Minnesota’s unworthy spell of permitting some employers to pay wages lower than the federal minimum appears to be nearing an end. A legislative conference committee took a major step this week toward a higher state minimum wage when Senate conferees said that under the right conditions, they can agree to the House-approved wage floor of $9.50 per hour for large employers.
Getting those conditions right won’t be easy, however. That was evident Tuesday evening when talks broke down over whether future minimum wage increases should be tied to inflation and imposed automatically. The House says yes, the Senate no.
The Senate has the better idea. Putting the minimum wage on autopilot may appear to take it out of the hands of neglectful politicians. But that appearance is deceiving. Instead, it injects an argument about whether or not to allow an automatic increase to go forward as an annual fixture in end-of-session deal making. And it increases the chances that employers would be compelled to raise wages at the start of a recession, which would lead to more layoffs than might otherwise occur.
Getting other conditions right is critical to crafting a minimum-wage increase that delivers on its promised gain for low-income workers and the overall economy with minimal disruption for employers and consumers.
We favor a slower phase-in of higher wages than the House bill orders. We’d start the new minimum no higher than $8.50 per hour about a year from enactment and advance it to $9.50 no sooner than Jan. 1, 2017 — not Aug. 1, 2015, as the House bill anticipates.
The reason: Get to $9.50 too quickly, and the new minimum wage’s potential benefits will be mitigated by a jarring hit to business balance sheets. A $9.50 minimum is a 31 percent boost from today’s federal minimum wage of $7.25. It would be more disruptive to employers that do no interstate commerce and thus are paying the lower state minimums, $6.15 for employers with gross annual sales of $625,000 or more, $5.25 for smaller employers.
Preserving a distinction between large and small employers is important to minimizing the downside of a big boost in the wage floor. Small employers often have little bottom-line flexibility. They’re more likely than large ones to respond to a wage floor that rises too quickly by cutting workers’ hours, eliminating jobs or canceling plans for more hiring.
Another distinction in current law — a “training wage” for employees under age 20 — should also survive in some form. The training wage in current law, $4.90 per hour, can be paid for the first 90 days in a young employee’s tenure; the House bill raises the training wage to $8 by Aug. 1, 2015.
The Minnesota Grocers’ Association and its business allies are asking the conference committee to extend that training wage to any employee under age 18. Without it, they say, there will be fewer jobs for high school students bagging groceries and stocking store shelves — jobs that often teach young people the value of work. It’s an idea worthy of consideration, especially at the $8 level.
A higher minimum wage has broad backing among Minnesotans, a Feb. 10-12 Star Tribune Minnesota Poll found. But fewer than half of those polled said they think a $9.50 minimum is warranted now. That shows that Minnesotans understand that reaching too far, too fast, has a counterproductive downside. Legislators should be realistic about that risk, and strive to minimize it.