Timing is right for Minnesota's minimum wage hike

  • Article by: EDITORIAL BOARD , Star Tribune
  • Updated: July 31, 2014 - 11:11 PM

Today’s minimum-pay increase will benefit more than the young.

This is pay raise day for thousands of Minnesotans. Today, after nine years in the $6.15-an-hour cellar, the state minimum wage moves ahead of the federal $7.25 level to $8, the first step on a road to $9.50 for most employers on Aug. 1, 2016, and automatic inflationary adjustments starting in 2018.

Those subsequent steps (see accompanying chart) come fast and steep, and could bring hardship to some employers and industries. Economists should closely monitor the impact of the higher minimums, and state elected officials should be prepared to make adjustments if negative consequences appear.

But today’s modest first step on that ladder should generate few misgivings. Now, as Minnesota is bouncing back impressively from a mean recession and the state unemployment rate is down to a respectable 4.5 percent, is the right time for government to ensure that the lowest-wage workers share in the benefits of a reviving economy.

As MoneyRates.com noted recently as it rated Minnesota the third-best state in the nation in which to make a living, this state’s cost of living and tax burden are higher than the average among the 50 states. Most Minnesotans earn “more than enough to make up for these disadvantages,” it said.

Not so, however, for the Minnesotans at the bottom of the wage scale. Nor does it seem likely that without a state push, labor market forces alone would be enough to boost those workers closer to self-sufficiency. A state that prizes work as highly as Minnesota does is right to ensure that hourly work brings decent rewards, and that those who work need not rely on the taxpayers to provide life’s necessities.

At $8, the new floor may be “one of the highest minimum wages in the nation,” as the Minnesota Chamber of Commerce said in a release last week. But 12 other states and the District of Columbia have minimum wages at least as high, and those are states that compare favorably and compete strongly with Minnesota for investment and human capital. Six other states aren’t far behind, with minimums between $7.75 and $8. Today’s move does not make Minnesota a wage outlier.

Initially, it’s a move that will affect only a sliver of the state’s workforce. As of last year’s state estimate, only 83,000 of the state’s hourly workforce of 1.57 million was paid the minimum wage or less. But an estimated 370,000 Minnesota hourly workers are paid less than $10.10 an hour. They won’t all see a pay raise this summer, but the bulk of them will by the time the new law is fully implemented in 2018.

It’s well for Minnesotans to remember who those workers are. A report released Wednesday by the National Women’s Law Center points out that in Minnesota, 68 percent of workers paid less than $10.10 an hour are female, even though women comprise just 48 percent of the state’s total workforce. Among low-wage women nationally, half work full time, a third are mothers, more than a third live in households with incomes of less than $25,000 a year and a quarter of them are age 50 or older. They are also disproportionately people of color.

Those numbers paint a picture that defies the stereotype of the minimum-wage worker as teenager with few financial responsibilities. About those teenagers trying to establish a work record: The new state law allows for a youth wage rate of at least $6.50 per hour for employees younger than 18 who are not covered by the federal $7.25 minimum. That feature should mute critics who contend that high minimum wages deprive young workers of career-starting employment opportunities.

It stands to reason that the National Women’s Law Center’s leading policy recommendation in its new report is a federal minimum wage increase. We like to think that by joining the states that have leapfrogged ahead of the federal wage floor, Minnesota’s move today will hasten a federal move in the same direction.

  • MINNESOTA MINIMUM WAGE

    (On Aug. 1 of each year, from 2014 to 2016)

    2014 2015 2016

    Large employers: $8.00, $9.00, $9.50

    Small employers: $6.50, $7.25, $7.75

    Youth wage: $6.50, $7.25 $7.75

    Training wage: $6.50, $7.25, $7.75

    J nonimmigrant visa: $7.25, $7.50, $7.75

    Source: Minnesota Chamber of Commerce

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