Agenda Item #5 January 17, 2017 Action MEMORANDUM. January 13, County Council TO:

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1 Agenda Item #5 January 17, 2017 Action MEMORANDUM January 13, 2017 TO: FROM: SUBJECT: County Council Gene Smith, Legislative Analyst -=?f1 Josh Hamlin, Legislative Attorney~ Action - Intent of Council to pursue minimum wage study Councilmembers Floreen and Katz and Council President Berliner recommend that the County pursue a study to better understand the economic impact ofbi1l12-16, Human Rights and Civil Liberties - County Minimum Wage - Amount - Annual Adjustment. Memos from Councilmembers Floreen and Katz are on 1-3. The recommended topics to analyze include: 1. Fiscal impact on the County, including but not limited to wage compression on the County workforce, contractors, or supported non-profits and increase in costs for services provided. 2. Economic impact vis-a-vis cost to businesses, including but not limited to surveying local businesses about the potential impact from a rising minimum wage and analyzing the combined increase in costs for other local requirements (e.g., earned sick and safe leave). 3. Social impact on low-wage workers, including but not limited to their eligibility for government-funded programs and their ability to secure employment within the County. The recommendation is that the Office of Legislative Oversight (OLO) oversee the study of these topics. OLO proposes that the County hire a contractor to address topics #2 and #3 and drafted a likely scope of work for a potential contractor (see 4-6). Information on topic #1 is available through various County agencies and departments; therefore, Council staff can work with Executive staff to analyze the bill's fiscal impact on the County. If the Council decides to undertake this study, all three topics will be presented to the Council upon completion of the contracted work in a joint report. A special appropriation would be required to support a contractor to complete the scope of work on topics #2 and #3.

2 This packet contains: Circle # Councilmember Floreen memo 1 Councilmember Katz memo 2 OLOMemo 4 F:\Smith\Minimum Wage\Action_Bill12-16 Impact Study.docx 2

3 - ft 0 Si!oU ~ MONTGOMERY COUNTY COUNCil ROCKVILLE, MARYLAND NANCY FLOREEN COUNCIL PRESIDENT MEMORANDUM December 1, 2016 TO: Chris Cihlar, Director Office ofle is f' e Oversight FROM: SUBJECT: Economic Impac Analysis Request - Minimum Wage The Office of Legislative Oversight's (OLO) FY17 Work Program includes an assignment in which Councilmembers can ask OLO to contract with outside experts to provide economic impact analysis that addresses questions on specific legislation. Currently the Council is considering Bi , Human Rights and Civil Liberties County Minimum Wage - Amount - Annual Adjustment. How the bill impacts employers and the job market in Montgomery County may have a significant economic impact on the County. Therefore, I am requesting that OLO contract with outside experts as soon as possible in order to conduct an economic impact analysis ofbi cc: Councilmembers 100 MARYLAND AVENUE, 6TH FLOOR ROCKVILLE, MARYLAND n FAX 2.40n COUNCILMEMBER.FLOREEN@MONTGOMERYCOUNTYMD.GOV l:~ PRINTED ON RECYCLED PAPER

4 MONTGOMERY COUNTY COUNCIL ROCKVILLE, MARYLAND SIDNEY A. KATZ COUNCILMEMBER - DISTRICT 3 MEMORANDUM TO: Health and Human Services Committee Members FROM: Councilmember Sidney Katz ~K DATE: November 30, 2016 RE: Bill 12-16, Human Rights and Civil Liberties - County Minimum Wage In my opinion, the key to a successful minimum wage is balance; where wages move toward livability while not exceeding what businesses can absorb. I am concerned that we are discussing an increase of the minimum wage in Montgomery County without the benefit of sufficient economic analysis. This balance is one that should be guided by as much information as possible and I am fearful that we are preparing to act without the benefit of such. On this issue, there is data available that will guide us toward more insight into this complex matter. An economic impact study will help us better foresee the potential fiscal consequences that this legislation might bring. The increased burden to our local budget appears significant but has not been adequately calculated. For example, the Interagency Coordinating Council for Developmental Disabilities (InterACC/DD) is projecting that a $1S/hour minimum wage will increase the county's portion of payments to workers with the developmentally disabled by $20 million per year. Other direct service provider contracts will also need to be similarly increased, the amounts of which have not yet fully been assessed. Just one provider, Montgomery County Coalition for the Homeless, projects that the county's additional burden will be $200,000 peryear for just that one organization. 1 There might also be unintended consequences that an economic impact study could bring to light. For example, we're learning that low-income parents in Seattle are being particularly pressured by the new minimum wage when their own pay increases don't keep up with child care costs.2 For our local budget, an increased minimum wage could push more families out of eligibility for state child care subsidies and drive them toward the county program, which is unable to keep up with demand even now. 100 MARYLAND AVENUE, 6TH FLOOR ROCKVILLE, MARYLAND TTY FAX COUNCILMEMBER.KATZ@MONTGOMERYCOUNTYMD,GOV :!; PRINTED ON RECYCLEO PAPER

5 Economic impact studies are not uncommon and other jurisdictions which have contemplated a $15 minimum wage have engaged in this type of research. Specifically, the City of Seattle commissioned a study by the University of Washington 3 and the University of California - Berkley has studied the State of New York's increase. 4 Montgomery County has already implemented historic changes to our minimum wage and, yet, has made no effort to look at the impacts of what we have already applied, much less the potential implications of further increases. Like all of my colleagues, my work to improve the lives of Montgomery County residents is paramount and I have been focused on how best to do this. But, minimum wage is a policy that focuses on people who work within our borders, and not necessarily those who live here. s We should understand the differences between the impacts of minimum wage and programs that focus on county residents, like the Earned Income Tax Credit. Our recent major increase was part of a regional effort and it is important to understand the impacts of acting without those same partners. Especially in an area with such porous borders, increasing our minimum wage from 30% to almost 100% higher than our neighbors will have consequences. 6 Similarly, I have spoken with several county businesses who love operating here and would like to stay and, hopefully, expand. However, because of elements like wage compression, this increase will impact employers at all pay scales. Some will either need to close their doors or relocate over county lines - taking their jobs with them. Others will be forced to layoff some existing employees or hire fewer people than planned because these businesses cannot afford the additional payroll. Without striking the right balance, we will increase the wage for some individual workers, while also potentially reducing the overall number of jobs. In an area like ours, where moving a business just a few miles down a road can take you into a new jurisdiction, this is a concern we cannot ignore. In sum, it is always incumbent on this Council to act with the benefit of as much information as possible. Undertaking a robust economic impact study is the most responsible way for us to proceed and I ask my colleagues to pursue one before enacting any legislation. cc: Council members Confidential Aides ' HHS1.pdf 2 3http:// local census data to this point will be included in the staff packet for the HH5 Committee's December 7, 2016, meeting. 6http:// UResou rces/files!agen da/cm!20 16/160711/ H H51. pdf

6 Memorandum January 11, 2017 To: From: RE: Councilmembers Chris Cihlar, Director Office of Legislative Oversight Hiring a Contractor to Conduct an Economic Impact Analysis of BiII1Z-16 In order to better understand the economic impact that Bill will have on Montgomery County, several Councilmembers have expressed interest in having the Office of Legislative Oversight oversee a study on this topic. As part of OLO's FY2017 work plan, OLO was assigned Project #16 which states in part, "Currently the Executive Branch develops estimates of the economic impact that legislation and Executive regulations will have in Montgomery County. While these documents provide valuable information and serve an important role in the Council's review of proposed legislation, in some instances Councilmembers want additional or more detailed economic impact analysis to supplement the estimate from Executive Branch staff.... At the request ofcouncilmembers, OLD will contract with outside experts to expand upon or provide additional economic impact analysis reports that address Councilmember questions on specific legislation." This memorandum outlines the research approach OLO would use to contract with economic experts in the field of minimum wage research. While project #16 in OLD's work plan did provide some resources for economic impact analysis, the scope of the proposed study would exceed these resources and require an additional appropriation from the County Council. In general, OLO recommends that an economic impact study of Bill focus on three general areas of analysis, described below. For each of these areas, OLO has provided a set of considerations it would expect to be included in the economic analysis, with the contracted economic expert developing the specific research approaches and analytic variables to effectively answer these questions.

7 Research Question #1: What does research show the impact of raising the minimum wage to be and how might these lessons apply to Montgomery County's proposed legislation? OLO would request that this analysis: Identify those areas in the country where a change in minimum wage is most similar to that proposed for Montgomery County, including the micro-economic climate in which that change in minimum wage was undertaken. Because Montgomery County exists in a large metropolitan area with multiple jurisdictions subject to different minimum wage requirements, the impact of a change in the County's minimum wage may differ from a change enacted in an area where only one wage rate dominates a given economic market. Discuss spending habits ofthose earning minimum wage and how a wage increase may impact those habits and/or expand local economic activity, particularly in Montgomery County. Discuss wage compression and how that might occur in the context of Montgomery County. Examine how an increase in the minimum wage would impact the eligibility of minimum wage workers for government-funded programs. Explore how a rise in the minimum wage might affect the ability of low-earning County residents to find employment in the County. In particular, the contractor would analyze whether competition for minimum wage positions in the County might increase among non County residents. Explain how minimum wage requirements of local jurisdictions interact with other government programs or initiatives tailored toward lower income individuals (Le. tax incentives, paid family leave, etc..) in impacting the overall local economy. Identify successful strategies, including but not limited to earned income tax credits, other local jurisdictions have used to address income inequality and discuss how those strategies might be perform in the context of Montgomery County's local economy. Research Question #2: What impacts, both positive and negative, have local businesses experienced as the minimum wage has risen and what are the impacts local businesses anticipate if Bill is passed? In order to answer this question OLO anticipates that the contractor would issue a randomlyadministered survey to local businesses, including businesses of all sizes but focusing on businesses most likely to be impacted by an increase in the minimum wage (Le., businesses that employee high numbers of employees who earn at or near minimum wage). The survey would seek to gather data to better understand the impact past minimum wage increases have had to date and what impact the businesses believe the new legislation would have in the future. Questions would be developed 2

8 by the contracting company or individual in concert with OLD and other identified stakeholders but would include topic areas such as: How increases in the minimum wage have impacted businesses to date. Strategies local businesses would employ to manage the increase in minimum wage. The impact a rising minimum wage has on the long term tenure of employees. Changes in the application pool of potential employees. Research Question #3: Ifthe County adopts this legislation, how would Montgomery County best monitor the impact of an increased minimum wage on the County's businesses and workforce? The contract would require the contractor to develop a tool for the County to monitor the impact of increasing the minimum wage. This tool would rely on regularly-collected, reliable data that could be maintained by the County over time. To develop such a tool, OLD anticipates that a contractor would: Compare the cost of doing business in Montgomery County to other local jurisdictions based on the current and proposed wage requirements, along with other variables such as paid leave requirements and local taxes. This analysis could result in a scale that places local jurisdictions in a range of most-to-ieast similar to Montgomery County. Examine data regularly collected by the Bureau of Labor Statistics and other relevant, reliable sources to determine which relevant economic variables that are most sensitive to the proposed changes in Montgomery County's minimum wage law. Provide predictive analysis on how Montgomery County would fare compared to other local jurisdictions based on a change in the County's minimum wage law. Develop a tool allowing the County to track itself and other jurisdictions against identified economic variables over time. This would include an analysis of when data changes might be anticipated and what data points might demonstrate that changes in the minimum wage law are having an impact on County-based businesses. The above outline provides a framework for what OLD believes will be a solid economic impact analysis of Bill OLD expects the above report could be completed in a period of approximately six months after a contract is awarded. While the cost of the analysis would depend on the agreed-upon scope, OLD believes the contracted could be awarded under an informal or mini-contract solicitation, for which the limit is up to $100,000. 3

MONTGOMERY COUNTY PLANNING DEPARTMENT THE MARYLAND-NATIONAL CAPITAL PARK AND PLANNING COMMISSION

MONTGOMERY COUNTY PLANNING DEPARTMENT THE MARYLAND-NATIONAL CAPITAL PARK AND PLANNING COMMISSION MCPB Item No. 12 Date: 05-30-13 Zoning Text Amendment No. 13-03 & Bill No. 13-13 Description Summary Mark