Massachusetts' minimum wage is increasing again in the new year. Here's why

Massachusetts' minimum wage will increase to $14.25 an hour on Jan. 1. It's the final adjustment to the state's wage floor before it becomes $15 an hour in 2023.

Massachusetts was one of the first states in the country to legislate a path toward a $15 minimum wage, but its adoption wasn't immediate. As part of a so-called legislative "grand bargain" in 2018, Gov. Charlie Baker and state lawmakers agreed to raise the minimum wage incrementally over five years.

The minimum wage is currently $13.50. The new minimum for tipped workers will go from $5.55 to $6.15 an hour.

Advocates are welcoming the scheduled increase. "It will mean that hundreds of thousands of workers will be seeing a raise — and so it's cause to celebrate," said Phineas Baxandall, a senior policy analyst at the left-leaning Mass. Budget and Policy Center.

Baxandall says the wage increase will bring a bit of relief with the prices of commodities like food and gas rising due to high inflation.

"This minimum wage increase is about 5.5%," he said. "It helps earnings keep paces with prices some, and that's something worth celebrating, but a minimum wage still isn't really enough to get by."

The new wage translates to $29,640 a year for someone working 40 hours a week, 52 weeks a year.

A recent analysis by the Massachusetts Institute of Technology found that when factoring in vital expenses — such as housing, transportation and other essentials — a single earner in Massachusetts with no dependents would need to make about $36,900 a year to pay the bills. Said another way, MIT's "living wage" calculator found that same person would need to be paid a minimum wage of about $17.74.

Some business groups fear the rising minimum wage could hurt small businesses operating on already slim margins.

"It will only result in employers having to pay more to retain existing workers," said Christopher Carlozzi, Massachusetts director for the National Federation of Independent Business.

"Aside from crowding inexperienced and younger applicants from the workforce, the higher minimum wage could mean even higher prices for consumers already trying to absorb rising costs," he said.

Carlozzi also noted that a recent national survey of more than 600 of his group's members found over 40% had already raised wages to try to attract workers.

Four other New England states also will hike up their wage floors in the new year. Connecticut and Rhode Island will see incremental raises; they're set to reach $15 an hour in 2023 and 2025, respectively.

Maine and Vermont tie their minimum wages to the consumer price index; Maine will increase its minimum wage to $12.25 an hour, and Vermont will up its to $12.55.

New Hampshire is the only New England state that still follows the federal minimum wage of $7.25 an hour.

With additional reporting from the New England News Collaborative