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V O L . X X I I I N O. I JA N UA R Y 9 , 2 0 1 7 16 Q: What impact could the new legislation (overtime rule, minimum wage, marijuana legalization) have on businesses? Amanda Rector: Both the minimum wage increase and the 3% surtax on incomes over $200,000 could have considerable negative effects on Maine's economy. Businesses will see labor costs increase dramatically as the minimum wage increases, espe- cially those in the hospitality industry where many employees are tipped workers. As a result, hours for workers will be cut or workers will be let go as they become too expensive for the business to maintain. Other businesses may be forced to reduce ben- efits such as health insurance coverage to cover the increased wages. Prices will likely increase for many products and services as the higher wage costs are passed on to the consumer. Many of the taxpay- ers who will be hit by the 3% surtax are actually pass-through businesses such as sole proprietor- ships and S corps. Increasing their tax burden will reduce the funds available for capital purchases and further investments in the business. Individuals fac- ing a steep hike in their income taxes may decide to relocate out of state. e federal overtime rule is up in the air now, so there is a great deal of uncertainty for businesses on this front. Uncertainty around regulations is never a good thing for business growth, but a change to the rule could help Maine businesses that would otherwise be faced with hav- ing to change their employment structure. John Traynor: e key issue facing business is an overall lack of confidence in the strength and sustain- ability of the economic expansion. is can be seen in the low level of capital spending by businesses on plant and equipment. e filter we will review all potential changes to legislation will be to see if it raises busi- ness confidence. Many of the recent work rule changes implemented by the Department of Labor have been overruled in the court system so the potential for the Trump administration to put its own stamp on these hot button issues is timely and will be watched carefully. Jonathan Reisman: e stayed federal overtime rules, the increase in the minimum wage and the surtax on the rich will all reduce economic freedom and eco- nomic growth. Increasing the cost of labor will result in less labor hired and higher prices for the things that labor produces. Some workers will gain at the expense of others who get fewer hours or are replaced by machines or not at all. Some highly paid professionals and successful entrepreneurs and couples will choose to leave Maine. Hopefully the federal overtime rules will not be defended by the Trump administration and will die an unlamented death. Should they be implemented, they will raise the cost of labor without any accompa- nying increase in productivity. With an unemployment rate below 5%, this may not be a great concern, but the historically low labor force participation rate, even in demographically challenged Maine, suggests caution. e indexed minimum wage increase and the 3% surtax on the rich are direct examples of 'democratic' social- ism… e one referenda initiative that actually increased economic freedom was the legalization of recreational marijuana, regardless of what Jeff Sessions may think. Rachel Bouvier: Maine's minimum wage hasn't changed since 2009. Since then, the cumulative rate of inflation was about 11%. So the minimum wage has declined in real terms since then. It doesn't keep up with the cost of living. e fear of many economists is that raising the minimum wage will create unemployment, as it dampens the demand for labor. at may be true in certain sectors. But the other side of the equation is that it will increase the size of the labor pool, as more workers will be willing to look for a job. I recently spoke to a young mother who was debating about taking a full-time job. She ultimately didn't because she would be paid less than the cost of child care. Something's wrong with that equation. As for the legalization of pot: I'm all in favor of taxing economic "bads" — cigarettes, alcohol, pollution — rather than eco- nomic "goods," such as employment and income. I fully support directing our police resources to more public safety issues. Charles Lawton: Marijuana has created unfore- seen circumstances in that a lot has come down to local government to decide planning, zoning and NIMBY issues. ere's also the issue in that banks won't let you borrow money, so that con- stricts things. You have people with suitcases full of cash driving around in cars. With the overtime rule, Trump could overturn it with an executive order. e issue still gets back to talent attraction and retention: the companies like Unum, WEX and MaineMed that are already growing and planning to grow will work what out they need [to offer in compensation] to get the right people. Portland | Augusta | Concord | Boston | Washington D.C. preti.com At Preti Flaherty, we go beyond the traditional practice of law to pursue innovative strategies and create opportunities for our clients. We're committed to supporting Maine's entrepreneurial community. Through our partnerships with the Maine Technology Institute, Maine Center for Entrepreneurial Development, and Maine Startup and Create Week as well as offering Preti Launch Pad—a complimentary legal assistance program for new small businesses—we help innovators fi nd viable paths to reaching their goals. We're ready to help you launch. about the future of Maine business WILLING TO THINK DIFFERENTLY » C O N T I N U E D F RO M P R E V I O U S PA G E

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