A higher minimum wage is in keeping with the Minnesota ethos that work has value and deserves a fair reward. It would be good for the affected workers and their families, and it would help spare taxpayers from the need to help provide life's necessities to employed people.
Those are among the reasons we urge the 2014 Legislature to raise the state's minimum wage to about $8.50 an hour next year, up from today's $6.15 for larger companies and $5.25 for smaller ones that don't engage in interstate commerce. (Those that do business across state lines must pay at least $7.25, the federal minimum.)
Those reasons are seldom disputed by the employers and their Republican allies who oppose DFL legislative efforts to boost the state minimum above the federal wage floor. But naysayers say those arguments are trumped by the squeeze higher wages will put on businesses and, in turn, on people who need jobs. Slower hiring and/or job cuts will result, they say.
Their contention is in sync with longstanding economic theory. But it hasn't been borne out by recent evidence. As some states have leapfrogged ahead of Congress to raise the minimum wage in recent years, economists have been able to study the consequences compared with neighboring states that did not lift their wage floors. Their findings were summarized in a recent letter from 600 U.S. economists to the nation's elected leaders, endorsing a national minimum of $10.10 by 2016. It said:
"The weight of evidence now show[s] that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers. … A minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the job front."
The testimony of those economists, among them seven Nobel Prize laureates and four professors at the University of Minnesota, ought to reassure legislators as they take up what amounts to unfinished business from the 2013 session (see accompanying text). The "job killer" label just doesn't stick.
That's particularly true at this stage in the economic cycle. The Great Recession wrung any excess out of business payrolls. Many Minnesota employers operate today with lean workforces and few options to shrink them further, now that consumer demand for their goods and services is rising again. Give low-wage workers more income, and still more consumer spending will ensue, intensifying pressure on employers to hire.
A minimum-wage increase may be a trigger for higher prices for some goods and services. But Americans should know that some of the prices they pay now are indirectly discounted by their own tax dollars. Low-wage workers frequently must rely on the Earned Income Tax Credit; child-care and housing subsidies; food stamps, and health insurance tax credits under the Affordable Care Act.