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Expert: Md. minimum wage increase would increase local cost of living

Thursday - 2/27/2014, 8:49am  ET

Minimum wage increase comes with costs

Stephen Fuller, the director of George Mason Universityâs Center for Regional Analysis, shares his thoughts.

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WASHINGTON -- While raising the minimum wage in Maryland could mean more money for workers, the move could cause some major concerns including an increase in the cost of living in the Old Line State, according to an expert.

A minimum wage increase would make Maryland a more expensive place to live and would make it less competitive when compared to other states, says Stephen Fuller, the director of George Mason University's Center for Regional Analysis.

"Business might be less likely to want to invest in Maryland," Fuller says of a raise in the minimum wage. "They would go to Delaware or Virginia where the cost of labor is less."

The Maryland General Assembly is set to hear legislation to change the minimum wage from $7.25 per hour to $10.10 per hour. Prince George's and Montgomery counties have already raised minimum wage to $11.50 by 2016.

An increase in the minimum wage would help the state's economy, Maryland Gov. Martin O'Malley told The Washington Post. He says when workers earn more money, businesses will have more customers and the economy will grow.

But Fuller says an increase in hourly salary would not necessarily mean economic growth in Maryland.

"Workers will come into the state because there is higher pay there, and then leave every day as commuters and take their money home and spend it in the neighboring states," he says.

An increase in the minimum wage could affect home values locally as well, Fuller says.

"As you raise the wages, it actually makes a place less attractive [as a] location, so people won't move into those jurisdictions with higher costs," he says. "And that undercuts the housing values in those places."

Fuller says the changes are affecting the future look of the workforce, which he says will have less full-time workers and a slower job growth rate in the next few years.

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