Inflation cited in push for $20 minimum wage
Photo | Courtesy of Commonwealth of Massachusetts
Massachusetts State House
Sen. Jason Lewis was a co-chair of the Joint Committee on Labor and Workforce Development in 2018 and negotiated the law Gov. Charlie Baker signed that year ordering the state's minimum wage be stepped up to $15 per hour by the start of 2023. On Tuesday, he told that committee the most recent increase "has had a tremendously positive impact on hundreds of thousands of working individuals and families in the commonwealth who have seen their take-home pay increase and improve their standard of living."
"So why am I here today?" he asked the committee rhetorically as he testified before it Tuesday. "Well, we need to raise the minimum wage again."
A slew of bills dealing with wages -- the state minimum wage, the minimum wage for workers who also earn tips, wages for overtime work, and more -- was before the Labor and Workforce Development Committee on Tuesday, renewing debate over what people working in Massachusetts should be paid. The conversation is restarted at a time when some Bay State businesses have raised pay well above the state minimum to retain employees and attract new workers from a limited pool of job-seekers, and as cost-of-living pressures are increasingly convincing some businesses and residents to relocate elsewhere.
Lewis testified in support of legislation (S 1200 / H 1925) he filed with Reps. Tram Nguyen of Andover and Dan Donahue of Worcester. Those bills would increase the state minimum wage by $1.25 per year until it reaches $20 in 2027 and index it to inflation. It would also increase the sub-minimum wage for tipped workers to $12 by 2027 and set it at 60 percent of the full minimum wage in future years, and stipulate that the minimum wage applies to municipal workers.
"Unfortunately, one of the things we did not expect back in 2018 was that we would suffer the rate of inflation that we have seen in recent years. Nobody expected we'd be seeing 9 percent or close to double-digit inflation, when we'd had 1 or 2 -- maybe 3 -- percent inflation for so many years," said Lewis (D-Winchester). "So that level of inflation has really eaten into, obviously, the real earnings that our residents are taking home."
Raise Up Massachusetts, the alliance of organized labor, community groups and faith-based organizations that was a driving force behind at least two previous efforts to increase the state's minimum wage but decided against bringing another minimum wage hike to the 2024 ballot, pointed to federal Bureau of Labor Statistics data showing that it cost more than $18 in July 2023 to buy what $15 bought in June 2018.
"As the price of food, heating, and other basic necessities has risen, workers need a raise too," Raise Up said.
Raise Up said that boosting the minimum wage to $20 by 2027 and indexing it to inflation would have the effect of "ultimately raising the wages of almost 1 million workers." The Massachusetts Budget and Policy Center in July published a report showing that 717,200 workers would be directly affected by the wage increases called for in the bill and another 276,200 workers who earn slightly more than the minimum would likely see comparable increases in their pay.
"Increasing the minimum wage from its current $15 level to $20 today would raise the wages of almost 1 million workers, or 29 percent of all wage earners statewide. That includes nearly 23 percent of all parents earning wages. Only 8 percent of those that would see a raise are teenagers. Of these workers receiving a raise, 58 percent are women, and 40 percent are people of color. Over 56 percent of those receiving a raise work full-time," the report said. "For the average full-time worker receiving a raise, they would see an additional $3,878 in wages for the year. A majority of workers seeing a raise would be white, though Asian, Black, and Hispanic workers would see somewhat larger raises on average."
Lewis and others pointed out that while being paid $20 per hour would make a difference for many workers, someone earning $20 an hour would still not be making a "living wage." MIT's Living Wage Calculator estimates that an adult with no children would need to make $21.35 per hour to support themselves in Massachusetts. For an adult with one child, the living wage would rise to $45.57 an hour, and two working adults would each need to make $24.72 an hour to support themselves and one child in Massachusetts.
A handful of business groups turned out Tuesday to oppose the push for a higher minimum wage, including National Federation of Independent Business and the Retailers Association of Massachusetts. They said that businesses are also suffering under high inflation and have already seen their costs rise as they contend with a chronic labor shortage here.
"Now is not the time to raise labor costs for small businesses by increasing the minimum wage to a whopping $20 per hour," Christopher Carlozzi, NFIB's Massachusetts state director, said. "Raising the base wage to $20 is not only unsustainable for Massachusetts employers who are already raising compensation to counteract the state's labor shortage and attract workers into the workforce, but additionally, these types of one-size-fits-all mandates hurt smaller, Main Street businesses that cannot absorb the cost the most."
Instead, NFIB said, Beacon Hill "should be providing financial relief to small, independent businesses, and not continuing to burden Main Street with higher costs and mandates."
Carlozzi said NFIB commissioned a study in the spring that determined that minimum wage increases like what is called for in the Lewis/Nguyen/Donahue bill "could lead to significant job losses, income reductions, and closures for small businesses across Massachusetts." The study was conducted by Regional Economic Models, Inc. and projected "a negative employment impact of almost 23,000 jobs, or 0.5% of the state's employment base" and "a negative economic output impact of over $3.4 billion, or 0.25% of the state's economic base" by 2033.
"Increasing the minimum wage would have multiple countervailing effects on the Massachusetts economy. It would raise wages for many employed workers, increasing consumer spending and thereby creating additional demand for many in-state businesses. However, it would also raise labor costs for many businesses, negatively impacting the state's economic competitiveness and increasing consumer prices," the report said. "REMI's analysis found that the latter effect would outweigh the former, leading to relatively lower levels of employment and economic output."
There were some businesses that told the committee they support efforts to increase the minimum wage, many as part of the national Business for a Fair Minimum Wage coalition.
"Our strong growth has been fueled by fair pay and the hard work, effectiveness and dedication of our employees. By paying living wages and benefits, our employees can afford to stick with us and to grow with our business. Employee retention drives customer retention. And when workers take home living wages, they can afford to spend money at restaurants and businesses across the Commonwealth," John Schall, owner of El Jefe's Taquerias in Cambridge and Boston, said in a statement.
The committee also heard extensive testimony Tuesday on legislation (H 1872 / S 1188) that would phase out the current $6.75 per hour sub-minimum wage for tipped service employees.
"This would, I think, go a long way in helping solve the employment issue that is happening in restaurants. We know that folks are having a hard time finding staff, they're having a hard time holding on to staff. We know that it's incredibly costly and expensive to train new staff, to hire, to bring folks on board," Rep. Samantha Montaño said. "Additionally, a lot of the racial dynamics that play out in restaurants are at play for the sub-minimum wage. Folks who work in fine dining tend to bring home a lot more money at the end of the day than folks who work in casual dining. That also plays out into racial and gender dynamics. We know that women and women of color tend to work the casual dining sector more and tend to work day shifts more than they are working evening shifts where they could potentially earn more money in tips."
One Fair Wage, a national coalition organized around the movement to end subminimum wages, has previously committed to spend $25 million to eliminate lower wages for tipped workers in 25 states by the 250th anniversary of the United States in 2026.
That group is also pursuing a potential 2024 ballot question in Massachusetts to bring tipped workers up to the same minimum wage as everyone else. Officials with One Fair Wage announced Tuesday that they have already collected more than half of the 74,574 signatures required to continue advancing towards next year's ballot. Ballot question campaigns have until Nov. 22 to file their signatures with local officials and until Dec. 6 to file them with the secretary of state's office.
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