By Megan McCormick. Massachusetts is likely to see a rise in its minimum wage in 2014 for the first time in six years. This is good news: increasing the minimum wage and indexing it for inflation is critical for the state’s low-wage workers. However, not everyone is pleased about the likely change, especially Massachusetts businesses. Fortunately, it should be fairly easy to accommodate business concerns through legislation in the current session.
In Massachusetts, there are two processes for raising the minimum wage: through bills submitted in the legislature, and through a ballot initiative. Currently, the Senate has approved and the House of Representatives awaits a vote on a bill that would increase the minimum wage to $9 an hour in 2012, $10 in 2015, and $11 in 2016, with indexing for inflation thereafter.
Citizen advocates led by the Raise Up Massachusetts Coalition have also succeeded in gathering enough support to place their initiative on the November 2014 ballot. They propose raising the minimum wage to $10.50 over two years and then implementing an index system. If the bill does not pass in the legislature before April 2014, or Raise Up Massachusetts rejects the bill, the ballot initiative can go on, creating the need to consolidate the two proposals.
Raising the minimum wage is a positive step for Massachusetts that will bolster the state’s economy while improving the standard of living for low-income residents. The current minimum wage, $8 per hour, has not increased since 2008, while the cost of living has increased rapidly. Given the high cost of living in Massachusetts, the state’s low wage workers need to earn more than in other states to afford basic expenses. Increasing the minimum wage is also an effective way to increase consumer spending and positively affect the state economy.
Implementing an index system as a part of minimum wage legislation would ensure that it does not lose value when the cost of living increases, by automatically adjusting for inflation each year. The index system would eliminate the necessity of going through the lengthy and complicated legislative process to increase the minimum wage. Other states that have adopted a similar system report that indexing is an effective way to ensure the minimum wage keeps pace with the standard of living in the state.
Despite widespread support for the minimum wage increase within the legislature and among the general public, proposals for reform have been met with strong opposition from business lobbies. Those groups argue that a minimum wage increase will negatively affect economic growth and will be difficult to handle in a recovering economy. Furthermore, businesses believe that implementing an index system will make it difficult to compete with other states where businesses pay lower wages.
Business opposition has led to proposed amendments to the minimum wage bill and proposals for concurrent legislation to reform the state’s unemployment insurance system to lessen the burden on state businesses. Even though there is widespread support for a minimum wage increase, business opposition could stop reform unless these proposals are taken seriously.
Fortunately, the business community’s demands are reasonable. First, a moderate amendment lowering the increase to $10.50 by 2016 could serve to ease the strain on Massachusetts businesses. Second, proposals to introduce concurrent unemployment insurance reform would not change minimum wage legislation as written but would provide businesses with a long-awaited concession. These proposals would lower the burden of what businesses see as an overly generous unemployment insurance system.
These proposed changes to the bill will increase its chances of passage in the legislature and acceptance by Raise Up Massachusetts. Advocates with the organization are unlikely to object to changes so similar to their proposals. Ensuring that group’s satisfaction is important for the legislature should they seek control of the minimum wage hike, as any dissatisfaction could lead to a ballot question. If both measures pass, the legislature will be left to reconcile the two proposals.
An increase in the Massachusetts minimum wage is long overdue and a necessary change for the state. This year, the proposed index system could mean avoiding the inevitable difficulties that come with increasing the minimum wage, especially as a result of the two parallel processes for implementing the change. The index system will effectively negate the need to reconcile proposals from the legislature and citizen advocates. Furthermore, it will ensure the minimum wage is self-sustaining.
Megan McCormick is a second-year student at Suffolk University Law School with an interest in labor and employment law. She received her B.A. from the College of the Holy Cross in 2011. Prior to law school she served a year in the Jesuit Volunteer Corps in El Paso, Texas at a nonprofit legal aid organization and has since returned to El Paso for the summer of 2013 to work as a law clerk at the Paso del Norte Civil Rights Project.