The Massachusetts Minimum Wage:

Past, Present and Future

Massachusetts Budget and Policy Center

15 Court Square, Suite 700, Boston, MA 02108

617.426.1228

www.massbudget.org

In 1912 Massachusetts Passed the First

Minimum Wage Law in the U.S.

March 1912: Workers in Lawrence, MA go on strike and win higher

wages.

June, 1912: Chapter 706 of the Acts of 1912 requires new wage

boards in Massachusetts to set wage rates sufficient “to supply the

necessary cost of living and to maintain the workers in health.”

1938: President Roosevelt signs the Fair Labor Standards Act

establishing a national minimum wage and guaranteeing basic rights

to workers.

Wage Inequality Has Grown in Recent Decades in

Massachusetts

$30.98

$47.83

$10.75 $11.12

$8.00 $-

$10

$20

$30

$40

$50

$60

1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

90th percentile

20th percentile

min wage

Source: U.S. Department of Labor; Economic Policy Institute analysis of Current Population Survey data.

Real Value of Hourly Wages at 20th and 90th Percentiles; Real Value of Minimum Wage (2011$)

The Real Value of the Minimum Wage Has

Dropped 24 Percent Since 1968

6.38

8.72

$0

$2

$4

$6

$8

$10

$12

1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020

Projected

Source: U.S. Department of Labor; Bureau of Labor Statistics. Real value calculated using the Consumer Price Index for all Urban Consumers (CPI-U); 2012-2020 values based on Congressional Budget Office projections for the CPI-U.

Real Value of the MA Minimum Wage (Actual 1968-2011; Projected 2012-2020); 2012 $

$10.52

$6.84

$8.00

A Full-Time Minimum Wage Worker Earns $5,000

Less Today Compared to 1968

$21,046

$16,000

-

5,000

10,000

15,000

20,000

25,000

1968 2012

Real Value of Minimum Wage for a Full-Time Worker (2000 Hours per Year), 2012 $

Poverty Threshold for a 3-Person Family

Source: U.S. Department of Labor; U.S. Census Bureau

Minimum Wage Today if it Had Grown

at the Same Rate as…

$8.00 $10.52

$13.87 $16.02

$0

$4

$8

$12

$16

$20

$24

$28

Current MA Min Wage

Inflation since 1968 Wages of the top 10% since 1979

Worker productivity since

1979

CEO compensation since 1978

$62.36

Projected 2012 Minimum Wage Using Selected Indices

Source: Bureau of Labor Statistics; Economic Policy Institute analysis of Current Population Survey and BLS data.

Raising the Minimum Wage to $10 Per Hour

Would Help Restore its Value

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00

$11.00

1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020

Increase to $10 & Index

Current Law

Increase to $10, No Index

Source: U.S. Department of Labor; MassBudget calculations for 2012-2020 based on Congressional Budget Office projections for

Real Value of the Massachusetts Minimum Wage (actual 1968-2011; projected 2012-2020)

Minimum Wage Increases Have Two Effects

Direct Effect: Workers who earn below the new minimum wage

will receive and automatic raise when the increase

takes effect.

Indirect Effect: Workers who earn slightly above the new minimum

wage will receive pay increases as the wage floor

adjusts upward.

Increasing the Minimum Wage to $10 Will Affect One

in Five MA Workers

325,000 Directly Affected

$2,078 Average Increase

256,000 Indirectly Affected

$580 Average Increase

Source: Economic Policy Institute projections based on 2010 Current Population Survey data

More than Half the Workers Affected by a

Minimum Wage Increase Are Women

Directly Affected by Increase to $10:

186,000 women

$2,021 average per year

Indirectly Affected by Increase to $10:

141,000 women

$527 average per year

Source: Economic Policy Institute analysis of Current Population Survey

One in Four Workers Who Will Receive a Pay

Increase Has Children

About 277,000 children have a parent who

will be affected by a minimum wage increase.

About 46,000 children affected by a minimum

wage increase live in households below the

poverty threshold.

Source: Economic Policy Institute analysis of Current Population Survey

Size of Wage Increase Did Not Determine Job

Loss in Recent Recession

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

RI $0

CT $0.35

ME $0.50

MA $0.50

VT $0.53

NH $2.10

Change in non-farm employment December, 2007-June, 2009, ranked by size of minimum wage increase

Source: EPI analysis of Bureau of Labor Statistics data; Department of Labor data on minimum wage levels; increase in state minimum wage between January, 2007 and January, 2009.

Increase:

Low Wage Jobs Have Grown Faster than High-

Wage Jobs

80

85

90

95

100

105

110

115

120

Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11

Low Concentration of MW earners

High Concentration of MW earners

Source: Economic Policy Institute Analysis of Current Employment Statistics survey data. High concentration industries include Retail Trade, Leisure and Hospitality and Other Services; Low concentration industries include Manufacturing, Construction, Transportation & Utilities, Information, Financial Activities, Professional & Business

Index of change in employment level by industry type as of each January, 1995-2012 (January 1995 = 100); shaded areas denote recession

Min Wage Increase

Min Wage Increase

Economic Policy Institute Model Projects Stimulus

Effect

581,000 workers earn higher wages

Result: ~4,500 new jobs in Massachusetts

Source: “A Massachusetts minimum-wage increase would help working families and generate jobs” (Economic Policy Institute, August, 2012)

Additional spending

=

More demand for local

goods and services

More demand leads =

New hiring

Big Businesses Employ the Majority of Low-

Wage Workers

Two-thirds of low wage workers in the U.S. work

for a corporation with over 100 employees.

In Massachusetts only 17 percent of workers at

all wage levels are employed in a business with

20 or fewer employees.

Compensation for executives at 50 largest low-

wage employers in the U.S. averaged $9.4

million last year.

Source: National Employment Law Project; MassBudget analysis of Census data

"At Costco, we know good wages are good business.

We keep our overhead low while still paying a starting

wage of $11 an hour. Our employees are a big reason

why our sales per square foot is almost double that of

our nearest competitor. Instead of minimizing wages,

we know it's a lot more profitable for the long term to

minimize employee turnover and maximize employee

productivity and commitment, product value, customer

service and company reputation.”

-Costco Senior Vice President Jeff Long

Statement Urging Passage of New York Minimum Wage Increase, May 24, 2012 http://www.businessforsharedprosperity.org/content/costco-greater-ny-chamber-eileen-fisher-hopstop-small-business-owners-urge-minimum-wage-incr