nights is the most read Rockville news site by far. Robert must be doing something right.

    10:37: a review of a Panera? I hope that was a joke. What next, a review of a Starbucks or Subway?

    1. Any way, what difference does it make to review Panera, when it will probably close in the next six months, due to insufficient revenues... and why? ...because there's nowhere to park... Welcome to Rockville!