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The Beacon Hill Report - November 21, 2013

Author: B. Vernon Date: November 20, 2013

Minimum Wage Issue

The Massachusetts Senate suddenly put legislation to dramatically increase the minimum wage on the calendar for a vote during the final week of formal legislative sessions in 2013.

The proposal to phase in the minimum wage increase to $11 per hour in July 2015 and tying the wage to inflation thereafter would constitute a 37.5% increase and give Massachusetts the highest minimum wage in the country – 20% higher than any contiguous state. NFIB will support amendments that moderate the increase to approximate the minimum wage in nearby states, eliminate indexing the wage to inflation, and keep MA small businesses cost competitive.

NFIB’s academic study of the impact of the minimum wage increase of this magnitude concludes that Massachusetts would lose between 35,000 and 60,000 jobs over the next decade depending on the rate of inflation with more than half the job loss in the small business sector. Increasing the minimum wage would increase wages for lots of seasonal, part-time and second job workers, but very few minimum wage workers are heads of households and most do not earn the minimum wage for long. Meanwhile, the study concludes that thousands of mostly young, inexperienced and minority workers will go without jobs.

The minimum wage is not intended to allow people to support a family. Wages are paid based not on what a person may need to support his or her family – we all know it is not enough. Wages are paid based on what value a worker may bring to a business.  The minimum wage is a minimum to which Massachusetts workers ought not to aspire but to seek to put in the past as soon as possible.  

The House is not expected to consider a minimum wage increase until early next year. NFIB will work to make sure that the House version will recognize the need to concentrate on job creation and contain a more moderate wage increase coupled with initiatives to lower costs for small business owners, such as unemployment insurance changes, to allow for more job creation. 

Income Tax Cut

Massachusetts taxpayers are again on the verge of receiving an income tax cut effective January 1, 2014. Last year tax revenues fell short of triggering a rate cut. Under the provisions of 2002 legislation, if revenue from the state income tax meets certain revenue benchmarks, the income tax rate is automatically decreased by .05%, or from the current 5.25% rate to 5.20%.

Massachusetts has met all the benchmarks to date to trigger the rate reduction. One test remains to be satisfied. If Massachusetts collects more revenue from the income tax in the three months prior to November 30 than it did during the previous fiscal year, then the income tax rate cut automatically takes effect in January. A rate cut would mean a reduction in revenue for the second half of fiscal 2014 of about $70 million and $140 million for the full fiscal year of 2015.   

Child Care Unionization 

On the heels of last year’s legislation allowing unionization workers at home-based day care centers, including the business owner, the state is considering legislation to unionize workers at institutional day care facilities. Testimony in support of and in opposition to House Bill No. 477 and Senate Bill No. 223 will be heard by the Committee on Public Service on November 25. The proposed legislation would allow employees of child care centers where at least ten per cent of the children are subsidized by the state to organize and collectively bargain with the state on wages and conditions of employment. The legislation specifically exempts child care centers run by government agencies and most large non-profit centers.        

 

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