Employer rep sees ramifications from minimum wage hike

Federal-Minimum-Wage-1

Minimum wage supporters have reason for optimism about achieving an increase in the wage floor this year but opponents continue to resist, pitching better job training and the earned income tax credit as better ways to assist low-wage earners.

The state Senate has approved a bill raising the minimum wage from $8 an hour to $11 an hour over three years and activists are also advancing an initiative petition calling for a $10.50 per hour wage floor.

Citing a study showing a $1.5 billion impact on employees and employers from the $11 an hour plan, Associated Industries of Massachusetts Executive Vice President John Regan wrote in a blog post Monday that “wage compression” from minimum wage hikes causes multiple problems for employers.

“It can erode morale among workers as existing employees become angry that newer or lower-skilled colleagues are making nearly as much or, in some cases, more than they are. That anger can in turn accelerate turnover as the result of employees quitting,” Regan wrote.

“Companies will be forced to address the problem by adjusting their entire compensation systems, usually upward and across-the-board.”

AIM has survey results set for release this week that show Massachusetts employers plan to increase overall wages and salaries by an average of 2.96 percent during 2014, a rate that exceeds levels before the Great Recession. According to AIM, salary growth climbed from a low of 1.7 percent in 2009 to 2.1 percent in 2010, 2.4 percent in 2011, 2.55 percent in 2012 and 2.8 percent this year.

House Speaker Robert DeLeo has expressed interest in pairing a minimum wage increase proposal with changes in the unemployment insurance system sought by employers.

Follow Metro Boston on Twitter: @MetroBOS


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