Massachusetts Should Raise the Minimum Wage (Again)
Nobody who works 40 hours a week should be living in poverty
In 2018, as part of a grand bargain, Massachusetts Gov. Charlie Baker (R) signed a bill raising the state minimum wage to $15/hour by 2023. That was good — a $15 minimum wage is something I strongly support, and many writers have made the case for it and rebutted the arguments against it much more eloquently than I could.
It’s also politically popular — more so than the general Democratic Party brand. In 2020, Florida voters passed Amendment 2, a measure that would raise the state’s minimum wage to $15/hour by 2026, with 60% of the vote while voting for former President Donald Trump 51-48:
According to this graphic from a January Economist article, a living wage in Florida is between $12 and $13/hour, in 2021 dollars:
Adjusting for inflation, the Amendment 2 increase to $15/hour by 2026 will have the same purchasing power as $13/hour in 2021 — assuming that there are no major long-term spikes in inflation, the wage increase will lift Florida’s minimum wage to a living wage. This is really good — anybody who works full-time should be making enough to maintain a basic standard of living, and the minimum wage in America has stagnated for decades while productivity has increased.
But you’ll notice in the Economist graph that the living wage in Massachusetts would be around $15.50/hour by 2021. It’s currently $13.50/hour — a shortfall of $4,160 per year. That’s a problem that ought to be fixed.
How did we get here?
In recent decades, Congress has been slow to raise the minimum wage to keep up with increases in the cost of living — forgoing commonsense measures like automatic inflation adjustment or using a commission of some kind to set increases. Instead, doing so has been left in the hands of politicians and subjected to gridlock.
According to Bloomberg economics writer Noah Smith, the rule of thumb is that the minimum wage does not cost jobs if it doesn’t exceed 60% of the local median wage — about $15 nationally. But Massachusetts is one of the wealthiest states in the union, with a high cost of living to match. The median wage in hourly terms is around $38 in 2018 dollars or $41 in 2021 dollars, so the state minimum wage should not exceed $24.60 (again in 2021 dollars) — so my proposed rate of $15.50/hour is well within the safe zone and would not result in lost jobs.
Slow and steady wins the race
Now, I understand that it’s not fair to ask businesses to swallow a $2 wage hike in just one year, especially when coming out of a tough economic situation during the pandemic. Under the 2018 law, the minimum wage was increased by 75¢ every year until it reaches $15 by 2023. I think that these gradual increases are fair to businesses and workers alike, and there’s evidence that they increase support for raising the minimum wage.
So my proposal is quite simple: keep doing annual 75¢ increases until the minimum wage in Massachusetts is equal to $15.50 in 2021 dollars. According to some back-of-the-envelope math, this would mean continuing the 75¢ hikes through 2027:
After 2027, the minimum wage should be set to be automatically adjusted for inflation or increased annually by some sort of commission, as laid out in the Vox video.
I’m not skilled enough to quantify my proposal’s effect on poverty, but I think it’s fair to say that the impact would be a net positive, and if by some miracle somebody who works on Beacon Hill is reading this, I hope that they try to get the ball rolling on this one (I suggest “$18/hour by 2028” as a slogan).