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Victoria Entzminger, 54, and Ruthella Logan, 51, both personal care attendants from Brockton and members of the Service Employees International Union, hold signs to show where they stand on increasing the minimum wage during a hearing at the Statehouse Tuesday.

(Dan Ring / The Republican)

BOSTON - Labor officials and activists squared off against business leaders Tuesday during a statehouse hearing on a bill that would increase the minimum wage in Massachusetts for the first time in five years.

Under bills in the state Legislature viewed as standing a good chance of passage, the minimum wage would increase in phases from the current $8 an hour to $11 an hour by July of 2015 and then would rise annually with inflation starting in 2016. The state's minimum wage last jumped in January of 2008.

Steven Tolman, president of the Massachusetts AFL-CIO, said the increase would inject $724 million in increased wages into the economy and create 4,500 jobs in the wake of more consumer spending.

Tolman said increasing the wage "is not simply the right thing to do morally, it is the best thing to do economically."

The bills, submitted by Sen. Marc R. Pacheco, a Taunton Democrat, and Rep. Antonio F.D. Cabral, a New Bedford Democrat, would also hike the minimum wage for employees who receive tips, such as a waitress, from the current $2.63 an hour, or 33 percent of the current wage, to 70 percent of the wage. The wage for tipped employees last increased in 1999.

In testimony, Senate President Therese Murray, who jump started the debate this year, said lawmakers need to calculate an acceptable "living wage" for Massachusetts workers.

"Any change to our minimum wage laws will affect businesses and residents throughout Massachusetts, and it’s important that we all take part in this conversation so that any change can be done thoughtfully, and with the best interests of the Commonwealth in mind," Murray told members of the Joint Committee on Labor and Workforce Development, which held the hearing.

Jon Hurst, president of the Massachusetts Retailers Association, left; William Vernon, state director of the National Federation of Independent Business, middle, and Peter G. Christie, president of the Massachusetts Restaurant Association, right, testify in opposition to increasing the minimum wage.

Murray did not say that she supports an increase in the minimum wage, but she cited statistics that an adult in Massachusetts requires, on average, $28,500 a year in earnings to be considered economically independent. She said an adult earning the minimum wage in Massachusetts earns only $16,704 annually, which is less than the federal poverty level.

About 94,000 people in the state earn at or close to the minimum wage. Another 398,000 workers earn between $8.25 and $11 per hour, for a total of nearly half a million minimum and low-wage workers, Murray testified.

About 500 people attended the hearing, which stretched late into the afternoon.

A panel of business leaders said they oppose an increase in the minimum wage.

Jon Hurst, president of the Retailers Association of Massachusetts; William B. Vernon, state director of the National Federation of Independent Business, Peter G. Christie , president of the Massachusetts Restaurant Association, and Brian M. Houghton, vice president of the Massachusetts Food Association, testified in opposition.

"Increasing the minimum wage is economically unsustainable, detrimental to the very workers proponents of an increase say it will help and ineffective as a program to alleviate poverty," Vernon testified.

Vernon said jobs would be lost if the wage is increased. A hike in labor costs encourages employers to find ways to use fewer workers or even replace workers with machines or new technologies, he said.

If the bill passes, the minimum wage in Massachusetts would be significantly higher than the wage in bordering states, Hurst said.

Hurst said New Hampshire's minimum wage is the federal rate of $7.25 an hour; Connecticut's is $8.25 an hour and rising to $9 in 2015; Rhode Island's is $7.75 an hour increasing to $8.25; New York's is $8 an hour going to $9 by the end of 2015; Maine, $7.50 per hour and Vermont, $8.60 an hour.

"In order for our economy to grow and our Main Streets to survive and thrive, we need to control the cost of doing business in Massachusetts," Hurst testified.

In testimony, Houghton said most supermarket and grocery workers earn more than the minimum wage. He said the issue is not increasing the wage - it's the ripple effect created by an increase.

"If the floor wage is increased, this puts pressure on companies to increase the salary and ceiling wages of other jobs within the company," Houghton said.

Supporters outnumbered opponents at the hearing and often punctuated testimony with cheers and sign waving.

Several people from Western Massachusetts attended the hearing to support the proposed increase.

"It is important to increase the wage so families can take care of each other and save money," said Kim Rivera, 48, of Springfield, who earns $13.48 per hour as a care worker for a human service agency.

Tammy Hall, 50, of Springfield, a personal care attendant and a single mother of two teenage girls, said workers like herself face a daily struggle to survive.

Hall said she receives Medicaid for health care, but no other state benefits. She pays $850 a month for a three-bedroom apartment for her family.

"I have children now who are going into the workforce," said Hall, who makes $13.68 an hour. "I want them to benefit and to be able to do things themselves."

The hearing came as President Barack Obama is proposing to increase the federal minimum wage to $9 per hour.

Gov. Deval L. Patrick's labor secretary urged an increase in the minimum wage and indexing it to inflation.

Joanne F. Goldstein, secretary of labor and workforce development, said raising the wage is one of the most effective ways to restore the consumer spending that boosts the economy.

"We are committed to a robust economy in which everyone gets a meaningful share," Goldstein said.

Jeannette Wicks-Lim of Amherst, an assistant research professor at the University of Massachusetts at Amherst, said studies by the political economy research Institute at the university shows that if businesses increased their prices of goods by 0.2 percent, it would cover all the costs of a hike in the minimum wage.

Wicks-Lim said the costs to businesses of increasing the wages are modest compared to the ability of businesses to absorb those costs.