The Grand Bargain Came Out and All I Got Was A Lousy Two-Day Sales Tax Holiday

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Here’s a prediction:  2018 will be known as the high-water mark of the Massachusetts economy.

Unemployment is low, growth is good, businesses are sprouting, and tall buildings are shooting up in Boston.

But state legislators seem bent on ending the happy times, in favor of government goodies.

The Massachusetts Legislature on Wednesday night passed a bill that will enact a $15-an-hour minimum wage by 2023 and paid family and medical leave for employees.

We say “will” because if Governor Charlie Baker doesn’t sign it, the Legislature will surely override his veto. (Our guess:  Baker will let the thing become law without his signature, saying he likes the overall idea of the bill but is troubled by some of the details. It’s the safe thing to do, and Charlie always does the safe thing.)

Now, no one begrudges workers making more money or getting to spend time taking care of loved ones or tending to their own health problems. The problem is when government forces employers to pay for these things – and the problem is made more acute when these things cost lots of money.

What happens when hiring an employee becomes more expensive? The number of jobs decreases. More potential workers scramble after fewer jobs. Wages decrease. Growth stagnates. Entrepreneurial opportunities lag. The economy suffers. And so do most people in the state.

Here’s an example:

The subminimum wage for tipped workers (like waiters and waitresses) in Massachusetts is going up incrementally from $3.75 an hour now until it reaches $6.75 an hour on January 1, 2023 – an 80 percent increase in about four and a half years. Expect increases in the prices of meals at restaurants, especially the sort of family-oriented restaurants that middle class people and those struggling to get by sometimes treat themselves to. Over time, expect fewer restaurants, and therefore fewer waiters and waitresses. But hey – at least they won’t be getting unfairly treated by their now-non-existent employers.

As for minimum wage:  Expect more automation at fast-food restaurants and fewer people working there. If McDonald’s can figure out a way to automate the whole thing, maybe someday there won’t be anyone working there at all. At $15 an hour per employee, the incentive to automate just went up – a lot.

Paid family and medical leave might be the most harmful of all.

Funding it starts with an estimated 0.63 percent tax on payroll. Statist planners love taxes of less than 1 percent because they sound so small.

The math is complicated, because how much employers (and, in some cases, employees) will pay for so-called “premiums” depends on how many employees the employer has. But at 0.63 percent, a worker making $75,000 a year will cost $472.50 more a year to hire, if you add up the employer’s contribution and whatever contribution an employee will make. Multiply the employer’s cost by tens and hundreds and thousands, and you get business decision makers thinking twice about expanding their work force.

And what happens when the original assumptions made to calculate the 0.63 percent paid-leave tax turn out to be flawed because paid leave becomes more popular than expected? Why, the tax goes up.

Since this is a conservative publication with a generally pro-business, pro-freedom philosophy, you might expect we’d celebrate the concessions that business advocates got for the so-called “grand bargain.”

We don’t.

The so-called permanent two-day sales tax holiday in August is a pathetic gain. For two days a year, Massachusetts residents can buy some expensive things here without paying an extra 6.25 percent (plus 0.75 percent local-option sales tax, plus whatever other taxes the Legislature eventually approves …) instead of making the effort to drive to New Hampshire. This is a victory?

Even more to the point:  The “permanent” sales tax holiday isn’t even on the books yet, and already it’s made the endangered species list. The over/under is five years before state legislators sadly proclaim that due to the latest fiscal “crisis,” the sales tax holiday has become just too expensive for state government to afford and therefore has to be ended — permanently. We’re taking the under.

In some respects the other concession business advocates got is even more disturbing. Come 2023, retail workers will no longer get time-and-a-half pay for working on Sundays, which will be treated just like any other day in terms of pay.

Time-and-a-half on Sundays is one of the last vestiges of the old Blue Laws that for centuries in Massachusetts kept holy the Lord’s Day. It was, if nothing else, a disincentive for employers to load up working hours on a day when, if all were well, the vast majority of us would be spending time praising our Creator and with our families.

But all is not well here, and soon Sundays will become a yet-more-pressure-laden day for retail workers whose bosses don’t care about church or family. State law currently states that employers can’t force employees to work on Sundays, but there are all sorts of ways to put subtle pressure on people who depend on their employers for their livelihood. Now that employers will eventually have no wage disincentive, Sundays in the Commonwealth will become even more hollowed out than they already are.

Business advocates who agreed to the so-called “grand bargain” say they had little choice – ballot questions mandating the $15-an-hour minimum wage and paid family and medical leave enjoy about 80 percent approval in the polls and likely would have been approved by voters in November. They say they got what they could to try to mitigate the damage.

Yet what’s needed in Massachusetts is an opposition. A politician, a civic leader, a business owner willing to stand up and say, “This is wrong; here’s why.”

Help Wanted:  Hero. Clear thinker, right-minded. Courage a must. Willingness to take abuse from left-wing activists and liberal media. Compensation modest in the beginning and maybe in the end, but gratitude will be enduring.