State government

New year will usher in 2018’s ‘grand bargain’

New benefits for workers, higher costs for businesses

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IT’S BEEN A TOUGH YEAR for low-wage workers, who were hit hard by the pandemic – losing jobs and income and facing housing and food insecurity.

But in Massachusetts, changes in state law that go into effect January 1 could bring at least slight relief. The minimum wage is set to rise next year, and the state’s paid family and medical leave program will go into effect as well.

However, the changes also come at a difficult time for businesses, which are reeling from forced shutdowns due to the pandemic and struggling to stay open.

Both these changes are part of a law passed in 2018, the so-called “grand bargain” aimed at keeping multiple questions off that year’s ballot.

The law will gradually raise the minimum wage to $15 an hour by 2023. This year’s increase will raise it from $12.75 to $13.50 an hour. The minimum wage for tipped workers – who are expected to supplement their income with tips – will rise from $4.95 to $5.55 an hour.

Premium pay given to employees who work on Sundays or most holidays will drop from 1.3 times the standard wage to 1.2 times.

According to the business group Business for a Fair Minimum Wage, 20 states will raise the minimum wage at the turn of the year. Of those, the only ones that will have higher minimum wages than Massachusetts next year will be California ($14/hour), parts of New York ($14 or $15, depending on the region) and the state of Washington ($13.69).

A broader change will be the implementation of paid family and medical leave. For the first time, all Massachusetts workers will be eligible to take up to 20 weeks of paid leave due to a serious injury or illness (26 weeks for members of the armed forces), and up to 12 weeks to bond with a new baby or care for an ill family member. The worker will be paid a percentage of their salary, up to $850 a week, and their job will be protected. Payroll taxes, which started being collected in October 2019, will pay for the new benefits.

The new benefits were pushed by a coalition of labor, clergy, and liberal organizing groups called Raise Up Massachusetts. Coalition members said the COVID-19 pandemic has made the benefits more important.

“While many white-collar workers have spent the pandemic sheltering in their home offices and seeing their savings accounts grow, hundreds of thousands of low-wage workers have spent the past nine months struggling to afford protective equipment, food, and rent while working on the frontlines to keep others safe,” said Lily Huang, co-director of Massachusetts Jobs with Justice, in a statement praising the minimum wage increase.

Deb Fastino, executive director of the Coalition for Social Justice, said paid leave will be vital for workers who cannot return to work because of long-haul COVID-19 symptoms.

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Shira Schoenberg

Reporter, CommonWealth
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About Shira Schoenberg

Shira Schoenberg is a reporter at CommonWealth magazine. Shira previously worked for more than seven years at the Springfield Republican/MassLive.com where she covered state politics and elections, covering topics as diverse as the launch of the legal marijuana industry, problems with the state's foster care system and the elections of U.S. Sen. Elizabeth Warren and Gov. Charlie Baker. Shira won the Massachusetts Bar Association's 2018 award for Excellence in Legal Journalism and has had several stories win awards from the New England Newspaper and Press Association. Shira covered the 2012 New Hampshire presidential primary for the Boston Globe. Before that, she worked for the Concord (N.H.) Monitor, where she wrote about state government, City Hall and Barack Obama's 2008 New Hampshire primary campaign. Shira holds a master's degree from Columbia University's Graduate School of Journalism.

About Shira Schoenberg

Shira Schoenberg is a reporter at CommonWealth magazine. Shira previously worked for more than seven years at the Springfield Republican/MassLive.com where she covered state politics and elections, covering topics as diverse as the launch of the legal marijuana industry, problems with the state's foster care system and the elections of U.S. Sen. Elizabeth Warren and Gov. Charlie Baker. Shira won the Massachusetts Bar Association's 2018 award for Excellence in Legal Journalism and has had several stories win awards from the New England Newspaper and Press Association. Shira covered the 2012 New Hampshire presidential primary for the Boston Globe. Before that, she worked for the Concord (N.H.) Monitor, where she wrote about state government, City Hall and Barack Obama's 2008 New Hampshire primary campaign. Shira holds a master's degree from Columbia University's Graduate School of Journalism.

However, the Retailers Association of Massachusetts notes that the minimum wage increase and the new leave program are coming at the same time as health insurance premiums are expected to rise by 7.9 percent. Unemployment insurance costs for businesses could also spike dramatically due to the huge benefits that were paid out this year.

A bill filed by Gov. Charlie Baker but not yet passed by the Legislature would reduce the unemployment benefit hit on businesses for the next two years. According to the Baker administration, the average per employee cost for businesses would rise from $539 this year to $635 next year under Baker’s proposed changes, rather than the $866 anticipated without any changes.

MassLive reported that some business owners are unhappy with the additional state-imposed costs on top of all the other COVID-19-related costs and revenue losses. Jeremiah Micka, the owner of the Union Station complex in Northampton, which includes three bars and a banquet facility, said the changes are coming at just the wrong time. “Right now we’re just trying to stay open,” Micka said.

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