NFIB Massachusetts Says House Minimum Wage Bill Still Hurts Economy

Date: March 20, 2014

Boston (March 20, 2014) – The House plan expected to be released today to increase the state minimum wage more than 30 percent in the next two years is better than the Senate alternative but still too much for some small businesses, said the National Federation of Independent Business (NFIB).


“We appreciate the deletion of the indexing (automatic increases) provision from the Senate version,” said NFIB State Director Bill Vernon.   “Economic studies prove that the timing of minimum wage increase in the economic cycle affects the severity of the economic impact. The House has in good faith tried to accommodate small businesses and soften a bit the impact of raising labor costs but in the end it will add to the cost of running a small business and force small businesses into making difficult hiring decisions.


Vernon said the combination of the minimum wage increase with some reforms to the state Unemployment Insurance system intended to reduce costs for employers is also encouraging.


“We appreciate the technical changes to reduce costs but the Unemployment Insurance reforms don’t address the underlying problems with the system,” he said.  “Those changes cannot really offset the substantial increase in labor costs imposed by a much higher minimum wage.”


Vernon pointed to a study within the last several weeks by the nonpartisan Congressional Budget Office that predicted more than half a million job losses nationally as the result of a federal bill that would raise the minimum wage to $10.10 per hour.  That’s consistent with NFIB research predicting that an earlier version of the Massachusetts bill would wipe out roughly 50,000 jobs over ten years depending on the rate of inflation.


“Since all of the versions currently under consideration on Beacon Hill are more aggressive than the federal plan, job losses here would be at least as severe and job creation will be slower here than predicted by the CBO,” he said.


“Small businesses that cannot count on a big increase in sales to accommodate higher labor costs will find a way to reduce employment. They’ll eliminate positions, lay off workers, cut their hours and look for ways to automate jobs so they don’t need employees. That is the way the economy works.”


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