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News from EPI Increasing the Massachusetts minimum wage would help working families and generate jobs

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For Immediate Release: Tuesday, August 21, 2012
Contact: Phoebe Silag or Donte Donald, news@epi.org 202-775-8810

Increasing the Massachusetts minimum wage would help working families and generate jobs

Increasing the Massachusetts minimum wage from $8.00 to $10.00 per hour would give more than 581,000 of Massachusetts’ lowest-paid workers a raise while generating thousands of new jobs, a new EPI Issue Brief finds. In A Massachusetts minimum-wage increase would help working families and generate jobs, EPI Policy Analyst Mary Gable shows that raising the minimum wage in Massachusetts would provide a substantial lift to the state economy and help remedy nearly four decades of wage stagnation, boosting the earnings of working families hardest hit by the Great Recession.

While increasing the minimum wage immediately would benefit the lowest-paid workers through boosted earnings, it would also yield positive effects on the larger Massachusetts economy. Raising the Massachusetts minimum wage to $10.00 per hour would put an additional $824 million in the hands of working families when they needed it most, augmenting their spending power in the local economy. They, in turn, would be more likely than any other income group to spend these extra earnings immediately on basic needs or services they could not previously afford.  In addition to the boost created through extra consumer spending, raising the minimum wage has the crucial advantage of not imposing significant costs on the state government, providing Massachusetts with a budget-neutral way to strengthen the economy.

In addition, economists generally recognize a direct relationship between increased economic activity and job creation. An increase in Massachusetts’ minimum wage from $8.00 to $10.00 per hour would result in a net increase in economic activity of approximately $522 million, generating an estimated 4,500 new jobs. With its unemployment rate currently at 6.1 percent, Massachusetts has not yet recovered the jobs it lost during the recession and the additional job growth necessary to keep up with population growth.  These 4,500 new jobs would begin to fill the state’s jobs shortfall.

Finally, while workers’ productivity has increased almost 100 percent since 1973 and corporate profits have reached peak profits in the same period, the real value of Massachusetts’ minimum wage has stagnated. In 2011, the real value of Massachusetts’ minimum wage was just one percent higher than it was in 1973. Raising the minimum wage would increase workers’ earnings to reflect their increased productivity.

“Although workers’ productivity has helped corporate profits reach record heights during the last four decades, workers’ earnings have remained virtually unchanged since 1973,” said Gable. “Raising the minimum wage in Massachusetts would begin to address the vast disconnect between soaring corporate profits and the lowest-paid workers’ wages and give a significant jolt to the state’s economy.”

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