Mass. lawmakers weigh minimum-wage increase

BOSTON (AP) -- Advocates for a higher Massachusetts minimum wage packed a Statehouse hearing Tuesday, saying an increase is a matter of fairness and would boost the economy.

But representatives of business groups argued the higher labor costs would make Massachusetts less competitive and ultimately hurt the workers it was trying to help.

The hearing before the committee on Labor and Workforce Development focused on a bill to increase the minimum hourly wage from $8 to $11 by July 2015. The proposal by Sen. Marc Pacheco would also tie future increases to inflation, starting in 2016.

Pacheco said predictions of economic damage from a minimum wage hike are always overblown.

"Every single time we finally had the courage to help people that played by the rules ... guess what? Nothing happened," said the Democrat from Taunton. "We didn't lose jobs. We didn't see the economy go down the tubes."

But Brian Houghton, of the Massachusetts Food Association, said minimum wage increases always have an impact because employers must somehow cover the higher labor costs — maybe by passing them on to consumers, maybe by cutting worker benefits.

"Something had to happen, because something had to give," he said.

Massachusetts last increased its minimum wage in 2008. Pacheco's proposal would raise the wage to $9 within 60 days after it passes, increase it to $10 by July 2014 and raise it to $11 a year later. An $11 rate is well above the current minimum wage in any state, with Washington's ($9.19) the nation's highest, as of the start of 2013. Two New England states, Connecticut ($8.25) and Vermont ($8.60) are currently higher than Massachusetts.

On Tuesday, the crowd in a basement auditorium at the Statehouse was dominated by minimum wage increase supporters who cheered loudly for wage hike advocates.

Some speakers said an increase would boost consumer spending, improve worker productivity and free up jobs, as people no longer need a second job. Others said it's simply wrong that full-time workers earning minimum wage can't get by without government assistance.

"This is actually shameful," said Sen. Karen Spilka, a Democrat from Ashland.

Steve Tolman, of the state AFL-CIO, said the increase makes up for the earnings erosion workers have suffered because the state minimum wage isn't tied to inflation.

"We shouldn't ever call it a bill to raise the minimum wage," Tolman said. "We should call it a bill to restore the minimum wage."

But speakers opposed to the hike said that proponents vastly overestimate the number of people who make minimum wage, and that teens already struggling to break into the workforce would be disproportionately priced out of the market.

Jon Hurst, of the Retailers Association of Massachusetts, said Massachusetts employers are burdened by high costs — including in energy and health care premiums — and the wage increase would put them at even a greater disadvantage with businesses in competing states.

Massachusetts is a socially conscious state, but resulting initiatives have a cost that must be recognized, said William Vernon, of the National Federation of Independent Business.

"You cannot expect to raise the cost of labor and not lose jobs or job opportunities," he said.

Amid the competing claims on job losses, Boston Federal Reserve Bank economist Alicia Sasser Modestino said the proposed wage hikes' effect on unemployment remained "an open empirical question."

She urged lawmakers to thoroughly analyze the bill's possible effects before acting.