Because of the peculiarities of the legislative calendar, Governor Romney’s decision last week to return the minimum wage bill with an amendment, instead of outright vetoing it, gives him the opportunity to kill the bill completely.
Here’s how it works. The bill containing the two-step increase from the current $6.75 up to $8 an hour was passed on Wednesday, July 12. Romney then had 10 days in which to sign, veto, or return it with an amendment. Had he just vetoed, the last day he could have done so would have been July 22, whereupon the legislature could have (and would have) overridden his veto.
But by waiting 9 days and then returning the bill to the legislature on Friday, July 21, with a proposed amendment (to raise it 25 cents to $7 an hour), Romney bought himself some time. The legislature then had to decide what to do about his amendment (of course it rejected it), and then had to send it back to Romney, whereupon his only options are to sign or veto. Legislators rejected the amendment on Monday, July 24, and re-enacted the bill and sent it to Romney today, July 25.
But here’s the rub: the legislature’s formal sessions end on July 31, and a formal session is needed to override a veto. Romney has 10 days in which to act. So if he waits more than 6 days to veto the bill, it’s dead unless the legislature takes the highly unusual step of coming back into a formal session to override. This bill is a big enough deal that they might take that step. But I don’t know what rules apply to calling a formal session beyond July 31 – any legislative whizzes out there know the answer?
Anyway, it’ll be interesting to see if Romney thinks his presidential plans depend on denying low-wage workers a raise. If he vetoes quickly, it cuts a deal with the legislature – he gets to say he vetoed it, but the legislature gets to enact its raise. If he waits, though, he’s really sacrificing these workers on the altar of his presidential ambitions. Nice.
And in other news, the legislature overrode Romney’s veto of the Ruane pension bill. Meaning today was a good day for the Healey campaign.
Which is good and it’s rightness cannot be argued with.
http://www.bluemassg…
Can’t you see him with the flaming sword?
Approving the bill, but leaving the minimum wage right where it is, as a matter of enforcement. That might be the smoothest political move of all. đŸ˜‰
why not just accept the $0.25 raise and work it again next year? The bill goes into effect Jan 1 2007, so you’d be getting another $10/week to minimum wage workers, which is better than nothing.
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Besides, then you can brag in consecutive years about raising the minimum wage, and by not using such a big increment it’s a bit “smoother” for businesses (kind of like the more frequent but less sharp postage increases).
they’ve already rejected the proposed amendment and re-enacted the original version. It’s in Romney’s court now.
but if the lege doesn’t call a special session, an appropriate question to ask will be: why didn’t the lege just go along with the Romney edit and take the quarter, and then make an effort to pass the bill next year earlier in the cycle so a governor veto isn’t a threat?
I don’t think so.
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And besides, if Romney vetoes again, the minimum wage WILL be an issue in this campaign, and will give Healey a bit of trouble even as she claims she’s in favor of an increase.
The samll business voters, who will fire help? The fired workers, who know their coffee shop boss ISN’T Halliburton? Bill Zammer of the Cape Chamber was on ‘BZ last night, talking about how businesses may go under from decreased traffic this summer due to high gas prices unless August is a spectacular month. Trouble with them, perhaps?
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Your title said it all – they will cut off their noses to spite their faces rather than give the governor – who ISN’T RUNNING AGAIN – a perception of victory (memo to BMG – Bush isn’t running again, either). Same thing for the Ruane pension.
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BTW – does anybody know if the final version contains that clause that DOUBLES minimum wage for restaurant workers? THAT should finish the Cape off nicely!
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Thanks, Bacon Hill! Mayby Ruane’s heirs will drive down to buy trinkets!
that your comment reflects general conservative thinking, and that Republicans believe that taking a position against the minimum wage is actually a political asset.
and consider the plight of the Cape coffee shop owner. The increase in the minimum wage is going to hurt this guy, and possibly create the need to layoff staff or reduce hours (both have a similar net effect on the bottom line.)
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It’s not a political arguement. It’s an economic one. Paul, I know you believe raiseing the minimum wage actually increases employment, but it just doesn’t.
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Listen to what Porcupine wrote, and consider what increasing the minimum wage might do to many small business across the state.
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It’s not political. It’s about the jobs.
Let me offer a different scenario.
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If the minimum wage increases, the coffee shop owner will have several choices; raise prices, cut expenses (employee or non-employee), take less profit, or some combination.
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If demand remains constant the owner will not cut employees because she will need those employees to make sales.
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Increased wages will affect every shop equally, so if prices have to go up, chances are they will go up everywhere. This COULD have the effect of making people drink less coffee, but the price of coffee has surely gone up since the last minimum wage increase, why would this time be any different, especially if the increase is marginal? How much could this affect prices? 5 cents a cup? 25 cents a cup?
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Now for every locally-owned coffee shop, there are 10 chains owned out-of-state. Those chains will be faced with the same decisions — increase prices, cut employees, take less profit. I’m guessing they’ll tend towards “take less profit” at first, because they have a bigger war chest to weather any storms.
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But that means more money will stay local, as opposed to flowing to the corporate headquarters, as local wages to pay for the coffee go into the local pockets of the people serving the coffee instead of the million-dollar salaries of the corporate executives and shareholder dividents. Sounds like a win for the local economy there.
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Maybe some of those people will buy a little more coffee with their increased salaries. And maybe they’ll spend more money locally.
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Sure, the people above them in the economic food chain will have to shell out a little more money, but maybe they’ll just buy one less DVD a year and keep their money local too.
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There are obviously all kinds of passion plays about what could transpire with a minimum wage increase, but they are all theoretical. Take a look at actual data and you’ll see that there has not been tragic job loss when the minimum wage has been marginally increased in the past.
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Reality trumps theory, doesn’t it?
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I don’t doubt that a sudden increase in any expense would spell trouble for a lot of companies. I’ve seen a number of gas stations go out of business in the past couple of years. My guess is that the cost of inventory killed them — instead of having to shell out $20k for a load of gas, it was suddenly $40k — harder to cover.
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But small increases are a different story. Increasing the minimum wage is just like increasing the cost of the coffee beans, increasing the cost of the water, increasing the cost of electricity. Businesses handle those changes, they learn to cope. They innovate, they become more efficient, and they survive.
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And the big difference with increasing employee wages is that more money stays local.
Increased payroll means increased worker’s comp, increased payroll tax match, increased unemployment premiums – any of THIS local?
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The big boxes and chains can use that war chest to drive small competitors out of business, and then raise prices for us all after they are gone.
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Has ANYBODY on this site ever met a payroll?
Its impossible to explain to democrats that Minimum Wage increases fail to accomplish intentions. I cynically think they know, but use the minimum wage as a wedge issue.
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It’s a law that’s all about perception and nothing about reality.
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Let’s pass a law to make all used cars worth $25000
Can’t I then say “It’s impossible to explain to Republicans that Minimum Wage increases fail to create the doomsday scenarios that they predict”? Is that any way to debate, to claim that your position is obviously correct and anyone who disagrees is hard-headed?
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Using an extreme argument hardly proves your point. The key to the increase is that it is gradual. Clearly you can’t mandate that everyone be paid a minimum of $50k and make everyone middle-class. The economy can’t react to that kind of shock.
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If cheap labor is so good for our economy, then why don’t we just lower everyone’s wages by 10%? Except, of course, for people making over $1 million — we should increase their wages, since everyone knows they’re the ones who create all the jobs. .
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A minimum wage is all about guiding the economy in a way so that gains are realized by everyone. Without one we would see a distribution of income and wealth that was lop-sided towards the people who control the capital, and very little of that would go to the people actually doing the work. History certainly proves that this kind of distribution doesn’t work — think Feudal Europe, for example.
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Do you really believe that a significant amount of people deserve to work but not earn enough for even basic things in life like housing or food? Would you rather have your taxes pay to give people those things? Or, as I suspect, do you just believe that some people don’t deserve a minimum wages OR basic necessities like food and shelter?
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And, Peter, are you really going to argue that a minimum wage increase is bad because it will give more money to the government in the form of taxes? Sorry, I don’t have religious debates with people, if you want to belong to the church of “taxes shouldn’t exist” that’s your business. Move to an island though, so you stop sponging off what I pay to support the infrastructure you use.
..and I hope ‘Progressivism’ isn’t your church.
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I was responding to your contention that all these wage increases are ‘local’ by providing some examples of how the money flies away from the locality. Both Worker’s comp and unemployment are wage-based insurance, not taxes. but now that you bring it up, a lot of liability insurance is calculated on payroll, too.
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I was trying to provide concrete examples of unintended consequences, and explain WHY small businesses might fire people. And they will in my opinion, as inventory is a fixed cost, but personnel is not. Service will just be a little slower.
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BTW – before you knowck the Middle Ages, consider that as an economic system, it lasted 1,000 years, as opposed to capitalism’s 200. Maybe wait before crowing.
Still no data provided to demonstrate that minimum wage increases lead to small business layoffs, as is the lynchpin of your argument. Why is that?
The Cato institute has always opposed minimum wage legislature and they back it up with stats
You’re going to need it.
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Vetoing a minimum wage hike will NOT look good when the guy’s running for President. Minimum wage increases are very popular and contrary to what anything Porcupine said, there are little to no negatives to a small minimum wage increases. In fact, study after study has shown, if anything, they can help local economies.
here
is based upon economic theory, not actual numbers from MA or other states that show what ACTUALLY happens when the minimum wage is increased.
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We hear the gloom and doom scenarios EVERY single time a raise is suggested, but mysterously these “economic models” and gloom and doom scenarios never actually happen.
numbers courtesy of CATO.
try SLATE.com on the minimum wage
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but this is a different argument against the minimum wage. In fact, this author actually accepts that rasing the minimum wage does NOT affect employment by any measurable degree.
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I’ll check out the Cato numbers, but considering I haven’t seen them anywhere else other than the obviously libertarian-biased Cato Institute, consider me very skeptical. I’ll look at the numbers, though, and thanks for the links.
The Boston Fed did a study on this.
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Before reading further, can we accept them as a moderate group? Hoyapaul? Gary et al? Certainly not as right as Cato, certainly not as left as Economic Policy Institute. Fed overall a bit more right of center; Boston Fed however is a bit more left than most Feds.
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Anyway:
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The author predicts a modest net loss of 2,000 to 10,000 low wage jobs at $8.25/hour in MA, and a net gain in wages of $255 million.
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So that’s $255 million that mostly shifts from small business owners and consumers to low-wage workers.
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Overall:
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1. Validates Hoya in his claim that the min wage increase will NOT be a huge deal (please spare me the “Tell it to the coffee store owner and the teen who can no longer save for college.” Every public policy has anecdotes – so what?).
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However –
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2. Validates Peter and Gary et al in that OF COURSE there is job loss, it has to happen, reasonable economists that aren’t crazy leftists only argue about EXTENT of job loss, not whether it occurs. There are a bunch of time series studies of low-wage employment immediately before and immediately after a wage increase passes. Almost invariably, jobs fall. These studies by definition cannot be perfectly controlled, so there’s inevitable argument on the methodology.
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Hey moderates: minimum wage is an imperfect mechanism which at the end of the day rewards work. Let’s reward work! Let’s accept a small level of economic drag, make it up with lower taxes by cutting wasteful Big Gov’t spending.
And MY main concern is for MY region. A minimum wage increase has MUCH more impact on a tourist area like the Cape or Berkshires than it does in a high tech corridor like 128 or in Boston/Cambridge/MetroWest. The Cape is already on the ropes from last year’s red tide, this year’s Man ‘o War, and high gas prices. A higher minimum wage will bankrupt small restaurants and stores – AND WILL LURE HOMOGENIZED BIG BOXES TO THE AREA. It will AID Wal-Mart while putting the small boutique and niche stores – and our artists and craftsmen – under severe stress, adding to already high unemployment for year round residents when winer comes.
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I am SO tired of being Boston’s petri dish!
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Do you HEAR ME, Hoya? IT WILL HELP WAL-MART!!!
I understand that many touristy areas rely more on employees to generate the profits because they are service based. But, until I see numbers showing that tourism is already down in a permanent trend, I’m skeptical that this will have an extremely adverse impact on Cape businesses.
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Is tourism down on the Cape? The red tide came and went, and has come and gone in the past. Same for Man ‘o Wars. There’s no reason to think either of them will effect next year’s tourism, when the increase would start. So, Mr. Prickly: is there data that suggests that tourism is down on a systemic level, or are there just two outlier years (red tide, M’oW) that while unfortunate won’t bring down tourism next year?
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P.S. I ignored “gas prices” as a problem because, well, I don’t see it. The price of driving from Boston to the Cape and back goes up 90 mi * 2 (round trip) * 1/22.5 mpg * $1.00 gal more than recent past == $8.00. It’s eight bucks more expensive to get from Boston to Chatham and back than it used to be. If you want to argue that the price of gas is preventing folks from saving enough money to come to the Cape for the summer, I could make the same case against coffees purchased at Starbucks or Dunkies.
So, then would you support a raise that only affected wages at big-box stores, the kind that was recently passed in Chicago?
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This would raise the cost of business for Wal-Mart, but not for your small restaurants and stores. Would this be OK with you?
where is the evidence to show that all these small businesses will be bankrupted? I’m just not seeing it.
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And if it helped the “homogenized big boxes” so much, why would their national lobbying arm, the Retail Industry Leaders Association, be so vehemently opposed to any minimum wage increase?
The Wal-Mart Tax:
I think this could help certain small businesses.
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Many small businesses are one-person shows. They aren’t directly affected by an increase in the minimum wage. Not like a small-chain, where one owner hires a lot of minimum wage employees to work the job because she can’t be in 10 stores at the same time. And certainly not in a large big-box, where they hire hundreds of minimum wage employees.
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Personally, I think that big-box retail is a bane rather than a boon, and one of the things I enjoy about the Cape is that I can get away from big-boxes. I also think that regional retail is a lot more fun than national retail, and I think the tradeoff in price, and sometimes even selection, wasn’t worth the death of the local or regional way of doing things.
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I think that this country would be better off if we hadn’t traded regionalism for efficiencies of scale. I’d feel a lot more confident that if they wanted to, my children would be able to live and work near where they grew up — instead of having to move away from friends and family to chase a job in their chosen profession. I’ve got a way to go until that day, but I hope that the future turns out that way.
and very nice link. This is exactly what I was looking for. I’ve even read some of Ms. Sasser’s stuff before (specifically, on the housing issue in MA) but was unaware of this.
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What this study shows me is that the minimum wage is not perfect. Indeed, what is? But like all legislation, one must consider the potential benefits and costs, and go with the policy in which the former outweighs the latter. I think a modest minimum wage increase falls in this category, for the reasons given in the study and elsewhere.
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(BTW, I think one key benefit briefly mentioned, but not really used in the data in the Sasser study, is the potential for an increase in low-wage workers’ purchasing power due to the increase, which will in turn place some of that money back into the economy.)
the potential for an increase in low-wage workers’ purchasing power due to the increase, which will in turn place some of that money back into the economy.)
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A MA worker making minimum wage, working 40 hours per week for 52 weeks a year clears $14,000 before taxes. Every extra $1 gets him another $2,000.
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Do you think someone making $14k a year is saving any money? It seems to me that an increase in low-wage workers’ purchasing power due to the increase, which will in turn place ALL of that money back into the economy.
well, remember that most of the money generated is simply cash transfer. consumers and small business owners have less; low-wage workers have more. net productivity (wealth creation) declines slightly.
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so while it’s true that a low-wage worker with cash is more likely* than a small business owner to spend it now versus save it, the total economic effect from “the shift in who has the purchasing power” is pretty small.
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*PS for StomV – not all min wage money is earned by full-time workers; some earned by teens who may save for college, or people with 2nd jobs who may be saving for something specific. therefore i wouldn’t agree with our “100% immediate return into local economy” theory.
about college-bound students, etc.
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But, realistically, they make up a very small percentage of the hours worked by minimum wage workers.
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Furthermore, those college-bound kids and those “saving for something specific” are going to be spending that money on college or that specific something soon anyway.
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Of course, some folks are spending more than 100% of their income. Will another $500 or $1000 a year result in them spending less than $500, $500, or more than $500 extra per year? Food for thought.
I don’t think I can accept the argument of “some job loss” as a show-stopper from a group of people who consistently argue to make it easier for people to lose jobs — by outsourcing, banning unions, corporate mergers, pushing big-box retailers, etc.
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I also find it doubtful that a coffee shop in Nashua is going to take business away from a coffee shop in Lawrence, given that gas is $3/gallon right now. If you don’t assume away things like distance and convenience — two things very important in the retail world that typically pays the minimum wage — then the theories simply don’t hold up.
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And finally, I don’t think I can agree with a group that makes this statement with a straight face:
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My god! More people might actually be paid more! Horrors!
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I’m not ashamed of the fact that this would essentially redistribute wealth to lower-wage workers. I think that’s an much better plan than putting them on the dole or giving them free social services or even the Earned Income Tax Credit.
that I do agree with is that the Earned Income Tax Credit is in fact a more efficent and probably more fair way of boosting the incomes of lower-wage workers.
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Of course, conservatives were (and many still are) against that one too.
The Earned Income Tax Credit may be a more efficient way to redistribute income, but I think that it is somehow disempowering and winds up costing the poor a lot more in image than they get in income.
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I like the general concept that people should earn what they get, and I do believe that when the government gives something to you, that makes it less likely that you’ll get it yourself independently.
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I am a believer that we wouldn’t need social programs, except perhaps for the people least able to fend for themselves, if we just structured our economy differently, and instead of a “winners-take-all” spoils system, we shared gains a bit more evenly.
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I’m not talking Communism. I’m talking about a system where you certainly can get ahead by working harder, but there would be less “get really lucky, become a billionaire” in the economy.
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After all, I don’t think that making it like to only become a multi-millionaire is going to cause a lot of successful people to say “screw this” and drop out onto the welfare rolls.
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I think the economic rules affect people greatly. Many of our ancestors came here from Europe in the 1920’s, fleeing abject poverty and dismal lives. Those same people were able to prosper here. What was different? Was there a space-ray projecting down on the Atlantic Ocean that made people “less lazy” (using today’s terminology)? Or could it be that the economic system in the United States made it easy to prosper?
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I’d like to see it become easier to become successful, not harder.