In 2015, when support for a $15-an-hour minimum wage started gaining serious momentum in Massachusetts, it was controversial enough to spur a years-long fight between union-backed proponents and business leaders who opposed it.
Now, what was once a pipe dream for labor has become reality: On Jan. 1, the state’s minimum wage increased from $14.25 an hour to $15, one of the highest rates in the nation. It was the final step in a series of pay hikes laid out in the 2018 “grand bargain,” a legislative deal that also cleared the way for paid medical and family leave, elimination of premium pay for Sunday workers, and a yearly sales tax holiday.
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But with inflation outpacing many pay raises, the hard-fought dollar figure once considered a “livable wage” isn’t looking so livable anymore.
Darius Cephas, a longtime fast-food worker who spent years rallying for the $15 minimum wage, recalled saying several years ago that with a minimum wage of $8 or $10, you could buy a gallon of milk and a box of cereal.
“The difference between now and then is now we can buy the carton of eggs with the milk and the cereal,” said Cephas, who lives in Dorchester and now makes a little over $15 an hour as a driver. “At least it’s better than nothing.”
No one could have predicted the economic changes that have occurred since the minimum wage rates were locked in more than four years ago. Whenever wage increases are done in phases, their purchasing power may diminish by the time they’re implemented, said Jeannette Wicks-Lim, a labor economist at the University of Massachusetts Amherst.
But with consumer prices up 7.1 percent from last year, the impact of this increase has been especially dampened: Today’s $15 gets you only as far as $12.70 did in June 2018, when Governor Charlie Baker signed the incremental increases into law, according to the US Bureau of Labor Statistics.
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“The raises certainly aren’t keeping up with the size of living cost increases that we’ve been seeing over the last few years,” especially in Massachusetts, said Wicks-Lim. “Fifteen dollars an hour really doesn’t pack the punch that it sounded like it was going to.”
This sends both proponents and opponents of increasing the minimum wage back to the drawing board. Advocates are weighing how to address the issue in the next legislative session, where Governor-elect Maura Healey appears receptive to their cause. Karissa Hand, a spokesperson for Healey, said in a statement that the incoming governor “believes the state minimum wage should be adjusted over time to keep up with the cost of living” and “will review any legislation that reaches her desk.”
Lew Finfer, one of the original leaders of Raise Up Massachusetts — a coalition of community, labor, and religious groups that was the driving force behind the 2018 hikes — said the group is considering pushing for an additional set of gradual wage increases. Harris Gruman, a top official at the Service Employees International Union and another Raise Up leader, said he is “sure legislation will be filed” in the new year regarding the minimum wage.
“It’s hard to say what the dollar amount is,” said Gruman, “but definitely the job isn’t finished.”
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Finfer said the group may also advocate for indexing these increases to inflation, meaning the bumps will automatically keep pace with the cost of living. “That is the simplest way to remove that uncertainty,” said David Cooper, director of the Economic Analysis and Research Network at the Economic Policy Institute.
Meanwhile, the impact of future wage hikes is worrying local business leaders, who have spent the past couple of years coping with inflation, a labor shortage, and supply chain problems. Four years ago, they argued that a bump to the minimum wage would drive up consumer prices and kill jobs. But it was the aftershocks of the pandemic that fueled inflation and forced many local businesses to boost wages well above $15 to attract and retain workers.
“Given what’s going on in the economy today, I think the minimum wage going up is the least of businesses’ concerns,” said Wicks-Lim.
But payroll increases — both to minimum wage workers as well as other employees who will get a raise to keep the company’s internal pay structure in line — represent just one more cost for small businesses to absorb, said Christopher Carlozzi, the Massachusetts director of the National Federation of Independent Business.
“Lawmakers should take a pause at this point and not really try to do anything regarding additional wage increases going forward,” Carlozzi said. “We really need to take a good, hard look at how we can ensure businesses do survive this, because they’re not out of it yet.”
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Jon Hurst, president of the Retailers Association of Massachusetts, said that many of the association’s 4,000 members have already exceeded a $15-an-hour base pay, “just to be fully staffed.” Indeed, low-paying sectors like retail and hospitality, hit hardest by labor shortages, have implemented some of the heftiest wage increases over the past year, with even national corporations like CVS, Target, and Starbucks now paying workers at least $15 an hour.
It is unclear how many Massachusetts workers are currently paid the minimum wage. Data published in 2019 by the Massachusetts Budget and Policy Center, a left-leaning think tank, estimated that more than 420,000 Massachusetts workers would benefit from a higher minimum wage, many of whom were people of color.
Still, even in the midst of a shaky economy, not every business is set on keeping payrolls as low as possible. Many employers believe that increasing base pay reduces turnover and training costs and increases productivity — valuable commodities when dedicated workers are hard to find.
“Staff that have been there two or three years are more than twice as productive as staff that have been there two months that you’re continually training,” said John Schall, the owner of El Jefe’s Taqueria, which has four Boston locations. The chain already had a base pay of $15.25 and $16.25 an hour, depending on the shift, but is boosting both those rates by a dollar to stay ahead of the minimum wage.
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However, some smaller businesses, like the Winthrop Marketplace grocery store, are feeling the pinch. “When this started [in 2018], that was just the one cost that we were tackling,” said Chris Wallerce, who runs the store with his father. “Now, it’s another straw on the camel’s back.”
But these unusual economic times also raise a different question: Does an increase in the minimum wage matter when most employers are paying more anyway? Economists say yes, partly because of the “ripple effect” that boosts wages up through the payroll, and partly because it serves as a safety net when the economy inevitably cools. “We’re not going to have a tight labor market forever,” said Cooper, of the Economic Policy Institute.
For some workers, $15 an hour will still have an impact. Antonio Sam, an immigrant from Guatemala who currently works for $14.25 an hour as a seafood packager in New Bedford, believes the additional pay will “give us more hope” and help him pay for food, rent, and other necessities, he said through an interpreter.
For others, however, the minimum wage bump will not solve their financial problems. Danielle Cannatelli, an employee at an Everett Dunkin’ shop, makes $14.50 an hour and is struggling to afford her truck payments and electric and gas bills. Will the extra 50 cents make a difference?
“Not much,” she said.
Randy Vasquez of the Globe staff contributed to this report.
Dana Gerber can be reached at dana.gerber@globe.com. Follow her @danagerber6.