By Ellie French
BU News Service
BOSTON — As a manager at the 7/11 in Kenmore Square, Andrew Asare makes $13.50 an hour, a wage significantly higher than that of the workers he oversees. But even so, he said, it’s not a livable wage in the city of Boston.
“How can you live if you have two children and you have a job that doesn’t pay $15 an hour? You can’t live in Boston,” he said.
Citing an MIT study on livable minimum wages, Asare said that when you factor in food, transportation and child support, making ends meet can be nearly impossible on wages like his.
“We are trying to make the minimum wage to be $22 an hour, but if it can be between $15 and $22, we will love it,” Asare said. “At least you can live on $15.”
On Jan. 1, tens of thousands of workers in Massachusetts will get a raise that will take them to $15 — and businesses across the state are preparing for that cost.
The increase is a result of June’s “Grand Bargain” vote on Beacon Hill, which included three things: a minimum wage increase, paid family and medical leave and a sales tax holiday. The agreement was crafted to avoid separate ballot questions on each issue.
As the new year begins, the minimum wage will rise to $12 per hour, followed by 75-cent increases each year, with the state slowly moving to $15 by 2024.
The Massachusetts Budget and Policy Center predicts that a quarter of the state’s workforce — 840,000 workers — will ultimately see their wages increase as a result.
“That’s huge for those workers who will have more money in their pockets to put food on the table, pay their medical bills, deal with other living expenses, but it’s also going to be a big help to our economy,” said Andrew Farnitano, a spokesman for Raise Up Massachusetts.
“Our local businesses need customers, and when one in four Massachusetts workers gets a raise, that’s more money they can spend at local businesses and that’s how we’re going to grow our economy from the bottom up.”
But gradual or not, the cost to employers will be significant. Jon Hurst, president of the Retailers Association of Massachusetts, said this will be a “near doubling” of the state’s minimum wage when you include the gradual increase from $8 to $11 that ended in 2017.
“Your payroll costs are going up, and they’re going up far faster than the economy and far faster than your sales. So something has to give,” Hurst said. “You can’t keep raising your prices.”
As a result, he said, there’s been a lot of anger amongst employers over the minimum wage increase.
“It’s going to force not only the wages up of new employees, but when you do that, you typically have to raise the wages of those that are above those new employees, so it affects more than just minimum wage earners, it affects all your hourly workers,” Hurst said.
“And the biggest anger there is why the Legislature did not do a teen wage. We’ll have the highest minimum wage in the country and no teen wage like 39 states have.”
He said teen wages in other states range from 50 cents an hour less to several dollars less, typically for a set period of time, like 90 days – something that he said makes teenagers a lot more employable.
“There aren’t a lot of 14-to-17-year-olds that you’re going to get a return on your investment at $15 an hour,” Hurst said.
Sen. Jason Lewis, D-Winchester, one of the authors of the Grand Bargain, understands the concerns of workers and employers. To a point.
“I think everybody recognized that it was preferable to solve the issues through the legislative process rather than to fight it out over ballot questions,” said Lewis. “The fact that we were able to reach a compromise on what would have been three complicated and controversial ballot questions was generally viewed very favorably. People are looking forward to implementation.”
Lewis said paid family and medical leave is, to him, the most significant part of the legislation — but also the least well understood, partially because specifics of that legislation won’t be finalized until March.
“Everybody kind of understands what the minimum wage is, and understands what a sales tax holiday is, but the fact that we’ve reached agreement in a very collaborative way with the business community and all the stakeholders at the table on creating a universal paid family and medical leave program in Massachusetts is a very big deal in my opinion,” Lewis said. “We will be one of only a handful of states that will have universal access to paid leave.”
He said having a universal program will also help level the playing field between big and small businesses in attracting talent, and make the state’s business more competitive overall.
Hurst disagreed, saying employers know exactly what the cost of an increased minimum wage will be, but that they may be underestimating the cost of paid family and medical leave.
“It’s a lot of anger over the minimum wage. It’s a lot of unknowns on how it’s going to impact the cost of operations on paid leave,” Hurst said.
“As bad as it is, it could have been a lot worse had we not had the Grand Bargain and fixed some things up. We’re educating on that, and looking to see if we can do some mitigation if it’s possible going forward. Certainly, there still has to be a lot of regulatory action to define things and clarify things on the paid leave law.”
But one thing that it seems nearly all employers and employees can agree on is the increase being a gradual one.
“Workers can know that they’re going to be getting a raise each year for the next five years, but businesses also know that’s it’s predictable and they can plan ahead for the next five years and plan for their costs,” Farnitano said.