The wide-ranging “grand bargain’’ bill emerging from Beacon Hill would make Massachusetts just the third state in the country to approve both a $15 minimum wage and mandatory paid family and medical leave.
The bill, which the Legislature passed Wednesday, would also impose a small payroll tax on workers and employers to pay for the leaves.
As the provisions in the legislation became public, business owners worried that they would have to raise prices, cut employee hours, or possibly even close their doors. Workers, on the other hand, rejoiced at the prospect of more money in their paychecks and a greater ability to care for family members in need.
“Small-business owners definitely feel like they are under siege,” said Christopher Carlozzi, state director of the National Federation of Independent Business, noting the recent wage increase to $11 an hour and the implementation of paid sick leave, on top of the state’s high health care and energy costs. “It’s inhibiting their ability to expand their businesses; it’s really impacting their ability to create new jobs.”
The Legislature passed the comprehensive bill to block three ballot questions from going before voters in the fall. The legislation would raise the minimum wage to $15 from $11 over five years, increase tipped wages to $6.75 an hour from $3.75 over five years, and create a paid family and medical leave program.
Workers would be eligible to take up to 12 weeks of paid family leave to care for a new child or 20 weeks of paid medical leave to deal with a serious injury or illness for themselves or family members.
The program would be paid through a 0.63 percent payroll tax that would, on average, cost $4 to $4.50 a week per employee, split roughly 50-50 between worker and employer. Employees would see a deduction in their paychecks starting next summer, with the leave benefits available beginning in 2021.
An employee’s compensation under the program would be a percentage of salary, capped at $850 a week.
As part of the compromise that worker advocates reached with business groups, the bill would also gradually eliminate time-and-a-half pay for retail workers on Sundays and holidays and create an annual sales tax holiday weekend.
New York and California are the only other states that have approved a $15 minimum wage and paid leave.
Some business owners support the changes, noting that higher pay and better benefits lead to greater productivity, less turnover, and increased purchases by customers who support the moves.
Others are distraught.
Steven Trulli, the owner of Whittemore Hardware and Remodeling in Melrose, said he doesn’t have a problem with a $15 minimum wage for adults, despite all of the added payroll costs he incurred as the minimum wage rose to $11.
“This is Massachusetts,” said Trulli, who employs 20 mostly part-time workers. “It’s expensive to live here.”
‘There’s so many things just killing small business today.’
What he really needs, he said, is a lower teen minimum wage, which business associations and some legislators had sought. Without it, and given the competition from big-box stores like Home Depot and rising rents, Trulli said he can’t afford to stay in business.
“I’m literally going to close the doors,” he said. “There’s so many things just killing small business today. This is just a death knell.”
Barry Steinberg, the owner of Watertown-based Direct Tire & Auto Service, already pays all 70 of his employees, spread among four stores, more than $15 an hour, but he expects the increase might prompt some retailers, particularly big chains, to reduce their head count. That could have the effect of making everybody work harder or forcing customers to wait longer.
Paid-leave requirements — which allow employees five months off for medical reasons and three months to care for a new child — could also cause complications for employers who need to fill the gaps while employees are away. “I think that’s a really extreme amount of time,” Steinberg said.
The pay hike would raise wages for roughly 1 million workers in Massachusetts, including those who currently make more than $15 an hour, who would get a bump once those below them got a raise, according to the left-leaning Economic Policy Institute. This is about a third of the state’s workforce, the majority of whom are adults with full-time jobs.
Mackinley Celestin is among those who would benefit.
Celestin, a 44-year-old single father, works four jobs to support his family, putting in as much as 120 hours a week, he said. Celestin has bachelor’s degrees in criminal justice and physical therapy but has not been able to find work in either field and is getting by making $11.75 an hour at a McDonald’s in Cambridge and working three security jobs.
He helped put his oldest daughter through college but couldn’t attend her graduation because he had to work.
If the wage goes up to $15, he said, he would have more time with his children. “I miss everything because of working all those jobs,” he said. “I don’t want the future generation to struggle the way I’ve struggled.”
But the increased costs for employers could lead them to raise prices — which would make things less affordable for low-income families, said George Montilio, president of Montilio’s Baking Co., which has four stores in Greater Boston.
“Minimum wage is only going to increase prices, which makes things less affordable for the people who struggle financially,” Montilio said. “Every time you raise prices, effectively, it hurts the poor people. It doesn’t hurt the rich.”
Studies on the impact of raising the minimum wage have varied widely. Some have found worker cutbacks, store closings, and fewer teens being hired. But a comprehensive study of 137 minimum-wage increases by Arindrajit Dube of the University of Massachusetts Amherst concluded that the number of jobs did not decrease following pay hikes.
A $15-per-hour minimum wage is largely uncharted territory, however, said Michael Saltsman, research director at the conservative Employment Policies Institute, and is “a pretty risky.”
But in Massachusetts, a state with some of the highest costs of living in the country, a $15 minimum wage is fairly moderate, said Paul Sonn, state policy program director at the National Employment Law Project, a workers advocacy group, and will raise wages in the service economy, where many adults are now spending their careers.Globe reporter Jon Chesto and correspondent Alexandra Whyte Gailey contributed to this report. Katie Johnston can be reached at katie.johnston @globe.com.