State's minimum wage hike kicks in

Zorely Allende's finances just got a little less tight.

Today, the state's minimum wage increases, and the pay of this single mother of two small children rises from $6.75 an hour to $7.50.

"Maybe I will be able to save now, so I can take a vacation," said Allende, 20, who is a cashier and cook at a McDonald's in Springfield . "I worked [every] week for as long as I can remember."

Allende is one of about 107,000 Massachusetts workers who will get a raise today, when the first phase of a minimum wage increase passed last summer begins. The hourly wages of the state's lowest-paid workers will jump again on Jan. 1, 2008, to $8 an hour, making Massachusetts' minimum wage among the highest in the nation.

On the basis of a 40-hour workweek, the workers will get a $1,560 bump this year, and $1,040 more next year.

"More and more working people are falling behind," said Noah Berger , executive director of the Massachusetts Budget and Policy Center, a nonpartisan think tank that recommended the wage increase. "They can be working full time, without escaping poverty. By raising the minimum wage, we'll help to make sure everybody who is willing to work full time to try to support their family can at least earn a wage that allows them to escape poverty, and that sends an important message about the value of work."

But while workers such as Allende and their advocates hail the increase, some business owners worry that the wage increase will put Massachusetts businesses at a disadvantage.

"This is a particular problem for small businesses," said Jon Hurst , president of the Retailers Association of Massachusetts. "I'm not going to tell you there aren't people who deserve a wage increase. But we've got to get smart and look at the effect it's having on our small businesses, and on consumers and families who [will be] paying higher prices."

In July, the state Legislature unanimously approved the minimum wage increase over Governor Mitt Romney's veto. Worker advocates had hoped lawmakers would also index future minimum wage increases to inflation, but they lost that battle.

The federal minimum wage, unchanged for 10 years, is $5.15 an hour, but that is likely to be raised by the incoming Democratic majority in Congress.

Allende lives in subsidized housing and qualifies for food stamps, but she said it is hard to give her children the things they need on the $198 a week she takes home.

"It is very, very difficult," she said, speaking by telephone through a translator for Neighbor to Neighbor Massachusetts, the community advocacy group that also pushed for the minimum wage increase. "I can't support myself. I have to ask for money from my mother. And it's really hard work."

She said she had been working at the restaurant for two years, and had not received a pay increase. "I am excited I will finally get something," she said.

Matt Duncan will see a little more money in his paychecks, too. The Dracut high school student works four shifts a week at a Lowell Market Basket, bagging groceries for $6.75 an hour.

His higher wages will make paying his car insurance premium less of a strain, he said.

"It definitely adds up," said the 16-year-old. "There are a few adults that work there, and [the increase is] good for them. My parents still pay for my stuff, but it's good for other employees who are on their own."

Hurst, however, said Duncan and other teenagers probably will suffer as a result of the minimum wage increase . Facing higher payroll costs, businesses will cut workers, retaining adults instead of teenagers, whom they consider less reliable and can work fewer hours, he said. Smaller businesses in particular will be at a competitive disadvantage, he said, especially when the state's minimum wage rises to $8 an hour next year.

"Big businesses with locations outside Massachusetts can take lower margins locally without raising prices," he said. "But if they're based here, and have higher costs here, they have one of two options: raise prices, or hire fewer people."

But Berger said Census data show that 80 percent of those who will be affected by this minimum wage increase are workers older than 20. He also said the minimum wage increase would eventually benefit local businesses.

"A higher minimum wage circulates more money into low-income communities, and they have more money to spend in local stores," he said. "It creates economic activity where we need it most."

And as happy as workers' advocates are at their wage increase victory, they see a huge amount of ground to make up, even after the increases.

A minimum wage worker makes $13,500 annually. After today, that annual salary will be about $15,000.

Advocates say that is still an alarmingly low income, particularly in Massachusetts, where the cost of living is so high.

"These are still very low wage jobs that are hard to support families on," said Lew Finfer , director of the Massachusetts Communities Action Network, which lobbied for the pay increases. "When you move up the floor, that's good news for the people at the floor and just above it. But there are a lot of things that need to be done: raising wages [further] and improving education and training."

Yvonne Abraham can be reached at abraham@globe.com.