By Matt Murphy, Gintautas Dumcius and Andy Metzger
STATE HOUSE NEWS SERVICE
STATE HOUSE -- The Massachusetts Senate on Thursday voted overwhelmingly in favor of a bill that would raise the state's minimum wage to a nation-leading $11 an hour by 2017 in a move that Democratic leaders said they feel confident will be enough to avoid a costly ballot campaign this fall for higher wages.
The Senate voted 35-4 to pass legislation that would gradually increase the minimum wage in three steps from its current perch at $8 an hour to $11 an hour in 2017, with $1 increases taking effect on the first day of each of the next three years starting on Jan. 1, 2015.
While supporters touted the need to help lift minimum wage workers out of poverty and stimulate the economy, some small business groups warned the effort would cost jobs and drive some small employers out of business.
"If you're payroll is going up, you're taxes are going up," said Jon Hurst, president of the Retailers Association of Massachusetts. Hurst said the bill, which also overhauls the state's unemployment insurance system, reflects the clout of unions in Massachusetts.
Senate President Therese Murray, before the vote, said she believed the bill would be sufficient for ballot organizers to drop their proposed referendum to raise the minimum wage to $10.50 by 2016 and link future increases to inflation.
Asked whether she had been given any assurances from ballot petition leaders, Murray said, "We have gotten some feedback that if this is passed today and the House passes it and we get it timely to the governor's desk and he signs it, that the ballot question will not go forward."
During floor remarks, Sen. Dan Wolf (D-Harwich) referred to the minimum wage increase as important "from a moral perspective," as well as functioning as an economic stimulus. Minimum wage earners will see an increase of $6,000, and they will spend it in small businesses and restaurants, he said. Wolf sat on the conference committee that negotiated the final bill with the House.
The hike in the minimum wage will also decrease the number of people on government assistance rolls, Wolf said.
The bill also includes unemployment insurance reforms, which will provide the business community with the predictability they requested, according to Wolf. It adjusts rates businesses pay to cover benefit costs for the jobless and seeks to avoid steep increases in rates.
"Everybody in the business community is going to see a decrease or stabilized rates for the next four years and that's really very important. As a business person I would say that's really important," said Wolf, who owns Cape Air.
Hurst, however, said the UI reforms don't go nearly far enough to close loopholes in the law that can increase fraud and costs for small businesses. "I fear for the future of 351 Main Streets across the Commonwealth. Common sense tells you that a mom and pop store cannot afford to pay a teenager $16.50 per hour to start on a Sunday; certainly not in the days of exponential sales growth to the Internet competition. Voters need to start asking the tough questions as to why their Main Streets are going dark," he said.
Responding to Hurst, Murray said, "I know Mr. Hurst wanted us to do away with the overtime on Sundays. That is something I think that pretty much the entire membership felt very strongly they did not want to do."
Senate Minority Leader Bruce Tarr (R-Gloucester) said he was disappointed that additional measures, such as an increase to the earned income tax credit for low income workers were not included in the bill.
He said Senate Republicans, all four of whom voted against the compromise, also wanted to raise the minimum wage but at a more moderate level and with regular reviews of its impact."We offered several attempts at that," said Tarr, saying the 750,000 Massachusetts residents living below the federal poverty line is "unacceptable."
The compromise bill, which now moves to the House where a vote is expected next week, would provide Massachusetts with the highest minimum wage in the country. Over 575,000 low wage earners, who are currently earning less than $11 per hour, would get a raise, said Lew Finfer, the co-chair of the group seeking to place a minimum wage increase on the November ballot.
The group, Raise Up Massachusetts, will meet next week to review the bill and decide whether they should go forward with the ballot initiative. The deadline to turn in the final round of signatures to local elections officials is June 18, Finfer said, and the group will continue gathering signatures for now. The deadline to turn certified signatures in to Secretary of State William Galvin's office is in early July, after which it will be too late to stop the ballot drive.
Asked about the compromise bill's lack of tying future increases to inflation, Finfer said the group will discuss the matter in its meeting planned for next week.
"We'll look at the whole picture but we think this was a very good and important step," Finfer said. "It's a significant wage increase."
Finfer said the potential ballot initiative has been a key driver of getting the minimum wage increase through the Legislature and onto the governor's desk. "I think they might have raised it but not at all to this extent," he said.
Sen. Marc Pacheco, a Taunton Democrat, exhorted activists to persist in their effort to pursue a ballot initiative that would raise the wage to $10.50 by 2016 and link it to inflation, which he said would raise the lowest wages more than the bill would over time.
Pacheco also said the bill before the Senate had a minimum wage for tipped employees that is "significantly lower" than other versions of the legislation. The compromise bill raised minimum wages for tipped workers from $2.63 to $3.75."I would urge you to continue to go to the ballot, because I know the Massachusetts voters," Pacheco said.
He added, "I hope this bill passes and I hope we actually have the ballot question go to the ballot."
Murray said she has not heard directly about business leaders being unhappy with the bill, pointing to many of the UI reforms that were included in the bill at the request of the business community. She also refuted the assertion that unions exert undue influence over the legislature.
"That's just not true. If that were the case, indexing would be on there," she said.
While Murray plans to retire from the Legislature at the end of this year, the Plymouth Democrat said the conversation about the cost of living in Massachusetts must continue even after wages increase.
"This can't be the end of the discussion because in order to live, particularly in the city of Boston, making $23,000 a year isn't going to cut it, especially if you have a family of four. You're still going to be below the poverty level," she said.