January 1st brought a measure of relief for many working families in Massachusetts. The state minimum wage bumped up to $10 per hour and the state Earned Income Tax Credit grew by more than 50%.
“Since the early 1980s there’s been a widening gap between pay for people at the top and pay for everyone else,” said State Senator Mike Barrett, D-Lexington, Senate Vice Chair of the Committee on Labor and Workforce Development. “These initiatives will help bridge that gap.”
The wage boost will increase the average annual earnings of a minimum wage worker by $2,000. According to estimates, the new wage floor will reduce the number of state residents living below the federal poverty level by roughly 3%.
“Ideally the minimum wage will let you buy food and put a roof over your head,” Barrett said. “It shouldn’t enable you to get rich, but if you’re working forty or fifty hours a week it should enable you to avoid being poor. This is a step in the right direction.”
The increase will affect an estimated 450,000 full-time workers, 81% of whom are age 20 or older, according to the Mass. Budget and Policy Center.
The State Senate passed the minimum wage increase in November 2013, with the House following suit in April 2014. Then-Governor Patrick signed the final legislation in July of that year. The law ensures the minimum wage will go up again, to $11, at the start of 2017.
In addition, the Earned Income Tax Credit expansion will provide up to $500 more in tax credits to working families with at least three children. Currently, 415,000 state residents qualify for the refundable tax break.
“People who make $50,000-per-year and below benefit from this approach,” said Barrett. “If you’re going to reduce taxes, why not target it at middle- and low-income people?”
“We live in a Commonwealth, which means that everyone must share in the prosperity of our vibrant economy, not just those at the top,” said Senate President Stan Rosenberg, D-Amherst.
Rosenberg adds that “The Senate has made shared prosperity a guiding principle of our work. By increasing the minimum wage and expanding the Earned Income Tax Credit, we will put money into the pockets of working families, and grow our economy from the bottom up instead of the top down. I am proud of the Senate’s leadership in securing these reforms, which speak volumes about the kind of place we want Massachusetts to be.”
The expansion of the EITC was proposed by the Senate in May 2015, with final passage in July of that year.
Barrett says much more must be done to fight income inequality. For example, he backs a legislative proposal to increase the minimum wage to $15 per hour for fast food workers and employees of big box retailers like Walmart. The bill recently won a favorable vote out of the Labor and Workforce Development Committee.
“People have got to make a living if they work full time,” Barrett said.