Last night, the Senate approved a compromise bill raising the minimum wage and stabilizing unemployment insurance rates in Massachusetts. The bill was the product of lengthy negotiations between House and Senate conferees.
Here are the minimum wage highlights:
- The minimum wage rises in stages from its current level of $8 to $11.00 in 2017.
- In 2017, it is expected that the minimum wage will sit just below the 1968 minimum wage in inflation-adjusted dollars and at roughly the poverty line for a family of 3.
- The package does not index the minimum wage to inflation.
- The tipped minimum wage will increase proportionately a little more than the general minimum wage, but remains substantially lower, rising to $3.75 in 2017. (See this thread for discussion on the tipped minimum.
For employers, the minimum wage is a cost increase and the basic trade is that they get lower and more stable unemployment rates.
- The package does not reduce benefits.
- The package effectively reduces and freezes employer contributions to the unemployment insurance fund — money in the fund just sits in Washington and does not circulate in our local economy.
- The package alters the computation of contribution rates to raise rates modestly for employers who tend to put a lot of people on the UI rolls.
Most of us feel it to be a very solid compromise. Many of us had favored a package including indexing of the minimum wage, and we didn’t get that, but the increase is substantial and should help a lot. We can seek a further adjustment in a few years, depending on how the economy goes.
The elephant in the room is non-compliance on both minimum wage and UI. There is a lot of under-the-table compensation in our economy. The legislation creates a council on the underground economy.
Senator Dan Wolf led the conference process on behalf of the Senate. Please click here to view the more detailed explanation and analysis which Dan prepared for his colleagues..