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Starting Friday, Jan. 1, the minimum wage in Massachusetts gets a 75-cent bump to $13.50 an hour. This is the third consecutive year the wage floor has increased on its way to $15 an hour. But with the state stuck in a pandemic economy, the stakes are higher than usual for workers and employers.
"The minimum wage increase is so critical right now," said Cindy Rowe, executive director of the Jewish Alliance for Law and Social Action. Back in 2018, it was one of many groups that pushed state legislators to pass a so-called "grand bargain" — a law that included a provision to raise the minimum wage to $15 an hour over five years.
"Minimum wage workers are essential workers," Rowe said. "They are out there working in grocery stores, cleaning buildings, taking care of our seniors and those with health care needs. They deserve our support and a decent wage which will let them take care of themselves and their families."
"Minimum wage workers are essential workers. They are out there working in grocery stores, cleaning buildings, taking care of our seniors and those with health care needs."Cindy Rowe, executive director of the Jewish Alliance for Law and Social Action
A minimum wage is not the same as a living wage. According MIT's Living Wage Calculator, a living wage for a single Massachusetts adult with no kids is $15.46 an hour — nearly two dollars more than this year's new state minimum.
Still, Phineas Baxandall, a senior policy analyst at the left-leaning Mass. Budget and Policy Center, said that the raise for workers at the lowest end of the income spectrum should aid in the economic recovery.
"More workers having more money in their pockets means they've got more money to go out and spend," Baxandall said, "and that's going to be good news for businesses, grocery stores, and the economy in general."
That argument doesn't hold water with Doug Bacon, a longtime veteran of Boston's restaurant industry.
"The advocates and the labor people who say all the dollars you spend on payroll trickle back to your business, it's just a bogus argument for restaurants," he said.
Bacon said he owns eight Boston-area restaurants, but four of them are in hibernation. Meanwhile, his pre-pandemic staff of almost 200 employees has been cut down to about 40.
"In the pandemic, it's extremely difficult just to make payroll every week," said Bacon, who takes issue with the new wage floor for tipped workers. At $5.55 an hour, that rate is about 12% higher than last year.
"The tipped wage is really gonna have a very small positive effect for the working people earning tips, because the vast majority of their income is tips," he said.
And for small business owners, he explained that the higher hourly pay can add up: "So it means that we're going to have to raise our prices and that's going to be difficult."
People don't have to eat out, Bacon added. And with fears about the coronavirus and increased government restrictions, higher prices at restaurants would be yet another thing discouraging people from dining out. All of it contributes to the pressure facing an already battered industry.
"There is a high level of anxiety out there from small business owners who are just worried about their doors staying open."Christopher Carlozzi, state director of the National Federation of Independent Business in Massachusetts
Of course, restaurants are not the only businesses struggling to make the math work right now — many entertainment venues, retail shops and movie theaters are trying to stave off closures.
"There is a high level of anxiety out there from small business owners who are just worried about their doors staying open," said Christopher Carlozzi, state director of the National Federation of Independent Business in Massachusetts.
Along with the higher wage costs, Carlozzi said, employers this year must begin paying into the state's paid family and medical leave program. Plus, they are likely to face increased taxes to help make up the $2.4 billion deficit in the state's unemployment insurance trust fund.
"When you start piling new labor costs on, he said, "that just makes it even harder for them to survive this pandemic."
This segment aired on January 1, 2021.
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