BOSTON – A summer study by a national business group says an increase in the Commonwealth’s minimum wage would be disastrous for the economy of the Bay State.
The National Federation of Independent Business, or NFIB, are saying a three dollar increase in the state’s minimum wage to eleven dollars an hour would not only make it the highest in the nation, but would also hit the state’s economy like a “wrecking ball”, according to Massachusetts NFIB Director Bill Vernon.
“We think it’s important for lawmakers to understand the potential consequences before they adopt it,” said Vernon. “The bottom line is that Massachusetts will have tens of thousands fewer jobs, which means fewer opportunities for workers on the lowest rungs of the ladder.”
The group’s research predicts that the potential is there for Massachusetts to lose as many as 63,000 jobs in the next decade if lawmakers move ahead with Senate Bill 878 to raise the minimum wage to eleven dollars by 2015 and then every year thereafter, due to the bill’s provision of indexing the wage to inflation.
The NFIB put forth several different scenarios in their study, based on the potential for inflation.
According to the study, even with zero percent inflation, a three dollar raise in the state’s current eight dollar minimum wage would lead to the loss of just over 38,000 jobs, and a decrease in the state’s economic output of almost five billion dollars.
The organization also stated that a rise in the rate of inflation to four percent would result in the loss of 63,000 jobs and the lowering of the Commonwealth’s economic output by $8.3 billion.
“This proposal would increase the minimum wage 37 percent in the next 18 months,” said Vernon, stating that the measure would be devastating for small employers. “It would be impossible for small businesses to estimate their labor costs year to year and it would force them to pay higher wages regardless of whether their revenues can keep up.”
State Senator Benjamin Downing (D-Pittsfield), who co-signed Senate Bill 878 sponsored by Senator Marc R. Pacheco (D-Taunton), thinks the bill, and increase in the minimum wage, is a positive move.
“I totally support an increase in the state minimum wage,” he told The Westfield News earlier this month. “An increase is long overdue, and those working in minimum wage jobs, who work hard and play by the rules, shouldn’t be wondering where their next meal is coming from.”
While Senate Bill 878 enjoys universal support from Beacon Hill Democrats, not all are quite as enamored with it as co-sponsor Downing.
“I think it’s got some good merit,” said Representative Brian Ashe (D-Longmeadow). “For people to make a living on eight dollars an hour is difficult.”
Ashe does not believe, however, that the debate on the bill is over.
“We don’t need to give away the bank, but money goes fast,” he said. “We need to find a way to make the Commonwealth’s minimum wage competitive. And we need to see if other states are indexing their minimum wages.”
Of the six New England states, only Vermont ties their minimum wage to inflation, and the Green Mountain state currently has the third highest minimum wage in the country at $8.60 an hour.
“The arguments against increases in the minimum wage have been consistently proven false,” Downing said. “which doesn’t mean we should dismiss them, but the data has shown that raising minimum wage is good for the economy.”
Vernon believes just the opposite, that a raise in the minimum wage in Massachusetts, a state with one of the highest costs of living in the nation, will make it the “most expensive state in the country to create entry-level jobs” in a “very short time.”
In addition, Vernon believes that the financial well-being of the Commonwealth’s young people is being put at stake, saying that policy makers often lament the jobless rate among teenagers, which now exceeds 20 percent in Massachusetts.
“Raising the minimum wage 37 percent and then putting future increases on automatic pilot virtually guarantees that the teenage unemployment problem will become a full-blown crisis.” he said. “In 10 years the minimum wage could be more than $15 per hour. That means that teenagers with no experience and low skills will be competing for jobs against older workers with more skills.”
“We’re pricing our kids out of the labor market,” he continued, before mentioning other low-skill workers that need jobs to develop the work habits, skills and experience that are necessary to “climb the ladder to economic success.”
