$15 An Hour An Albatross, Some Businesses Say
By Matt McDonald | January 3, 2017, 16:54 EST
Massachusetts business owners say further hikes in the state’s minimum wage would increase their costs so much they might have to delay hiring or even move out of state, according to a business lobbying group.
About 71 percent of businesses surveyed last month say they would have to increase their payroll if the minimum wage increased to $15 an hour, according to Associated Industries of Massachusetts, which represents business interests on Beacon Hill.
“While we are empathetic with the challenges facing lower wage staff, it is also the case that we will employ fewer hourly employees at higher minimum wages,” one business executive wrote, according to the organization. “Each dollar increase costs our company $1.5 million per year.”
On Tuesday, January 3 the pro-business group released some of the results from two December surveys of its members. One survey got responses from 132 members, mostly business owners and chief executive officers; while another polled about 160 personnel officers. The organization did not release the surveys themselves.
Government-mandated minimum wage divides economists and analysts. Supporters say it helps people who need it most and even contributes to the economy by increasing their spending power. Opponents say it makes low-level jobs too expensive for employers, thereby leading to automation and unemployment.
Aside from the practical effect, some libertarians oppose it on philosophical grounds, arguing that it limits the freedom of employers and workers to make their own financial arrangements.
On January 1 the state’s minimum wage for most workers increased to $11 an hour. (It’s now $3.75 per hour for service workers who get tips.)
That’s now the highest state-level minimum wage in the country, but some want to see it go much higher.
Raise Up Massachusetts, a coalition of labor and faith groups founded in 2013, is pressing state officials to increase the minimum wage to $15 an hour.
“Fifteen would lift a family of four out of the poverty level that they’re currently forced to subsist on,” said Steve Crawford, a spokesman for Raise Up Massachusetts, in an interview.
Crawford dismissed arguments that further increases in the minimum wage will diminish job opportunities. He noted that the state economy has grown and unemployment has stayed low since the minimum wage increases started taking effect at the beginning of 2015.
“This is the same sky-is-falling predictions that we’ve always had from AIM. They were wrong before. And why they think they’re going to be right this time, they’re going to have to explain,” Crawford told NewBostonPost. “But the evidence shows this is lifting our economy rather than hurting it.”
But is $15 an hour enough?
“When we get to 15 we should stop this constant struggle over the minimum wage and index it to inflation,” Crawford said.
But the best way to improve the lives of low wage-earners is to improve education, training, and opportunity, says a business advocate.
“AIM believes that raising the minimum wage to $15 per hour, while emotionally appealing and politically expedient, is an ineffective way to address income inequality,” wrote Christopher Geehorn, executive vice president for marketing and communications for Associated Industries of Massachusetts, in a blog post published Tuesday.
Geehorn used the image of a deli worker in East Cambridge working at a place where biotech professionals who work on the other side of the street eat lunch. The only way to get the low-paid deli worker to a high-paying job across the street is to increase his education and training, not mandate an increase in his hourly wage at the deli, he said.
It’s a feel-good measure that misses the point, he argued.
“Raising the minimum wage, in fact, represents a fundamental distraction from addressing the real economic impediments that prevent all Massachusetts citizens from sharing in the state’s prosperity. These are the same impediments, ironically, that contribute to the persistent skills shortage that threatens innovation and economic growth in Massachusetts,” he wrote. “Workers are ultimately compensated according to the skills, education, work ethic and value they bring to the enterprise.”
In an interview, he said while the state economy may currently be handling the dollar-an-hour increases during the past couple of years, prospects are a lot less bright if the state minimum wage goes from $11 to $15, a jump of 36 percent.
Raising the minimum wage to $15 an hour was a key position of U.S. Senator Bernie Sanders when he ran for the Democratic nomination for president last year. A few cities on the West Coast have adopted the measure.
Massachusetts was the first state in the country to recommend a minimum wage, after the 1912 Bread and Roses strike in Lawrence called attention to the conditions of workers in the textile mills.
The federal government first established a national minimum wage in 1933 during the Great Depression. The federal Supreme Court found it unconstitutional, but later upheld a subsequent minimum wage law approved by Congress in 1938.
The current federal minimum wage is $7.25 per hour. The most recent increase took effect in July 2009, during President Barack Obama’s first year in office.
In June 2014 the state Legislature approved a law increasing the Massachusetts minimum wage to $9 an hour at the beginning of 2015, $10 an hour at the beginning of 2016, and $11 an hour at the beginning of 2017.
Before two years ago, the most recent increase in the state minimum wage had taken place in 2008, when it was increased to $8 an hour.
The top minimum wage is a lot higher now. Workers at retail stores in Massachusetts get time-and-a-half pay on Sundays, so the Sunday minimum wage for them is now effectively $16.50 an hour.
Beacon Hill leaders have been noncommittal about raising the minimum wage again, but a measure is expect to come before legislators later this year.