Keeping up with the minimum wage is like a dream sequence, one where no matter how fast you run, you keep falling behind.
Two years ago, Massachusetts legislators voted to raise the state’s minimum wage to $11, the highest in the country. But our reign at the top won’t last long.
California and New York recently announced plans to increase their minimum hourly wage to $15 in the coming years — about as high as the minimum wage has ever been, here in the United States or around the world.
Perhaps $15 is what’s required to finally challenge the inequality fracturing the nation. But it could also strain the resilience of state economies and place an unpredictable burden on struggling cities.
How does the Mass. minimum wage stack up?
The best way to make apples-to-apples comparisons over time, and between countries, is by looking at the relationship between what a minimum-wage worker earns and what a middle-wage worker takes home.
Right now, a middle-wage worker in Massachusetts earns $21.19 per hour; that’s the state’s median wage, or the level where half the people make more and half make less.
The minimum wage, by contrast, is currently $10 (it won’t climb to $11 until Jan. 1 of next year). That makes the minimum wage about 47 percent of the median — 10 divided by 21.19.
Though 47 percent is relatively high, it’s not unprecedented. In 1980, the minimum wage in Massachusetts was 50 percent of the median wage. Vermont and Maine were even higher, at 62 percent.
And today, around the world, there are a number of advanced countries where the minimum wage is over 50 percent of the median, including Australia, New Zealand, and France.
How big is a jump to $15?
Partly it depends on how quickly we want to get there. If the Massachusetts minimum wage were suddenly raised to $15, it would amount to a whopping 70 percent of the state median wage. That’s higher than just about any historical or international example.
But a change like this is more likely to come gradually. In California and New York, the two states that have so far embraced the $15 target, the minimum wage will be phased in over a period of years, with safeguards and exceptions to forestall anything too dramatic or too dire.
In California, the minimum wage will go from $10 to $11 by 2018, and then another dollar a year through 2022. In New York, there are additional convolutions. New York City will get a $15 minimum wage by the end of 2019, while the rest of the state takes more time, depending on economic circumstances.
Assuming Massachusetts follows the gradual approach, phasing in a $15 minimum wage by 2021, by the time the official minimum wage reaches $15, it would amount to something more like 60 percent of the average wage. Less astronomical but still historically high.
Why is $15 the new goal?
Pressure from below has helped advance the cause of the $15 wage. Unions and other labor groups have been able to draw immense support, which they’ve effectively translated into a winning public message and a successful lobbying campaign.
And it’s not just states. Several major cities, like Seattle, have adopted the $15 wage.
It’s also become a common demand in collective bargaining, which is why city employees in Pittsburgh and home health care workers in Massachusetts can also boast $15 minimum wages.
Advocates and sympathetic economists hope that expanding the paychecks of America’s lowest-paid workers will help workers up and down the income ladder and even strengthen the overall economy.
Here’s one way that could happen: When labor is cheap, businesses have little incentive to improve efficiency or increase productivity. Whatever the challenge, they know they can hire lots of workers at low cost. But when the minimum wage goes up, hiring gets more expensive. That gives businesses new reason to cut waste, provide better training, and invest in productivity-boosting technologies that are essential to long-term economic growth.
More generally, though, you can think of the fight for $15 as part of the broader war against inequality. For over three decades, the lion’s share of economic growth has been feeding the top 1 percent, with less and less left over for low-wage workers.
Against such a durable economic force, it’s possible that only a dramatic strike for the needs of daily wage-earners can make a meaningful difference.
What are the risks of a $15 minimum wage?
Massive job loss, or perhaps even the collapse of labor-intensive industries like retail. Such fears, though, have proved unfounded in the past. Decades of research have shown that minimum wage hikes barely send a ripple through the business world, even as they increase people’s earnings and reduce poverty.
All those studies were done with small increases, however. And a jump to $15 isn’t small. It would make it far more expensive for business to hire workers. So expensive that they might stop hiring, which would mean fewer jobs.
At particular risk are cities and sectors already struggling to keep up. Think Fresno, compared to San Francisco. Buffalo, compared to New York City. Or Springfield, compared to Boston.
Currently, the median wage in Springfield is $18.94. That’s not all that far above the proposed $15 minimum wage. Even with a gradual, five-year phase-in — and assuming paychecks in Springfield kept growing — a $15 minimum wage would still be something like 70 percent of the average wage in Springfield in 2021. That’s incredibly high.
Pay varies greatly among cities
Source: BLS-OES. Cities and surrounding metropolitan areas.
Faced with this same problem, New York decided to implement different wage rules for different parts of the state, moving quickly to $15 in and around New York City while pausing at $12.50 across the north and west.
That approach might work well for Massachusetts, given how readily the state economy seems to divide into two parts: Greater Boston and everywhere else.
Is the $15 minimum wage coming here?
So far, rumblings of a $15 minimum wage bill from the state Senate have been met with grumblings from the House.
But the lobbying strategies honed in New York and California are well suited for Massachusetts. Bay Staters are at least as liberal as their Golden and Empire state compatriots. So it’s possible labor groups will threaten to take the issue directly to Massachusetts voters, if the Legislature can’t find an acceptable compromise.
Then again, a $15 minimum wage really does seem to be different from the minimum wage increases of the past — pushing the minimum wage to a level so high that it brings greater risk to jobs and businesses. That could be a reason to wait at least a few years, to see what happens with the bold experiments being undertaken elsewhere around the country.
Still, Massachusetts has a history of leading on difficult issues, whether it’s universal health care or education reform. The $15 minimum wage could be our next invitation to the vanguard.