“Can Maryland’s Small Businesses Survive a $25 Minimum Wage?”

When Maryland lawmakers floated the idea of raising the state’s minimum wage to $25 an hour, the proposal landed like a thunderclap across the state’s business community. For advocates, it’s a long-overdue correction — a bold attempt to bridge the widening gap between paychecks and the cost of living. For small and medium-sized business owners, it’s an existential question: can they survive it?

A Push Rooted in Pain and Promise

Maryland’s current minimum wage — $15 an hour statewide — was considered ambitious when first passed. But inflation, rent spikes, and the soaring cost of essentials have rapidly eroded its purchasing power, especially in the Baltimore-Washington corridor.

Groups like One Fair Wage, the national advocacy organization leading the push, argue that $25 is no longer radical — it’s realistic. “You can’t survive on $15 anymore,” the group’s founder, Saru Jayaraman, said at a rally earlier this year. “We’re not talking about luxury; we’re talking about living.”

If passed, Maryland would become the first state in the nation to mandate a $25 hourly minimum, a precedent likely to reverberate across the country. The proposal is slated for potential inclusion on the 2026 statewide ballot, signaling a public showdown between wage justice and economic caution.

For Businesses, the Math Is Brutal

While the moral argument is compelling, the math isn’t kind. A jump from $15 to $25 represents a 66 percent increase in base labor cost, a shock many smaller businesses simply can’t absorb.

In Baltimore’s Fells Point, Sharon Lewis, who owns a family-run restaurant that employs 22 people, says she supports fair pay but fears the fallout. “Our payroll would go from around $34,000 a month to almost $57,000,” she said. “There’s just no way we can do that without raising prices — and if we raise prices, customers leave. It’s a lose-lose.”

Economists warn that this kind of leap could create a ripple effect through Maryland’s economy. Businesses may respond by cutting staff, reducing hours, or accelerating automation, particularly in industries like retail, food service, and logistics. Others could consider relocating operations to neighboring states like Pennsylvania or Virginia, where wage floors remain significantly lower.

The Uneven Geography of Cost and Competition

Maryland’s economy isn’t uniform. A $25 minimum wage might make sense in high-cost regions like Montgomery and Prince George’s Counties, where housing and commuting costs rival the Washington suburbs. But for rural and smaller-town businesses — in Hagerstown, Salisbury, or Southern Maryland — it could be crushing.

“Regional wage differentiation matters,” said David Cooper, a senior analyst at the Economic Policy Institute. “A $25 wage might align with a living wage in Silver Spring, but it far exceeds market wages in Western Maryland. Uniformity may sound fair, but it can create unintended strain.”

The Case for Phasing In — and Helping Out

Even among supporters of the $25 figure, there’s broad consensus that timing and structure matter. A gradual phase-in — say, over three to five years — could give businesses time to adjust, adapt, and plan for rising costs.

Policy experts have also suggested pairing the hike with tax credits, training grants, or small-business support programs, ensuring that Main Street isn’t left behind in the pursuit of wage equity.

“If we’re serious about raising wages, we need to be serious about helping employers shoulder it,” said Dr. Anirban Basu, a Baltimore-based economist and CEO of Sage Policy Group. “Otherwise, we risk doing more harm than good — especially for the small enterprises that make up the backbone of Maryland’s economy.”

What Happens If It Passes

If the proposal gains traction, Maryland could find itself at the forefront of a national experiment — a test of whether aggressive wage reform can coexist with business viability.

The best-case scenario, economists say, is one where higher wages boost local spending, reduce turnover, and inject more money into neighborhood economies — partially offsetting higher costs.

The worst-case? Businesses closing or cutting back, prices rising sharply, and workers losing the very jobs the law aimed to protect.

In practice, the outcome would likely fall somewhere in between — depending on how quickly the increase is implemented, how flexible the market proves, and whether state lawmakers introduce safety valves for small business.

Between Idealism and Reality

The $25 wage debate, at its core, asks Maryland to confront a defining question: What is the value of work — and who can afford to pay for it?

For workers, it’s a lifeline — a bid for dignity and stability in an economy where even full-time jobs don’t always mean security. For small business owners, it’s a potential breaking point.

“I’m not against paying people what they deserve,” said Lewis, the restaurant owner in Fells Point. “But if we go under trying to do it, nobody wins.”

As Maryland inches closer to a public vote, the stakes extend beyond economics. The decision will test not just balance sheets, but the state’s broader philosophy — whether fairness and feasibility can truly coexist on the same paycheck.