January 18, 2018

Report: $15 minimum wage impacts 40% of Worcester workers

Courtesy
Timothy J. McGourthy, executive director of the Worcester Regional Research Bureau.

Raising the Massachusetts' minimum wage to $15 per hour could hurt business and result in 40 percent of Worcester's workforce getting a pay raise, according to a report released Thursday from the Worcester Regional Research Bureau.

Such a move, however, could hurt some companies already working with a thin profit margin, WRRB said.

About 24,000 employees - 31 percent of workers - would see a direct increase, while another 7,000, or 9 percent, would see an indirect rise as employers increase wages to maintain a salary hierarchy, WRRB said, citing data from the Massachusetts Budget and Policy Center.

Worcester -- and all of Massachusetts -- has an $11 minimum wage, the second highest statewide rate in the country after Washington state's $11.50. Advocates on Beacon Hill are pushing for a $15 minimum wage, including proposed state legislation to incrementally raise the wage to $15 by 2021 and a ballot question set for the fall that would do the same by 2022.

Per each proposal, the wage would be adjusted by cost of living increases each year after.

Wage increases for municipal workers and Worcester schools employees would cost at least $750,000 combined, according to WRRB.

WRRB acknowledged the political support the legislation has, noting the bill is sponsored by Democratic State Rep. Dan Donahue of Worcester and the bill's endorsement by Worcester City Council.

However, WRRB said businesses would have to adjust payrolls dramatically, possibly resulting in a loss of jobs and other cost-cutting measures.

"There is a reason that no group is seriously pushing for a $25 minimum wage, or a $50 minimum wage, or a $500 minimum wage," WRRB wrote. "It is because everyone, including minimum wage advocates, understands that it is possible to go too far and that raising the minimum wage by too much, too quickly would have adverse effects that would outweigh any positive results."

Instead, WRRB called for a raise to the federal minimum wage of $7.25, which has not risen with inflation.

A targeted alternative should be debated and set, similar to federal interest rate policies, WRRB wrote.

"Greater Boston and Greater Worcester may need different minimums to account for both cost of living and market capacity. A real discussion over minimum wage should not be dictated by past practice or a simple default to round numbers," WRRB said in the report.

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