Labor group pushes for $10 hour state minimum wage

The state’s largest organized labor group is throwing its weight behind a proposal to raise the minimum wage in Massachusetts by $2 over the next three years in a move that would give the state the highest base wage rate in the country.

As lawmakers look to find ways to reduce health insurance costs for businesses and spur hiring, the bill filed by Sen. Marc Pacheco (D-Taunton) and Rep. Antonio Cabral (D-New Bedford) would gradually raise the minimum wage to $10 by the summer of 2013.

At a closed-door legislative breakfast for new lawmakers on Tuesday, the AFL-CIO of Massachusetts identified the wage adjustment as one of its top priorities this legislative session, as well as enabling workers without sick days to earn them, and an increase in the state’s income tax offset by deductions for lower to middle class workers.

“Every legitimate economic analysis shows that increasing the minimum wage results in economic growth locally, and if we’re ever so lucky to see something done on the national level, economic growth nationally. The logic behind that is very clear. People who are low wage workers spend the majority of their money in the local economy,” said Tim Sullivan, legislative and communication director for the AFL-CIO.

The minimum wage in Massachusetts increased to $8 per hour in January 2008, the second step of a phased adjustment to the wage law approved by the Legislature in 2006 over a veto by then-Gov. Mitt Romney. The 50-cent increase three years ago was the last change to the minimum wage.

The bill filed by Pacheco and Cabral would increase the minimum wage to $8.75 per hour on of July 1, $9.50 per hour by July 1, 2012, and $10 per hour July 1, 2013. The legislation also calls for tying future wage adjustments to the Consumer Price Index, allowing for annual cost of living adjustments, plan that has been rejected in the past.

The legislation has 19 House and Senate co-sponsors.

“I filed it so that we can maintain the value of the minimum wage as a percentage of our economy,” Pacheco told the News Service in a phone interview. “The wage base continues to erode in terms of the cost of living so the longer you go without adjusting it, the wage is worth less.”

Pacheco said his goal is to maintain the value of the minimum wage over time, dismissing the argument that increasing the cost of wages on employers would stymie job growth and hurt the state’s economic recovery.

“We hear that every time a minimum wage bill is filed, and history will prove the arguments never actually happen when a minimum wage bill is passed,” Pacheco said. “It’s just not factual, and can’t be supported by real evidence that increasing the minimum wage means we’re going to lose jobs. That simply has not been the case.”

He said that even at $10 per hour, the increase he has proposed would likely fall short of keeping pace with the buying power of the minimum wage from five years ago when the Legislature last approved an increase.

According to the National Conference of State Legislatures, Connecticut, the District of Columbia, Illinois, Oregon, Vermont and Washington have higher minimum wages than Massachusetts, with Washington the highest rate in the country at $8.67 per hour.

Nevada also requires that workers be paid $8.25 per hour if they do not receive health benefits, but lowers the rate to $7.25 if health care coverage is provided.

Associated Industries of Massachusetts President and CEO Richard Lord said he wasn’t sure there was much appetite on Beacon Hill to tackle the minimum wage, but said his organization would oppose any effort to do so.

“Although the economy is slowly recovering it’s still pretty shaky and increasing the minimum wage at this time would be a risky move. Every time we do increase the minimum there’s some loss of low-income jobs and that’s the last thing we want right now.”

Sullivan said increasing the minimum wage would have little impact on business decisions to hire or expand their workforces.

“If the minimum wage was $1 they’d be reluctant to hire. They’re always reluctant to hire whether the economy is good or bad,” Sullivan said.

With some lawmakers eyeing Fidelity’s decision to shift nearly 1,100 jobs out of Massachusetts as a sign that neighboring states are in a better position to lure business, Lord also questioned the need to lead on minimum wage.

“It also raises competitive issues when Massachusetts adopts polices that are different than most other states,” Lord said.

Pacheco said he wasn’t sure whether he could muster the support of his colleagues to pass the bill this session.

“This is my proposal. It doesn’t mean you’re going to see it passed this year. I’m not saying it won’t, but if you don’t fight for economic justice, it never happens,” Pacheco said. “I’m certainly going to try to see it get done.”

Sullivan said it was important to “get these things in the hopper” so that when the time is right over the next two years to start the debate, the bill will already be in place.

“By the time we have the debate, the economy may be closer to where it needs to be and it will be easier to have that conversation about increasing people’s wages,” Sullivan said.

Jon Hurst, president of the Retailers Association of Massachusetts, said he is not surprised to see the issue resurface after five years, but argued the timing was wrong.

“Our priorities should be about getting people back to work period and making our small business profitable and competitive,” said Jon Hurst, president of the Retailers Association of Massachusetts.

Hurst said raising the minimum wage would undoubtedly hurt job growth, and be a “killer” for teenage jobs.

“There’s a crisis out there for creating jobs for teenagers and raising the minimum wage would push that 29 percent employment rate further down,” said Hurst, noting that retailers in Massachusetts must pay workers time-and-a-half on Sunday, pushing the base rate to $12 an hour.

The AFL-CIO is also backing an increase in the income tax on the highest wage earners, supporting legislation filed by Sen. Sonia Chang-Diaz and Rep. James O’Day state’s income tax to 5.95 percent, from 5.3 percent. The bill includes significant increases in tax deductions for low and middle-income workers and families that supporters say would prevent any tax increases on those earning less than $62,000 a year.