Senate passes Minimum Wage Increase

Please find below the text of a senate press release on our bill to increase the minimum wage.

I was pleased to support this legislation.  While a recognize that a drastic increase could have a severe impact on jobs and that even a modest increase will lead to job reductions in a few businesses, I’m hopeful that the relatively modest increase in this bill will benefit many workers while disadvantaging relatively few.  Your thoughts and examples much appreciated in this forum!

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Senate Passes Bill to Restore Minimum Wage (November 18)

BOSTON – The Senate on Tuesday passed a bill that will restore the value of the minimum wage in Massachusetts by increasing the minimum wage to $11 by 2016 and tying future increases to the Consumer Price Index for the Northeast region. The bill also increases wages for tipped workers to 50 percent of the minimum wage.

Note by WB on 2/13/2014: Many have questioned the fairness of the dramatic increase in the tipped minimum wage in the Senate version of the bill. What many did not fully appreciate during the debate was that tipped workers for law-abiding employers get make-up wages when the sum of their tipped minimum wage and their tips falls below the non-tipped minimum wage. The disproportionate proposed increase in the tipped minimum wage would cause tipped workers to get a much greater increase than other workers. The final bill is likely to include an increase in the tipped wage that is proportionate to the increase in the non-tipped wage.

Adjusting for inflation, the minimum wage in 1968 would be worth $10.72 today. A full-time minimum wage worker in 1968 earned $21,400 in today’s dollars, about $5,400 dollars more than a full-time minimum wage worker today.

The poverty rate in Massachusetts has increased by 20 percent since 2006 and the child poverty rate has increased by 25 percent. Poverty is linked with negative health outcomes and lower academic achievement. In addition, the school dropout rate for low-income families is 4.5 times higher than for others.

“This bill offers a much-needed helping hand to many of our residents and takes us one step closer to providing a living wage in the Commonwealth,” Senate President Therese Murray (D-Plymouth) said. “We are facing a huge income gap that only continues to widen, where the workers at the top see large wage increases and the workers at the bottom are at a standstill. That needs to change. Increasing the minimum wage to $11 per hour by 2016 will directly affect nearly half a million minimum wage and low-wage workers in Massachusetts.”

“Today’s vote is a victory for working people across this Commonwealth,” said Senator Dan Wolf (D-Harwich). “As a matter of fundamental fairness and economic policy, helping hardworking people and stimulating economic growth, restoring the minimum wage is the right thing to do. The great benefits that we reap in restoring the minimum wage and indexing it to inflation are not simply economic. Our neighborhoods will be stronger, our middle class will be stronger, our state will be stronger, our moral foundation will be stronger–all of us will be stronger.”

The legislatures in four other states, California, Connecticut, New York and Rhode Island, enacted bills to increase the minimum wage starting in 2014. In addition, New Jersey voters approved a Constitutional amendment this month to raise the minimum wage in 2014 and tie increases to cost of living.

Under this bill, Massachusetts will join ten other states that currently index the minimum wage to inflation.

The bill now goes to the House of Representatives.

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Published by Will Brownsberger

Will Brownsberger is State Senator from the Second Suffolk and Middlesex District.

15 replies on “Senate passes Minimum Wage Increase”

  1. I believe that you made the right decision here. Overly simplified economic theory might suggest that jobs will be lost due to higher wages, but that theory is not supported in available empirical research. Many minimum wage jobs are tied to the existence of a strong, dynamic economy in Massachusetts, geographically, and cannot just up and move across state borders at whim. Therefore, this bill should go a long way towards helping the people who are working those jobs, and their families.

  2. Putting aside the macroeconomic fine points, does it strike anyone else that anyone working full time should be able to get by on her or his wages? Paying everyone a reasonable (“living”) wage would probably induce inflation. But what’s worse, having some products and services become more expensive or continuing to have wage-earners be dependent on government assistance? It’s crazy that employees of companies such as Walmart and MacDonalds need food stamps to be able to eat and must resort to medicaid for health coverage. Why should taxpayers be subsidizing the profits of giant corporations?

  3. Yes, this is the right thing to do…the evidence shows that even a large increase in Minimum Wage doesn’t effect jobs…certainly not a “severe impact on jobs” See this paper from 2010 http://www.irle.berkeley.edu/workingpapers/157-07.pdf which shows that “a hypothetical 10 percent increase in the minimum wage affects employment in the restaurant or retail industries, by much less than 1 percent; the change is in fact statistically indistinguishable from zero” according to one of the study authors. And this research has been followed up on http://ftp.iza.org/dp7638.pdf by UMass Amherst professors and other researchers: http://moya.bus.miami.edu/~lgiuliano/minwage_prepub.pdf
    http://www.iza.org/conference_files/EMW2009/addison_j44.pdf
    http://www.francescobilli.it/rcea/RePEc/pdf/wp02_08.pdf
    http://www.deakin.edu.au/buslaw/aef/workingpapers/papers/2008_14eco.pdf
    and http://www.cepr.net/documents/publications/min-wage-2013-02.pdf
    Plus here’s a review from today’s NYT http://opinionator.blogs.nytimes.com/2013/11/30/the-minimum-we-can-do/?ref=opinion

    Plus increasing the minimum wage leads to decreasing employee turnover. So it’s just a shibboleth that increasing minimum wage leads to significant job losses. It doesn’t…and some of the top researchers are right here at U Mass! So you can call them if you need more info on the subject. Arindrajit Dube
    1030 Thompson Hall
    University of Massachusetts Amherst
    Email:
    [email protected]

  4. I guess the question whenever a new law is considered is, “Are we addressing some market failure that the private sector is unable to address?” Given the stagnant wages since the late 1970s despite increasing costs of living, especially in the Boston area, it would seem that there is reason for the government to intervene.

    On another note, there is always a fear of stifling employment growth with such laws. However, I guess it’s really a quality vs. quantity consideration. If we were only concerned with the number of jobs, we would probably have no minimum wage, and still have 14-hour work days and child laborers. I think we can all agree that some employment regulations are a good thing (although finding that threshold where “some regulations” becomes “too many regulations” is the difficult job of our electeds).

  5. I fully support this minimum wage increase. All empirical evidence shows it does NOT reduce jobs, and gives folks enough money to live on. Whoever is working full time should be able to support their families on their salaries. Anything less is exploitation, especially since the CEOs of these companies are taking home millions, sometimes billions. Additionally, if the minimum wage had kept up with inflation, it would probably be somewhere around $30 at this point! Keep up the good work.

  6. I fully support this. More money in people’s pockets is what drives the economy. Poverty is unconscionable in this day and age. Thanks for this.
    Nayla Rathle
    Belmont

  7. I hear this term “negative impact on business” There are some business that who hire mostly at minimum wage. These must be looked at why they operate that way and what role they play in society. An example is fast food. Some say that they will have to raise prices and may become less competetive if the minimum wage is applied. But I have to wonder that this food is not nutririonaly good in the long term to public health. So maybe they should upgrade the nutritional quality, charge more for it and pay their workers better. Or get their social license to operate and close down.

  8. Imagine that someone was to propose taxing businesses that hire poor people. There would be an upside — the state would have more money to spend on roads and schools and whatever. But we all intuit that there would also be a downside. Increases in the minimum wage are functionally identical to such a tax. Perhaps, as other writers here have suggested, there really is no downside. Perhaps there would be no downside to taxing the employment of poor persons as well. But it does fly in the face of common sense. Raising the price of something ought to lower consumption of it. As I said, perhaps the employment of poor people is an exception to this principle, which is otherwise pretty widely observed. If so, I would love to hear why that might be. One so seldom runs into public policy initiatives that have no downside.

  9. Thank you for supporting this effort. Salaries have not kept at all with other basic costs like housing. Nobody should be forced to work full time and still be in poverty. It is indecent. We need more than a raise in minimum wage, we need a living wage.

  10. I agree with all the supporters of a higher minimum wage, or better, a living wage pegged to local costs of living and, of course, to inflation. Fred Hapgood: No, requiring employers to pay workers a living wage is not the same as imposing an extra tax on employers who hire poor people! On a purely practical basis, even industrialist Henry Ford realized that he had to pay his workers enough so they could buy his cars. And on the basis of equity, we have to realize that the workers make the owners’ profits possible, even if they didn’t have the big idea and create the company; they have to get a bigger share of those profits — not devolve into wage slavery, where they must work in exchange for bare subsistence (or less). What kind of a society do we want? Government-enabled plutocracy (fascism), or regulated distribution of our economic resources to support a productive, stable and equitable society? That’s the question underlying the living wage debate.

  11. Shirley makes a good point — this is not a tax: It does not take money out of the private sector, rather it shifts money to low earners.

    Fred is right that increasing the price of labor should, according to economic theory reduce purchase of labor. But the devil is in the details — what is elasticity of demand for labor in the face of price increases? It appears to be low — modest wage increases do cost few jobs. That’s what Colleen’s information says.

    It’s a judgment call — there is obviously a point at which dramatic minimum wage increases would cost jobs, but we hope and believe we have taken a step forward that is in the right range: It will help many more people than it will hurt.

  12. We need to support this bill in Massachusetts, including raising the minimum tipped wage for restaurant workers to 60% of minimum wage. Tipped workers haven’t gotten a raise in 15 years.

    I’d like to offer a perspective on the increase in the wages of tipped workers. Some have argued that such an increase isn’t necessary, because if tipped workers make less than the minimum wage in a day because they’ve received few tips, the employers are obligated by law to make up the difference.

    However, in my experience working in minimum wage jobs, it can be the case that employers are neglectful in ensuring that tipped workers are given the difference when they make less than minimum wage. The reason we need to support a minimum wage increase for tipped workers is because it should not be the responsibility of tipped workers to spend every week going through the hassle of finding out if they were compensated appropriately. Moreover, if tipped workers aren’t compensated at minimum wage, I am concerned that there may not be enough protections for them if they need to confront their employer.

    Salaried workers have the benefit of knowing their salary and receiving it regularly on a weekly/biweekly/monthly basis. That tipped workers do not have this security places them at a significant risk in comparison to other workers. Raising the minimum wage will help address this insecurity and ensure that those workers who have the least resources do not bear a disproportionate burden in ensuring they are compensated fairly for their work.

  13. Drew, I support a general minimum wage increase and I also support some adjustment for tipped workers, but I wouldn’t bring tipped workers to the same minimum as untipped workers — that would bring the total compensation of tipped workers considerably above the compensation of workers in untipped occupations.

    I very much share your concern about employers not playing by the rules. But it’s bigger than the tipped wage issue — there is a broad range of non-compliance in smaller businesses. Given that, we need to make sure we don’t inadvertently push more businesses into paying their workers under the table.

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