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States like California that are jumping on the living wage bandwagon, might want to stop and take a look at one state in particular, Massachusetts, and the effects it has with it mandated $10 an hour minimum wage.
Massachusetts has hiked its minimum wage from $8-$9 an hour in 2015 and two $10 an hour in 2016. The result has been one of its biggest losses in employment since the recession in the hospitality, leisure, and retail sectors. This information is provided by the Labor Department.
In February the retail employment was down about 2200 jobs since its post recession peak of 354,000 in July. Retail employment is at its lowest level since November 2014, when the first step of the states minimum wage first went into effect.
Within already extremely competitive market from places like Amazon and other online retailers, retail employment nationwide has been on the rise between November 2014 and February 2016.
Employment at restaurants, hotels and other hospitality venues in Massachusetts has fallen by 1300 since hitting a high of 350,600 last May.
One employer alone, being the Price Chopper grocery store had closed down stating problems with his future viability. This closure costs the state 57 jobs alone. The chairman of the store has warned the minimum wage hikes would be difficult to bear, as grocery stores tend to run on a thin profit margin already.
In January to the for Sam’s clubs stated for closure by Walmart were in Massachusetts. The blame was not specifically placed on the states rising minimum wage but other closures that were announced came in high minimum wage areas including Oakland, the city of Los Angeles in Los Angeles County. Walmart also scrapped plans for additional stores in Washington DC where the minimum wage will rise by one dollar this july.
Apparently not by coincidence Massachusetts was also home to two of the 40 department stores targeted for closure by Macy’s in January after a weak holiday season.
Other modest employers have tried to incorporate the $10 minimum wage in other ways. Earnings information released by Dunkin brands, it was noted in Boston a franchise of Dunkin’ Donuts was charging more for regular coffee than Starbucks.
California also has a $10 minimum wage, future hikes to $11 an hour at the start of 2017 has long been anticipated by Massachusetts employers. In California has suddenly just voted to keep raising his base wage to $11 by 2018 and eventually to $15.
That may result in Massachusetts employers have had a longer time to weigh the consequences of their wage increases and possibly to begin adapting. And some higher wage jobs actually saw a drop in wages to compensate.
One other note in this minimum wage job sector, that is dominated by restaurants and hotels, the average weekly wage of $477 in February was actually down 8.3% from $521 in June 2014 which was before the wage hikes began.
The data that is being analyzed and statistics is always subject to revision as more information becomes available, but it does appear that the higher wages being offset of a large extent a few hours being worked. And it may have an effect long-term on jobs that used to pay more than a minimum wage and they no longer do so.