Below are 2 Testimonials sent to the Joint Committee on Labor and Workforce Development on June 11, 2013
Testimony 1: From Peter D. Laird Sr.
Mr. Chairman and Committee Members, thank you for the opportunity to comment on the proposed bill to increase the minimum wage. I come before the Committee as a citizen and particularly as a grandfather of eight grandchildren all living in Massachusetts. It’s my hope that as I grow older all my grand kids will be living in Massachusetts, available for me to interact personally with them and that I will not have to resort to Skype or iPad transmissions from some distant state because that’s where the jobs are. As much as we all love Massachusetts and view it as a wonderful place to live, much of the rest of the country is growing relatively faster than the Commonwealth. Proof of this was in the last census and our losing a Congressional seat in the 2012 election.
Massachusetts is a high cost state to do business for a myriad of reasons. I don’t believe we should add to those costs – and to the PERCEPTION of those high costs – by increasing our minimum wage to the highest state rate in the country -20% higher than the next highest rate in the State of Washington.
Nationally, just 1 1/2% of the population earn only the minimum wage. More than half of that small percentage are teenagers or students – not primary breadwinners. The average family income of those students and teenagers is $65,000 a year. When a teenager and student myself I earned $1.25 per hour as a stock boy in summer jobs at an electrical devices assembly plant and $.90 as a dishwasher in my college’s dining halls. Clearly, I couldn’t maintain a household on those wages nor pay for the totality of my college expenses, but I could and did buy books and help defray my parent’s, a teamster and a school teacher, expenses helping me through school.
In 1999 Massachusetts ranked 10th in teenage employment at 54%. In 2012 the Commonwealth ranked 31st at 26.5%. This proposed legislative increase in the minimum wage will worsen this situation.
Numerous studies have been done on the impact of raising minimum wages. Professor David Neumark of the University of California/ Irvine and William Wascher, a researcher for the Federal Reserve in Washington, DC in 2008 did a thorough study of 102 studies that had been done in the previous three decades. Two thirds of the studies showed a consistent indication of a negative employment effect. Only eight per cent showed a positive impact. Of the 33 studies the two researchers felt were the most credible due to more stringent methodology, 28 of 33 (85%) found a negative impact on employment; none found a positive impact.
And the greatest negative effect was on the less skilled, in particular teenagers especially black and Hispanic teenagers.
Since an increase in the mandatory minimum wage has a negative effect on the most vulnerable – teenagers and black and Hispanics trying to gain entry into the job market to learn job skills to benefit them longer term, I’d encourage legislators to leave the Massachusetts’ minimum wage unchanged.
Thank you for the opportunity to make my comments.
Pete Laird Sr.
Testimony 2: From Paul D. Craney, Executive Director, Massachusetts Fiscal Alliance
Good afternoon members of this committee, I will try to be concise and brief since there are so many that want to offer their opinion today. My name is Paul D. Craney and I am the Executive Director of Massachusetts Fiscal Alliance, a right of center economic, fiscal and good government non-profit group.
Thank you for letting me have this opportunity to speak to you today on the minimum wage and if we as a state should increase it. Before I begin my testimony, let me put the minimum wage in a context that everyone here can easily identify with, and that’s elections.
As a successful candidate for public office, you had to earn more votes than your opponent. As a candidate, you knew what the rules were for winning and for most it was developing a campaign plan to get 50% plus 1 vote. It’s the same for employers. They develop a campaign plan that addresses their largest two concerns: making payroll and knowing where their income is going to come from. As a candidate, you develop your campaign plan for the first Tuesday in November and the rules don’t change. As an employer, the same is also true. The end of every payroll period is their first Tuesday in November. With the economy being so slow, especially outside of the Boston beltway, by increasing the minimum wage rate, you are making it almost impossible for many to win; the rules are being changed for them.
Let me now examine the facts on the minimum wage hike. Massachusetts is one of 18 states that has a higher state minimum wage rate ($8 per hour), than the Federal law of $7.25 per hour. 23 states have a minimum wage rate the same as the Federal rate. The border states of New York and New Hampshire have lower rates than Massachusetts.
The debate over raising the rates for the minimum wage continues to draw emotion and proponents see the issues as a matter of fairness. In contrast to some perceptions, a majority of minimum wage workers are teenagers entering the workforce, and not adults trying to raise a family. According to the Bureau of Labor Statistics (BLS,) 21% of hourly employed teenagers earn minimum wage or less compared with about 3% of workers age 25 and over. Of this small percentage of adults earning minimum wage or less, 94% also have a spouse that works as well.
In 8 out of 10 families supporting children, the minimum wage job accounts for less than 20% of the total household income. 4 A majority of studies also show that increasing the minimum wage actually cuts jobs and does not reduce poverty levels. Additionally, nearly two-thirds of minimum wage earners receive a raise in their first year of employment.
Since the majority of minimum wage workers are young adults, the effect of increasing the minimum wage would actually hurt them as businesses can no longer afford to hire them. The unemployment rate for teens in Massachusetts has been increasing over the last several years.
The MassBudget website states, “In 2011, 13.8 percent or close to one in seven young adults (ages 16-24) in Massachusetts are unemployed. This is a dramatic increase—more than doubling—of the youth unemployment rate in 2000, which was 6.7 percent, or one in fifteen.
Well respected newspapers have editorialized on the subject as well. The New York Times, editorialized about the minimum wage rate increase once on January 14, 1987 and then again on April 15, 1987. In each editorial, the Times disputed the flaws that proponents defended for the increase in minimum wage. The justifications they have been making since 1987 are still being used today.
The Times stated, “Raising the minimum wage by a substantial amount would price working poor people out of the job market.” “Raise the legal minimum price of labor above the productivity of the least skilled workers and fewer will be hired.” “Those at greatest risk from a higher minimum would be young, poor workers, who already face formidable barriers to getting and keeping jobs”
More recently, the Boston Business Journal editorialized on March 1, 2013 against the rate increase here in Massachusetts. The BBJ stated, “Regulate something and you get less of it. Regulate minimum wage jobs and you’ll get fewer of them. Massachusetts should shelve minimum wage hikes for the sake of the tens of thousands who can’t find a job.” I have submitted copies of these editorials with my written testimony for your reference.
So what is the solution for helping the small percentage of minimum wage workers who are trying to support a family? In the 1970’s the Earned Income Tax Credit (EITC) was signed into law. This law allows low income households to receive a tax credit based on their income level; the lower their income, the higher the tax credit. This permits targeted low income households to receive a break rather than the minimum wage pool in general. Additionally, the Times editorialized in 1987 and it can still be encouraged today to increase job training for minimum wage workers in hopes that they will be promoted to higher paying professions.
Thank you again for your time and I am happy to answer any questions you may have today or as a follow up.
Paul D. Craney
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