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January 2, 2019 by Jon Hurst, President

As we celebrate the New Year and look optimistically at the future, many small business owners are facing 2019 with fear for their profitability, given new state payroll mandates on wages and paid leave.

Effective January 1, small businesses saw the increased mandated payroll costs of a $1 minimum wage hike.  This increase is on top of a $3 increase which was just fully implemented two years ago, and is the first step of a $4 increase over 5 years.  Together, the $7 hike over 9 years represents an 88% increase over a period of time in which the cumulative inflation rate is unlikely to exceed 20%. But it isn’t just the wages of new employees, it’s the compression effect of higher wages right up the ladder, along with the mandated Social Security, Unemployment Insurance (UI) and workers compensation premiums that come with it.  And on July 1, those payroll taxes will also include a new state family and medical leave tax on employers and employees alike.

In the day and age of the smartphone, you can’t just raise prices to cover these new costs and expect consumers to still pay you for your goods and services when they can buy anywhere.   So to balance out the new mandated payroll costs, Beacon Hill should do the following in 2019 to ease costs:

  1. Fix the Small Business Health Insurance Crisis.  Massachusetts has the second lowest individual premiums, yet the second highest small business premiums in the country.  At the same time large employers pay far less for far better coverage than do small employers.  That is shockingly unacceptable, and is due to discrimination under the law and in the markets. 
  2. Close the Loopholes In The UI System.   Massachusetts is ranked 50th by the Tax Foundation for unemployment insurance systems.  In short, employers and employees alike abuse the system due to an inadequate eligibility system.
  3. Prevent Local Ordinances Affecting Consumer Choices.  Many states by law prevent local ordinances affecting interstate commerce, but MA does not.  So a patchwork on tobacco sales, plastic bag usage, water bottle sales, etc., has emerged across the state due to organized special interest group efforts before 351 cities and towns.  These affect local stores, but unfortunately not the new Internet competition.  For consumer choice and small business competitive reasons, require statewide standards for consumer product sales. 
  4. Pass a Teen Wage.  Thirty-nine states have them.  Let’s make sure 14-17 year olds have the learning and earning opportunities they need, and small businesses have the incentives to hire them.



The following letter to the editor appeared in the Boston Herald's January 22nd print edition. It was prepared in response to a previously published Herald Op-Ed discussing the inherent flaws of the "Fight for $15" campaign. In addition to the general concerns identified in the Op-Ed, the LTE shines a light on two major outliers in Massachusetts wage law which would result in additional costs to the reatil industry in the event a $15 minimum wage proposal proved successful.

$15 mandate goes too far

The Herald is correct in saying that “the ‘Fight for 15’ campaign is flawed” (“Wage protest on radar,” Jan. 19). Presented as a grassroots social movement, this union-led campaign is designed to accomplish through one-size-fits-all legislation what its leaders could not accomplish at the negotiation table. This approach ignores the negative economic impact to small employers — our primary engine for new job growth — who will struggle to afford new labor costs. The result will be fewer job opportunities for the very workers the campaign claims to support.

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On December 22, 1982, Governor Ed King signed a bill into law to allow retail stores to open on Sunday. The law required that most retail employees also be paid time and a half wages for voluntary work on Sunday. The minimum wage in 1982 was $3.35. Music fans were shopping in record stores for Michael Jackson’s newly released album, Thriller, on cassette tape.

Times have changed. The economy has changed. There are almost no record stores left and cassette tapes are obsolete. Yet, the Sunday premium pay law lives on. With the Massachusetts minimum wage set to increase to $10.00 on January 1, the minimum wage on Sunday for a 16 year old cashier will be $15.00 an hour, while across the border in New Hampshire the minimum remains at $7.25. By 2017 it will increase to $16.50. Sundays in retail have become unaffordable in Massachusetts.

Retail is the only industry in the Commonwealth required by law to pay a Sunday premium. No other sector – hospitality, government, health care, entertainment – is required to do so, and only one other state, Rhode Island, shares this requirement.

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