Economics professors join push for $15 minimum wage

Courtesy College of the Holy Cross An economics professor from College of the Holy Cross helped pen a letter to the Legislature pushing for a $15 minimum wage.

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By State House News Service

As activists ramp up their push to raise the minimum wage again, economists from many of the state's public and private universities are rallying to the cause, supporting a $15 an hour minimum wage as a way to lift families working at the threshold of poverty.

Ninety economists have signed a letter supporting the gradual lifting of the minimum wage by four dollars over the next four years until it tops out at $15 an hour in 2021.

In a letter set to be delivered to lawmakers on Monday, the economists concluded that "raising the minimum wage to $15 an hour by 2021 will be an effective means of improving overall living standards for low-wage workers and their families and is likely to contribute to a general improvement in economic conditions."

The professors work on campuses from Amherst to Boston, including the University of Massachusetts, Boston College, Bentley College, Northeastern University, Smith College and Holy Cross.

The arguments in favor of raising the minimum come as the Raise Up Massachusetts coalition plans to launch its signature-gathering campaign this week to put a question on the 2018 ballot to achieve a $15 an hour minimum wage.

The letter also puts weight behind the case that some business leaders who support increasing wages are prepared to make Tuesday during a State House hearing on legislation that would accomplish the same goal as the proposed ballot question.

Professor Arthur MacEwan, a UMass Boston economist who signed the letter, said he's seen little impact on the level of employment in Massachusetts to suggest the last minimum wage increase caused much disruption.

"The Massachusetts economy is basically booming in recent times. I've seen no indication that increasing the minimum wage has caused substantial problems," MacEwan told the News Service.

The final installment of a three-year, three-dollar increase in the minimum wage took effect in January 2017, raising the wage floor in Massachusetts to $11. But even before the full phase-in of the last legislatively approved wage hike could take effect, activists began pushing for another increase.

Critics of another minimum wage hike have expressed concern that raising the wage floor to $15 an hour could force employers to reduce their workforces or cut hours for minimum wage employees. Retailers, in particular, have pointed out that small businesses struggle not just with the minimum wage, but the added expense of staying open on Sundays when workers get time and a half pay.

Historically, lawmakers have allowed cooling off periods between increases in the minimum wage that allow employers to fully adjust to the wage structure, but legislators on Beacon Hill may not have the luxury of dictating the schedule this time around, with the threat of a ballot question looming.

"If it doesn't happen in the Legislature, it will be on the ballot," Senate President Stanley Rosenberg said in June.

The debate is also heating up just as Massachusetts is beginning the process of trying to lure Amazon's planned new United States headquarters, with as many as 50,000 jobs, to the state.

While Amazon may have a greater mix of income levels in its workforce than General Electric did when it selected Boston for its new headquarters, MacEwan said he believes the tight labor market would be of greater concern than the minimum wage.

"My hunch is that this is a very secondary level of concern for them. They're much more concerned with a whole group of amenities that are involved. I would think they're much more concerned with the very tight labor market Here. That would be more of a detriment to them choosing Massachusetts," MacEwan said.

The economists who wrote the letter noted that minimum wage workers who work 40 hours per week earned $22,880 a year, just 12 percent above the federal poverty line, which doesn't account for the high cost of living in Massachusetts.

The economists report that had the minimum wage kept up with inflation and productivity growth since 1979 it would sit at more than $18 an hour today.

Furthermore, MacEwan said that the buying power of the $7.25 per hour minimum wage in Jackson, Mississippi - among the lowest income earning states in the country - is greater for workers that the $11 minimum wage earned in Boston.

"In terms of creating a hardship for business, I just don't think we're there," said MacEwan.

The economists said higher minimum wages have been shown by studies to reduce employee turnover, which can cut down on hiring and training costs and improve worker productivity.

The overall cost to employers could also be absorbed, according to the letter, with relatively small increases in prices. The letter estimates that McDonald's, if necessary, could fully cover the cost of a $15 an hour wage by increasing prices 1.3 percent per year for four years.

"The increases are quite small. I don't see that as creating a substantial contribution to the cost of living," MacEwan said. "It's not desirable to have prices go up, but you have to weigh that against the distribution impact and if we have to do that to help the people at the bottom, I think it would be the right thing to do."

The economists said 1.1 million, or one-third of state's workforce, would be impacted by another increase in the minimum wage.