Proponents on Wednesday celebrated the success of a measure to raise Portland’s minimum wage and guarantee hazard pay during periods of emergency, while businesses warned they could not withstand the skyrocketing labor costs.

Question A on the Portland ballot, approved by voters Tuesday, will increase the city’s minimum wage from $12 an hour to $13 an hour in 2022. The wage will increase $1 every year till it hits $15 an hour in 2024. Subsequent annual increases will be tied to percent increases in the consumer price index.

The measure also requires businesses to pay employees time-and-a-half for working during a declared emergency, such as the one proclaimed in March when the coronavirus pandemic struck Maine. That means when the referendum goes into effect in December, the minimum wage will be $18 an hour in the city.

The referendum, part of a raft of proposals from People First Portland, a political group organized by the Southern Maine Democratic Socialists of America, passed with 62 percent of the vote, according to unofficial election results.

People First Portland said the measure would help low-wage workers, especially women and people of color, earn a livable wage in Portland and help the local economy by putting more money into the pockets of those who need it the most.

Speaking to reporters and supporters outside Portland City Hall on Wednesday, People First Portland volunteer Em Burnett said the city needs to inform businesses that “starting Dec. 3, all essential workers must be paid no less than $18 an hour, and that the wage for all minimum wage workers will increase to $13 an hour on Jan. 1, 2022.”

As many as 23,500 Portland workers could see a wage increase under the new ordinance, including 14,000 workers making less than $15 an hour, according to the Maine Center for Economic Policy, a left-leaning research and advocacy group.

The success of the minimum wage proposal has startled some pro-business groups and small and large employers in Maine’s biggest city. A referendum to increase the minimum wage to $15 five years ago got just 42 percent of the vote in Portland.

“It is really the emergency wage piece that is going to be devastating to business,” said Quincy Hentzel, executive director of the Portland Regional Chamber of Commerce.

The chamber and several businesses campaigned against the minimum wage measure, using the slogan, “We can’t do $22,” a reference to the $22.50 hazard pay that would be mandated during an emergency after the city’s minimum wage reaches $15 an hour in 2024.

Employers will have to make very tough choices in the coming months that could mean cutting hours, laying off staff or raising prices, Hentzel said. Combined with the economic pressure of the pandemic, Hentzel predicts a sudden wage increase may force some small employers out of business.

“I don’t think I can stress enough how difficult these past months have been for small businesses, and come December, to have the highest minimum wage in the country, it is hard to see a path forward for some of them,” she said.

The chamber is examining ways it could mitigate the impact on businesses, Hentzel said. The results of the referendum cannot be repealed or amended by the City Council for five years, but it could be reversed or changed with another citywide referendum.

While raising the minimum wage is something many support, the referendum will have unintended consequences some voters did not consider, Hentzel said.

“It is very hard to get across the actual implications these will have, the challenges people will have to implement this policy,” she said. “If people really understood what those were, this might have gone a different way.”

Lori Moses, executive director of Morrill Day Nursery, said she doesn’t know how to manage the wage increases mandated by the referendum without increasing tuition costs for parents.

The day care center, on Danforth Street, has about 20 employees and takes care of 65 children, from newborns to those about 5 years old, with prices ranging from $288 to $342 per week. Moses said she is an advocate for paying her staff a living wage and has increased pay to between $13 and $14 an hour for an assistant teacher, and $16 to $17 an hour for a lead teacher.

When the emergency wage provision kicks in next month, Moses said, her only real option is to pass the costs on to parents. Labor accounts for at least 75 percent of her budget, she said.

“It is just devastating – I don’t know what else to do but raise parent tuition or close down during the emergency,” Moses said. “I don’t know what else to do.”

MaineHealth, Portland’s biggest employer, said it campaigned against the minimum wage ordinance because of the significant financial burden the emergency hazard pay provision would create.

A $22.50 minimum wage during an emergency could add $1.6 million per week in new costs, an unsustainable amount for Maine Medical Center, said Kate Fullam Harris, MaineHealth’s chief government affairs officer.

The statewide healthcare company “believes that minimum wage and other labor policies should be considered at the state level due to the confusion and uncertainty they create for employers who occupy multiple locations,” Fullam Harris said.

“Given the size and severity of the impact, Maine Medical Center and MaineHealth are still evaluating how to best cope with the referendum and its impact on operations,” she said.

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