A century ago, Massachusetts became the first state in the country to pass a minimum wage law. Now, the state legislature is considering legislation to increase its minimum wage — currently at $8.00 an hour, $0.75 above the federal minimum — to $10.00 an hour. If the legislation becomes law, it will give more than a half-million low-wage workers a pay increase and could generate 4,500 new jobs because of increased economic activity, according to a study from the Economic Policy Institute:
Increasing Massachusetts’s minimum wage to $10.00 on January 1, 2013, would give a raise to more than 581,000 of the state’s lowest-paid workers. It would provide nearly $824 million in additional wages to directly and indirectly affected families, who would, in turn, spend those extra earnings. Indirectly affected workers—those earning close to, but still above, the proposed new minimum wage—would likely receive a boost in earnings due to the “spillover” effect (Shierholz 2009), giving them more to spend on necessities. [...]
Using these same standard fiscal multipliers to analyze the jobs impact of an increase in compensation of low-wage workers and decrease in corporate profits that result from a minimum-wage increase, we find that increasing the Massachusetts minimum wage from $8.00 to $10.00 per hour would result in a net increase in economic activity of approximately $522 million and would generate roughly 4,500 net new jobs.
Though Republican lawmakers across the country consistently oppose minimum wage increases on grounds that they hurt job growth, small businesses, and overall economic growth, multiple studies, including EPI’s, contradict those claims. An analysis by the Center for American Progress found that “a significant body of academic research has found that raising the minimum wage does not result in job losses even during hard economic times.”
At the beginning of 2012, scheduled minimum wage increases were set to benefit 1.4 million workers, and such policies tend to benefit women and minorities, workers who typically face pay gaps and other disadvantages in the workplace.