Start from the beginning. What is the minimum wage in Massachusetts?
Currently, the Massachusetts minimum wage is $8 an hour. That’s above the federal level of $7.25 an hour, but below the rate of some other states, like Connecticut, which also just enacted the highest state minimum wage — to $10.10 an hour by 2017.
There’s a separate minimum wage — $2.63 — for tipped Massachusetts workers (also above the national level, which is $2.13), and an hourly wage of $1.60 for agricultural employees.
(A note on the tipped minimum: In 2012, the average hourly pay — that is, wages plus tips — for waiters and waitresses in the Boston metro area was $13.69, the U.S. government found.)
Got it. So I hear some people want to raise those various minimum wages in Massachusetts. When did we last do that?
The Massachusetts minimum wage was last changed in 2008. And the state’s wage currently doesn’t have automatic upward adjustments indexed to inflation, as many states have.
In fact, the left-leaning Massachusetts Budget and Policy Center has researched how the state’s minimum wage has been eroded by inflation, and concluded that the real (inflation-adjusted) value of the wage has dropped 25 percent since 1968. (Critics, though, say 1968 is an arbitrary year to use for the comparison.)
OK, so what are the wage-raising proposals on the table right now?
Here’s the situation in Massachusetts: In November, the state Senate approved a bill that would raise the minimum wage to $11 an hour by 2016, and then tie future increases to inflation. The package would also raise the tipped minimum wage to 50 percent of the regular minimum wage.
Now the ball is in the House’s court, and it’s right now looking at a slightly different proposal. A few weeks ago, Speaker Robert DeLeo called for raising the minimum wage to $10.50 by 2016. Additionally, his plan would not index future increases to inflation, and would bring the tipped minimum wage to $3.75 by 2016. The full chamber is set to debate the issue.
Another sticking point has been unemployment insurance reforms. DeLeo’s package ties the reforms and a minimum wage hike together, while the Senate passed two pieces of legislation separately. So the various UI reform proposals have to be reconciled as well.
And apart from the Legislature, an advocacy group called Raise Up Massachusetts is leading an effort to put a minimum wage increase and earned sick time on the November ballot. It’s also pressing legislators on inflation-indexed increases and a higher tipped wage.
So between the legislative proposals (and a supportive governor) and the ballot effort, it’s looking very likely that the Massachusetts minimum wage is headed up — even higher than Connecticut’s just-passed level. But obviously, key details remain up in the air.
And, of course, the Massachusetts action is going on amid a national debate on the issue. Cities, other states and the federal government are weighing wage hikes of their own.
But many people oppose such legislation. What’s their reasoning?
There’s a big, long-running debate over the efficacy of minimum wage hikes.
Proponents say higher wages are needed to keep up with inflation, and that pay hikes boost worker purchasing power, reduce employee turnover, and can bring people out of poverty.
Critics, though, caution that higher wages increase labor costs, which then force employers to raise prices and/or cut other wages, benefits or jobs. Others also argue that not all low-wage earners need a higher minimum wage; some people, in fact, favor a separate teen pay floor.
Last month, the Congressional Budget Office dropped a blockbuster report into the national discussion. It said raising the U.S. minimum wage in steps to $10.10 — President Obama’s proposal — would result in employers cutting about 500,000 jobs, but it would also lift nearly 1 million Americans out of poverty.
Other studies, however, have found no discernible effect on employment. It’s up for debate.
What’s also up for debate is whether there are better ways to help low-wage workers. Many economists prefer an expanded Earned Income Tax Credit, which is a direct payment; still others think the EITC works best as a complement to a higher wage floor.
Alright, enough policy for a minute. Who actually makes the minimum wage?
This is another big part of the issue. Here are some of the interesting figures from a new U.S. report on those earning the federal minimum wage — that’s $7.25 an hour — last year:
– In 2013, most working Americans were paid at hourly rates. Of those hourly paid workers, just 4.3 percent earned the federal minimum wage ($7.25) or less.
– Of those minimum wage earners, half were younger than 25 and 62 percent were women.
– Nearly two-thirds of last year’s minimum wage employees in the U.S. worked part-time.
– “Almost two-thirds of workers earning the minimum wage or less in 2013 were employed in service occupations, mostly in food preparation and serving-related jobs.”
Figures are harder to come by for Massachusetts alone, but the trends are similar.
For instance, the Massachusetts Budget and Policy Center last year found that about 73 percent of workers earning the state minimum wage were 20 years or older, and 38 percent of employees earning less than $11 an hour worked full time.
So who would actually get a raise under the various proposals?
Those earning the minimum wage itself — and also all the people who make above the current minimum wage but below the level to which lawmakers want to raise the wage.
For example, the website FiveThirtyEight calculated that “in 2013 more than 25 million people earned less than $10.10 an hour…” That gives you an idea of how many Americans would get a raise if President Obama’s minimum wage proposal were to pass.
The Massachusetts Budget and Policy Center — which, again, backs a higher minimum wage — has also crunched numbers on who would be affected by proposed increases in the state’s pay floor. It found that a total of 582,000 people — 454,000 directly, 128,000 indirectly — would see an increase in their wages if DeLeo’s proposal ($10.50 by 2016) becomes law.
Can we end on something simple?
Sure. Here’s a tidbit: Massachusetts enacted the nation’s first minimum wage, in 1912.