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Business 2018: Minimum wage rise, paid leave likely to move forward

  • Judy Herrell, owner of Herrell's Ice Cream, near her store on Old South Street in Northampton, Wednesday, Jan. 31, 2018. —GAZETTE STAFF/JERREY ROBERTS

  • Judy Herrell, in front of Thornes Marketplace, where her store, Herrell's Ice Cream, is located, Wednesday. GAZETTE STAFF/JERREY ROBERTS

  • Judy Herrell, in front of Thornes Marketplace, where her store, Herrell's Ice Cream, is located, Wednesday, Jan. 31, 2018. —GAZETTE STAFF/JERREY ROBERTS



For the Gazette
Monday, February 05, 2018

BOSTON — Legislation to raise the minimum wage to $15 an hour and establish paid family and medical leave for Massachusetts workers is very likely to move forward one way or another, both opponents and supporters say.

Two bills, H.2365 and H.2172, are pending before the Committee for Workforce and Labor Development. The first would raise the minimum wage to $15 an hour by the year 2022 from its current $11 an hour.  The second would establish a public program into which employers and employees would pay the average of a cup of coffee a week. Employees would then be paid out of the fund during medical or family leave.

The community coalition Raise Up Massachusetts is also in the process of collecting signatures on two petitions to raise the minimum wage and establish paid leave.

If the Legislature does not vote to pass the two bills by June, the Raise Up Massachusetts petitions would become ballot questions in November for a statewide vote, pending enough signatures.

Andrew Farnitano, a spokesman for Raise Up Massachusetts, said the coalition is optimistic the legislation will pass.

“We are prepared to go to the ballot, but we’re very optimistic,” he said. “We think the Legislature understands the importance of raising the minimum wage and giving people paid time off when they’re sick or when they have a baby.”

However, opponents said that while raising the minimum wage and providing paid leave are good goals, the legislation as it stands now is too much, too fast. It’s a difficult line, said Judy Herrell, owner of Herrell’s Ice Cream & Bakery in Northampton.

Herrell supported raising the minimum wage to $11 an hour and said “of course” she’d like to pay her employees more. But for her small business and the seasonality of her ice cream shop, which employs many teen workers who need training, she said the jump to $15 an hour will be difficult to absorb.

“For big box stores, payroll is often a tiny percentage of the bottom line,” she said. “But for an independent business, with one store, two stores, that’s a huge hit.”

New technology and online competition have already impacted the sales of many brick and mortar stores, she said, but the restaurant and hospitality industry is likely to be the most affected by minimum wage legislation as it employs a large proportion of minimum wage workers and has a narrow profit margin that can’t be easily increased with price markups.

Steve Clark, director of government affairs for the Massachusetts Restaurant Association, said the biggest impact for the restaurant industry will be wage compression. Employees who already earn $15 an hour will need to have their wages adjusted to $18 or $19 an hour, he said, resulting in greatly increased costs overall for the employer.

“The restaurant industry is an industry of pennies, where even the most well-run establishments average about 5 percent profit margin,” he said, adding that Massachusetts already has one of the highest starting wages in the country.

“This proposal would raise that number 36 percent in only four years. This is way too high and far too fast, as a multi-year, multi-dollar increase is unsustainable and borderline reckless,” Clark said.

Raise Up Massachusetts pointed out in a January press release that 2018 was the first year in four years that the minimum wage in Massachusetts did not increase. Arizona, Colorado, Maine, Oregon, and Washington have now approved minimum wages higher than $11 an hour and California and New York are on schedule to raise their minimum wages to $15 an hour.

As for paid leave, Clark said that the Massachusetts Restaurant Association is not necessarily against the idea, but costs for the program as it stands in the Legislature now are higher than originally promised. The association is against both bills.

According to Rep. Solomon Goldstein-Rose, D-Amherst, discussions are ongoing in the Legislature. He said that legislation to establish paid leave is extremely likely to pass if it goes to the ballot.

“Some business groups are initially skeptical, but when business owners dig into the details they often like it,” he said. “I’m hoping legislators in these conversations will add into the mix the idea of a ‘tax swap’ involving a sales tax reduction coupled with a carbon pollution price to make up the revenue and protect human service programs and local aid.”

As it appears increased minimum wage and paid leave are on track to be enacted by Legislature or ballot question, there are those who are looking for other ways to decrease costs for small business owners and offset the changes, like the idea of a tax swap.

The Senate’s special Retail Task Force will hold a meeting in Northampton Monday to hear from business owners and customers. Herrell, one of the retail representatives on the task force, encourages anyone to come and share their thoughts on these issues or other ways of improving business in Massachusetts. The meeting will be held at Union Station Banquets from 10:30 a.m. to 12:45 p.m.