Wage hike stresses small biz
Many see the New Year as a symbol for a brighter future ahead, but for business owners it will usher in a set of new laws — and added expenses — that amount to another gut punch to industries already decimated by the pandemic.
“There’s an onslaught of expenses hitting all our small businesses at once and it’s honestly overwhelming. Very overwhelming,” said Revere tanning salon owner Tina Barresi of Wakefield.
Barresi said her string of five tanning salons is “surviving” but owes “a couple hundred thousand dollars” to landlords, creditors and utility companies.
“The government should really delay this,” Barresi said. On Thursday the government announced its second round of awards that will eventually total roughly $717 million in grants for small businesses. Barresi secured one, but she said the $75,000 award is barely enough to “keep treading water.”
The minimum wage has now increased by 75 cents to $13.50 an hour. It’s the third of five annual increases to boost the minimum wage to $15 by 2023. Friday’s hike also affects tipped workers like waitresses and bartenders who will earn $5.55 an hour, a 60-cent raise.
At the same time, the Paid Family Medical Leave Act takes effect, allowing qualifying workers up to 26 weeks of paid time off. The new policy is funded through a tax split roughly between workers and businesses that both have been paying for a little over a year.
The policies passed in 2018 while the state’s economy boomed as part of a package following years of pressure from workers’ rights advocates. Now, some aren’t so sure the time is right for added costs.
“It’s about the cumulative effect — to have one of the highest minimum wages in the entire country is tough enough but, you do that on top of the pandemic and with one of the most costly PFML laws kicking in on the same day, plus all the unknowns on the (unemployment insurance) front — any one of those would be difficult at a time when sales are down because of the economic realities of COVID,” said Massachusetts Retailers Association President Jon Hurst. “Looking at all these things together, it really is a perfect storm that is going to put a lot of small businesses in jeopardy.”
North End restaurateur Donato Frattaroli, who recently opened Victory Point in Quincy’s Marina Bay, said restaurants in particular “are being punished.”
“Every day with these new restrictions and with these new laws, people don’t understand, it’s killing us,” Frattaroli said. Roughly 37% of the state’s small businesses and a quarter of restaurants disappeared in 2020, studies show.
Gov. Charlie Baker said he knows the minimum wage hike is likely to cause stress but in response to questions from the Herald on Wednesday said, “at this point in time there is not an appetite, for lack of a better word, to change the start date.”
“The timing of all this stuff is difficult because it comes in the same cycle as the incredible pain that’s been inflicted on small businesses generally,” Baker continued.
But for essential workers like Waldir Antunes de Souza of Nantucket, the boosts couldn’t come at a better time.
“It’s been a hard year, and every dollar counts. An extra bump in my paycheck means I’ll have more money for groceries, rent, and clothing,” de Souza said.