Beginning today, minimum-wage workers in Massachusetts will enjoy a boost in their pay.
The state minimum wage increases from $10 to $11 an hour on New Year’s Day, the last of three increases required by a 2014 law.
The raise is being cheered by workers’ advocates, even as businesses’ reactions are more mixed.
“By raising wages at the bottom, we get a lot more activity going in neighborhoods where people work and live, and that will be good for everybody,” said Harris Gruman, executive director of the SEIU Massachusetts State Council, who has campaigned for minimum wage increases for years.
When former Gov. Deval Patrick signed the bill into law, the minimum wage had not increased since 2008. The law raised it from $8 to $9 in 2015, $10 in 2016 and $11 in 2017.
The minimum wage for tipped workers will be $3.75 an hour, as long as tips bring those workers’ earnings up to at least $11 an hour.
Pablo Acosta, 46, lives in Boston and has worked at a range of jobs over the years for warehouses, a paper mill and a seafood distributor. Although he now earns more than the minimum wage as a Salvation Army employee, many of his previous jobs paid the minimum wage. Acosta said he is happy to see the minimum wage increase, although he does not believe $11 an hour is enough.
“The minimum wage in America is incredibly unfair,” Acosta said. “Costs go up but wages don’t. The cost of food, gasoline.”
Acosta said even when he was married and had two paychecks coming in, he often found it hard to make ends meet. “(The minimum wage) is not keeping up with the economy, the cost of living, any of the expenses an everyday kind of person has to face,” Acosta said.
Nineteen states will raise the minimum wage today. Massachusetts will be tied with New York and Washington state for the second-highest minimum wage in the country, after Washington, D.C., which has an $11.50 minimum wage. An estimated 500,000 Massachusetts workers will benefit from the wage hike, according to advocates for the law.
Businesses have been mixed in their reactions to the increase.
Dean Cycon, founder and CEO of Dean’s Beans Organic Coffee Co. in Orange and an advocate for raising the minimum wage, pays his 13 employees at least $13 an hour and covers all their health care costs.
“I believe working people need to share in the benefits of the company, and frankly, they need all the help they can get in this economic era,” Cycon said.
“Companies that don’t pay a reasonable wage to their entry-level or lower-level employees are calling upon the rest of society to support their business.”
— Dean Cycon
“I’ve always felt if the success of your business depends on paying people a very low wage, then maybe your businesses shouldn’t be in business,” Cycon said. “From a pricing point of view, businesses can afford to raise their prices a little bit to cover the small percentage of their costs of doing business that the increase in the minimum wage should represent.”
Cycon said companies that do not pay their workers enough to live on are pushing costs onto the rest of society, since those workers then rely on food stamps or other government assistance.
“Companies that don’t pay a reasonable wage to their entry-level or lower-level employees are calling upon the rest of society to support their business,” Cycon said.
But Ryan Kearney, general counsel for the Retailers Association of Massachusetts, said while many retailers pay above the minimum wage, two related provisions in state law make it hard for businesses to cope with the increases.
First, Massachusetts does not have a teen wage, a lower wage that exists in many other states to encourage businesses to hire teenagers and train them. “A high minimum wage makes it unaffordable for retailers to bring them in and train them,” Kearney said.
Kearney also criticized a state law that requires retailers to pay time and a half on Sunday. Only Massachusetts and Rhode Island have this law. With a $16.50 minimum Sunday wage, Kearney said Massachusetts retailers are less competitive with online sales and with neighboring states. New Hampshire, for example, pays a minimum wage of $7.25 per hour.
“It’s government-imposed discrimination against our retailers in Massachusetts,” Kearney said. “For small businesses, it is something that will become unaffordable as the rate continues to skyrocket.”
Kearney said as the minimum wage has increased the last two years, some retailers have raised prices, some have cut jobs and some have become less profitable. “Whether it’s loss of jobs or loss of profitability or loss of sales, there’s certainly an impact that’s been felt by our membership,” Kearney said.
Chris Geehern, a spokesman for Associated Industries of Massachusetts, a trade group, said this minimum wage increase is a little easier for businesses to handle because it was planned and phased in over three years.
But Geehern said he has heard anecdotally about companies not making new hires or not expanding the last couple of years because payroll costs have increased. He noted that when the minimum wage increases, companies may also feel pressure to raise wages of longer-term employees who were being paid near the new minimum wage.
“Whenever you have a minimum wage increase, it reduces the overall compensation budget for companies,” Geehern said. “In some cases, it forces them to reduce hours, to not hire additional employees or sometimes it causes them to reduce employment.”
This is not the end of the debate over the minimum wage in Massachusetts. Activists are now pushing to increase the minimum wage gradually to $15 an hour, part of a national movement led by unions in industries like fast food.
“We have an incredibly affluent state, yet we have one of the highest levels of inequality in the country,” said Gruman. “If we want an economy that works for everybody, we need wages that keep up with the cost of living here.”.
A new version of the wage and hour law poster that employers are required to display is now available on Attorney General Maura Healey’s website.
By January 04, 2017 at 6:10 PMon January 01, 2017 at 6:30 AM, updated