NORTHAMPTON — Jeremiah Micka has been dealing with a lot lately.
Like many, the owner of the Union Station complex in Northampton — which includes the Tunnel Bar, the Roosevelt Room banquet facility, the Platform Sports Bar and a patio bar called The Deck — has struggled to keep his business afloat during the coronavirus pandemic.
In the new year, he and his fellow business owners will get even more on their plates.
The state’s minimum wage goes up Jan. 1 — from $12.75, where it’s been for a year, to $13.50. The minimum wage is set to go up incrementally until hitting $15 an hour in 2023. For tipped employees, the wage will go up from $4.95 to $5.55 in the new year, on its way to $6.75 an hour in 2023.
Meanwhile, the state’s Paid Family Medical Leave Act fully takes effect in January. The law created a state benefit, funded through a tax on businesses, allowing workers to take up to 26 weeks off to care for a loved one, including after the birth, adoption or foster care placement of a child.
These changes were all part of a “Grand Compromise” passed by the state Legislature in 2018 and signed into law by Republican Gov. Charlie Baker after years of activism by worker advocates and pushback from the business community.
But back in 2018, no one who put the law in place could have foreseen the impact of COVID-19.
“It’s coming at the wrong time,” Micka said. “Right now we’re just trying to stay open, keep our doors open.”
Other business owners, though, say the new costs have long been on the horizon, and they’ve had time to prepare. And for minimum wage and tipped workers, many of whom work in industries hit hardest by the pandemic, the raise and paid leave policy offer small measure of consolation in a volatile economy.
Peter Rosskothen, owner of the Log Cabin, Delaney House, D. Hotel & Suites and Delaney’s Market, said his focus is on surviving the pandemic. Businesses have known about the move to $15 an hour for a long time, he said.
“I think we are mentally ready for that,” he said. “I’m much more focused on the COVID problems and the lack of support for the hospitality industry.”
He said he does disagree with changes to the tipped minimum wage. Income for tipped workers isn’t usually tied to hours, but to how busy an establishment is and its total sales. “Average wage for a tipped worker is irrelevant,” he said. “They make money as percentage of the sales.”
Ahalya Raman of Northampton earns $13.25 an hour in the shelter and housing department at ServiceNet. She’s part of the United Auto Workers union local at the social service agency and says it is good, steady work that has kept her going through the pandemic.
“I am fairly young,” she said. “But it’s not my first job.”
But, she said, it’s still tough making ends meet.
“I get two paychecks a month. One whole paycheck a month goes to rent and house utilities, phone bill,” she said. “One whole paycheck if not more. It’s incredibly difficult for me to save money and think about how to move forward in my life.”
Raman said minimum wage workers have born a lot of the strain during the pandemic. They are adjusting and readjusting to new guidelines and rules brought on by COVID, all the while worried about challenges in their own lives — everything from their own health, the health of their families, to finding child care that allows them to keep working.
The new minimum wage and the family leave policy at least afford people some peace of mind, she said.
In October 2020, Peter Rosskothen, owner of the Log Cabin and Delaney House, rolled out new event options that include augmented reality technology. (Hoang ‘Leon’ Nguyen / The Republican)
Karl J. Petrick, associate professor of economics at Western New England University, said a minimum wage hike is typically something businesses can absorb. After all, it also puts more money into people’s pockets and juices spending.
”Normally, this is not too hard for businesses to swallow,” he said. “But coming during a pandemic — these are not normal times.”
Given recent spending patterns, Petrick said, any extra money people earn is most likely to be spent online or at discounters on basic necessities.
What the increased minimum wage might do is encourage more people to reenter the workforce.
The labor force participation rate edged down to 61.5% in November, 1.9 percentage points below its February level. That is one reason the unemployment rate is not even higher; unemployment rates do not factor in people who have dropped out of the workforce.
But wages aren’t the only thing keeping people from seeking work. Child care — or the lack of it, given that many schools are offering only remote or hybrid learning options — keeps many people, especially mothers, out of the workforce.
Pride Stores CEO Robert Bolduc, right, shows food selections at a store on State Street in Springfield. At left is neighborhood resident Walter Kroll.
“That tightens up the labor market a lot,” said Pride Stores CEO Robert Bolduc. “It still does.”
Bolduc said it was also hard to compete for workers against the $600-a-week unemployment boost the federal government paid earlier this year.
“The minimum wage is too low,” said Bolduc, whose company starts employees at $15 an hour. “Every decent employer should pay more than that. Your people have to live. You have to sleep at night.”
Patricia Canavan, president of United Personnel in Springfield, believes implementing paid family and medical leave will be difficult for employers.
The policy relies on a tax — one that employers and employees have been paying since October 2019 — of no greater than 0.75% of a worker’s eligible wages to fund up to 26 weeks of paid leave.
Beginning Jan 1., workers can finally claim the benefit.
But it’s hard, Canavan said, to hold jobs open and make sure work gets done. The law means that employers must over hire and do more training so they have people who can “float” in their organization and pick up the slack.
State Sen. Eric P. Lesser, D-Longmeadow, supports the minimum wage increases and family and medical leave.
The $15 minimum wage has broad bipartisan popularity, he argues, pointing to a wage referendum in Florida this year. In the same election that saw President Donald J. Trump increase his margin of victory in the Sunshine State over 2016, just over 60% voters also approved the initiative to increase the state’s hourly minimum wage to $15 by 2026.
Meanwhile, the pandemic makes the family and medical leave provision even more important than it was two years ago, Lesser said. Low-wage workers need protection and income if they need to stay home due to illness or to care for someone who is ill. Without it? People go to work and risk spreading COVID-19.
But employers worry their payments into the state’s unemployment insurance will go up following widespread layoffs and furloughs in 2020. The state’s fund needs to be replenished, and an employer’s experience — how many unemployment claims it has had — also can drive up premiums.
Earlier this month, Baker proposed a bill that would freeze the unemployment insurance contribution rate that employers owe the state. That means the average per-employee cost would go up 17% instead of increasing by nearly 60%.
For Micka, the state’s response to the pandemic has restricted how many customers he can serve, shut down his banquet business and put his future in doubt at a time when other bars and restaurants in tourist-heavy Northampton have closed for the winter. He has 70 workers when the business is doing well, but is down to a skeleton crew now.
Micka’s solution will be technology. He said he’s already bought handheld devices so servers can transmit orders to the kitchen. Soon there will be tabletop kiosks for ordering. All of it will save work and eliminate the need for some workers.
“It’s the only way,” he said. “I can only charge so much for a hamburger.”
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