Massachusetts Blows the Trump Boom Windfall

You know that boom in hiring, investment, manufacturing taking place all over the nation that has resulted in expansion for business and bonus’ for employees everywhere? Well Massachusetts has taken decisive steps to put an end to all that.

On June 28, 2018, Massachusetts Governor Charlie Baker signed a bill titled “An Act Relative to Minimum Wage, Paid Family Medical Leave, and the Sales Tax Holiday” (H.4640). The new law, dubbed the “Grand Bargain,” implements incremental increases in Massachusetts’ minimum wage over the next five years, and creates a new paid family and medical leave program in the Commonwealth. A full text of the bill can be found here.

Minimum Wage Increase
The law increases the minimum wage from $11.00 to $15.00 over the course of five years. In 2019, the minimum wage will increase from $11.00 to $12.00. Thereafter, it will continue to increase each year in $0.75 increments until it reaches $15 in 2023. The Grand Bargain also results in a five-year phase out of the requirement of premium pay for hours worked on Sunday

Six months ago if you were a Massachusetts business, you were thinking about how you would use those tax cuts to grow your business, now you are thinking if you have 50 employees you are going to have to make sure you can generate an extra $100,000 next year and $400,000 by 2023 to cover the wage increases for those fifty folks, not to mention the taxes that come along with it.

So while business in other states take advantage of both the Trump boom and the Trump tax cut to expand their production, modernize equipment, bring in new workers, pay bonuses to reward their best workers businesses in Massachusetts are going to have to think twice before taking any steps knowing those low skill workers will add $8000 to the debt side of their ledger each.

And it’s worse than it sounds because while in a one party state like Massachusetts there is absolutely no prospect of this higher minimum wage being reversed, there is always the chance that the Trump boom might be curtailed by a Democrat victory in November of this year or in 2020 and of course as the Trump Tax rates aren’t permanent it’s very possible either a victorious Democrat or a feckless GOP congress will choose to let them die.

Massachusetts voters may have overwhelmingly voted for Hillary Clinton but they had better pray that Donald Trump stays where he is with a GOP congress because once the Trump boom and the Tax cuts end, so will the jobs that this economy has produced and discover that the true minimum wage remains constant at zero.

If you are a young person or someone starting a family the time to get out of this state is now.