GloucesterTimes.com, Gloucester, MA

July 26, 2013

Study: Forced wage hike would KO jobs

By Matt Murphy
State House News Service

---- — BOSTON — While advocates for a minimum wage increase are poised to push for a 2014 ballot question in 2014 to raise the minimum wage to $11 an hour, the National Federation of Independent Business has released a study predicting that such a wage hike, by 2015 and tied to inflation, could cost the state up to 63,000 jobs over the next 10 years and reduce economic output by $45 billion.

The report, prepared by the NFIB Research Foundation in Washington, suggested that the annual labor cost per employee for small business owners could grow $4,000 to $6,000 per employee, depending on whether the wage is indexed to inflation and at what rate it grows.

“This proposal would hit the economy like a wrecking ball and we think it’s important for lawmakers to understand the potential consequences before they adopt it,” said NFIB State Director Bill 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 report modeled a bill filed by Rep. Antonio Cabral that would increase the minimum wage in Massachusetts from $8 to $11 in two steps by 2015. Sen. Marc Pacheco has filed similar legislation to raise the wage rate to $11 over three years.

“It’s just not anywhere close to being accurate. It’s what they’ve said in the past and it has never come to fruition,” Pacheco said, responding to the report. “The same groups opposed to the minimum wage were also in opposition to passing health care reform in Massachusetts. They were also for the most part in opposition to passing new sets of energy legislation. States that we compete against did not do what we did, and we’ve created more jobs than they have.”

Pacheco would like to see his bill pass the Legislature this session, but if not, he said he would be “all for” putting a question to raise the wage rate on the ballot in 2014. “I think the citizens of Massachusetts are far and away ahead of the political leaders, in this case,” Pacheco said.

The prospects of fighting a ballot question has opposed business groups on edge. “I’m always concerned. Clearly it’s a difficult issue politically. It’s a difficult issue for me to get across to the general public,” Vernon said.

Rep. Thomas Conroy and Sen. Daniel Wolf, co-chair the legislative committee that is weighing minimum wage proposals this session, said they are still in “learning mode” and welcome reports like the NFIB study, even if it contradicts much of what they’ve read to date.

The Wayland Democrat said he is not working under any timeline for a recommendation from the Committee on Labor and Workforce Development, but Senate President Therese Murray has expressed an interest in addressing the “living wage.”

“We have been reading a lot of economic analysis and reports from academics and think tanks. Less from the business community, so I welcome those. But a lot of the reports point to either growth or no real effect on the economy or jobs. No deleterious effect,” Conroy said.

Over the past decade, the state’s minimum wage has climbed 18.5 percent from $6.75 in 2003 to $8 today. The last increase came in 2008 when it climbed from $7.50. The NFIB study reports 62,000 workers in Massachusetts earning at or below the minimum wage, which could climb to as high as $15 an hour by 2023 if indexed to a cost of living rate that grows 4 percent a year.

Vernon said a wage trend like that forecast in the study could turn problems like low teenage employment into a “full-blown crisis.”

The report estimates that 58 percent of the jobs lost, even if the minimum wage isn’t tied to inflation, will come from small businesses with fewer than 500 employees.

Wage hike supporters dismiss the warnings by business groups as red herrings, but Vernon said the consequences are real. “The evidence is contrary. You see in Massachusetts, a lot of these jobs lost are jobs not created. Our job growth is anemic and has been for a decade now. There might be a little bit of an increase now, but we haven’t increased the minimum wage yet,” Vernon said.

According to the Massachusetts Budget and Policy Center, the minimum wage has increased six times since 1995, and each time employment growth in industries with high concentrations of minimum wage workers has been more positive than total employment growth, and “markedly higher” than growth in sectors with low concentrations of minimum wage workers.

Steven Tolman, president of the Massachusetts AFL-CIO, called the NFIB report findings “bogus, fraudulent and misleading.” “These are the same stupid arguments we’ve heard since I was in the Legislature,” said Tolman, who left the Senate in 2011.

Tolman, a Brighton Democrat, said that even through a recession workers higher up the pay-scale ladder have received raises from their employers without crippling economic recovery and job growth.

“The bottom line is you can make numbers and figures work out to whatever conclusion you’re trying to reach. The hardworking people making $8 an hour haven’t had a raise in five years and someone wants to begrudge them a $1 raise. That is unbelievable,” Tolman said.

The minimum wage debate isn’t just taking place in Massachusetts. The Maine Legislature recently voted to increase its state wage from $7.50 to $9 by 2016, but could not muster the votes necessary to override a veto of the bill by Republican Gov. Paul LePage.