Politics Statehouse

New wage proposals in Massachusetts have fans and foes. Here are the basics.

By Upstateherd (Own work) [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

By Walker Armstrong

Boston University Statehouse Program

Efforts to increase the minimum wage in Massachusetts year-over-year have been met with a mix of resistance and enthusiasm since the so-called “grand bargain” of 2018. Now, with that $15 an hour rate finally realized as of Jan. 1, state officials are proposing another round of wage hikes.

What are effectively two identical proposals — one from the Senate and the House respectively — amount to a policy plan for a series of four annual rate hikes to bring the standard wage up to $20 per hour by 2027. 

The proposal also includes a measure that would index the 2027 rate to the consumer price index starting in 2028, affording wage earners a rate that would raise automatically alongside inflation. 

“It’s a struggle to imagine that there would be an increase every single year beyond $20 in 2027,” said Pamela Parker, who has owned and operated Harvest of Barnstable in Yarmouth Port for 12 years. A proposal before the Massachusetts legislature would track the minimum wage with the consumer price index starting in 2028. Steve Heaslip

“It’s a struggle to imagine that there would be an increase every single year beyond $20 in 2027, that’s out of control,” said Pamela Parker, who has owned and operated Harvest of Barnstable for 12 years.

Wage hikes are necessary for workers to keep up with the high costs of living, says one legislator.

Sen. Jason M. Lewis, D-Winchester, who filed the Senate’s version of the bill, argued such a policy is necessary for the workforce in order to keep up with the high costs of living that remain ubiquitous throughout the Bay State.

“If you look at what is considered a living wage for a single person living in the Greater Boston area, they would need $22.56 per hour just to cover the basic necessities of life,” said Lewis, citing the Massachusetts Institute of Technology Living Wage calculator. “Clearly $15 an hour is a lot better than $10 an hour, and is helping a lot of people in Massachusetts, but still is nowhere close to what would be considered a living wage.”

A business owner could have trouble budgeting with the proposed annual wage hike.

Parker, the owner of the botanical and shell arrangement design studio in Yarmouth Port, said she appreciates how high the cost of living on Cape Cod is, especially for wage earners working on or around minimum wage. But she said the proposal would create a system that would make it difficult to run her small business. 

“Especially if it’s attached to an inflation index, how do I budget for that? You can’t because you don’t know what it’s going to be,” she said.

Rep. Tram Nguyen, D.-Andover, said indexing the wage is necessary because of the unpredictable nature of the economy. 

“Particularly because inflation is putting real pressure on workers, the minimum wage needs to keep up with our costs, which is why we’re fighting for [indexing] right now,” said Nguyen, who filed the House bill alongside Rep. Daniel Donahue, D-Worcester. “We’re looking to keep up with future inflation.”

If passed, the bill would raise the minimum wage annually at a rate of $1.25 per hour. 

Business owners could face financial factors that can no longer controlled.

Parker said she wished she could pay all of her 14 employees “three times” the minimum wage, but that she has to consider measures that will keep her business afloat.

“I’m sure all of my employees would be thrilled with the wage change,” she said. “It’s just that at what point are you at risk of losing your business because of all the financial factors that you can no longer control?”

Other opponents of the proposal cite increased business costs brought onto small business owners by the COVID-19 pandemic and soaring inflation, arguing that another series of wage hikes would only exacerbate an already dire situation.  

Small businesses need to time recover and grow after the COVID-19 pandemic and growing inflation, a retail business group says.

Jon Hurst, president of the Retailers Association of Massachusetts, said he would like to give small businesses the opportunity to recover and grow before any further costs are tacked onto their already extensive overhead.

“Every small business needs one of two things to survive, they need either higher sales or lower costs,” Hurst said. “Their sales plummeted during the pandemic and their costs exploded, and even today, a lot of them are not back to where they were before the pandemic.”

Wages are only a fraction of a business owner’s costs, according to labor and community groups

Andrew Farnitano, spokesperson for the Raise Up Massachusetts, which includes organized labor and community groups that have been instrumental in pressing lawmakers to pass minimum wage increases, said wages are only a “fraction” of the total cost of doing business. 

“They have to pay for rent, they have to pay the cost of equipment, or ingredients and materials,” he said. “So, the wages that they are paying are one of many costs.”

From 2014 to 2020 — just before the pandemic hit — the Massachusetts minimum wage rose from $8 an hour to $12.75 an hour, said Farnitano. 

“Over that period, the state’s economy added more than 337,000 jobs, and unemployment dropped to the lowest rate since the early 2000s,” Farnitano said. “It’s clear that minimum wage increases can go hand in hand with economic growth.”

This story originally appeared in the Cape Cod Times.

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