DeLeo wary of minimum wage hike for Mass.

Business costs must also be cut, House leader says

House leaders are balking at a Senate proposal that would give Massachusetts the highest minimum wage in the nation, warning that it would be a mistake unless the state also cuts costs for businesses by overhauling the state's unemployment insurance system.

"Right now, the whole proposal, as far as we're concerned, is still in flux," Speaker Robert A. DeLeo told the Globe in an interview in a State House hallway.

"My gut feeling is, it's an issue we should address," DeLeo said of the minimum wage. "Now, having said that, if we can't do it in coordination with [unemployment insurance], I may not be so sure."

DeLeo said the House would wait until January to consider the bill, which the Senate approved on Tuesday by a vote of 32-7.

The Senate legislation would raise the minimum wage from $8 an hour to $11 by 2016, surpassing California, which became the first state to break double digits in September, when it increased its minimum wage from $8 an hour to $10 by 2016.

After pushing the wage to $11 an hour in 2016, the Senate legislation would then tie the wage to the Consumer Price Index, triggering automatic increases as the costs of goods rise. The bill would also require that the wage remain at least 50 cents higher than the federal minimum, which is currently $7.25 an hour.

An amendment adopted in the Senate on Tuesday would hike the minimum wage for tipped workers such as waiters to 50 percent of the state minimum. The rate for tipped workers has been $2.63 an hour since 1999.

In demanding that an increase in the minimum wage be accompanied by changes to the unemployment insurance system, DeLeo is siding with businesses that say they need relief from the costly system if they are to absorb the added burden of higher pay for workers.

"With unemployment over 7 percent, we need a balanced approach to the minimum wage and unemployment insurance reform issues," said Jim Klocke, executive vice president of the Greater Boston Chamber of Commerce. "A bill to increase the minimum wage should also include UI reforms. The specifics of the bill are important — it should strengthen rather than harm the state's ability to create jobs."

Senate President Therese Murray, who is leading the charge for the higher wage in the Legislature, has said she is committed to making changes to the unemployment insurance system in January, but has prioritized the wage hike, putting the bill on a fast-track in her chamber.

Murray said studies show that an adult living in Massachusetts needs $28,600 to remain economically independent. But a worker earns just $16,000 a year at the current rate of $8 an hour, she said. Even at $11 an hour, Murray said, a worker would still earn only $22,000 a year.

Massachusetts, she said, should have the highest minimum in the nation because its cost of living is among the highest nationwide. The bill, she added, would help more than 500,000 workers whose wages have not kept pace with the rising cost of groceries and other staples.

"My local food banks are inundated with people they had never seen before," Murray said in an interview.

Lawmakers in both branches are facing pressure from a coalition of labor unions, religious organizations, and community groups, which announced Monday that it had gathered enough signatures to place a measure on the November 2014 ballot that would increase the minimum wage to $10.50 by 2016.

That ballot question has the support of the state's senior US senator, Elizabeth Warren.

Business groups argue that a sharp increase in the minimum wage will discourage hiring in a fragile economy and put Massachusetts at a competitive disadvantage.

While other states have hiked their minimum wages in recent months, none has gone as high as $11 an hour. Before California hits its planed $10 an hour by 2016, New York will raise its minimum wage from $7.25 an hour to $9 by the end of 2015. Connecticut's minimum wage is also set to rise to $9 an hour by 2015.

"We're shocked by the sheer level of where we're heading," said Jon B. Hurst, president of the Retailers Association of Massachusetts. "The biggest threat you're going to see is absolutely no job growth for small businesses."

Supporters say the Senate bill would boost the pay for 485,000 workers who currently earn between $8 and $11 an hour. Another 104,000 workers who earn between $11 and $12 an hour would see their pay rise as a result of a ripple effect from the higher minimum, according to the Massachusetts Budget and Policy Center, a liberal research group that supports the higher wage.

"While our economy has become increasingly productive, wages for middle- and low-income workers have been stagnant and the value of the minimum wage has declined," Noah Berger, president of the center, said in a statement. "When too many of our working people don't make enough to pay for basic necessities, it hurts those workers and their families — and the reduced demand for goods and services harms local businesses, as well."