Phased in

The House-Senate minimum-wage accord announced Monday would raise today’s large-employer state wage floor in these steps:

•$8 on Aug. 1, 2014

•$8.50 on Aug. 1, 2015

•$9.50 on Aug. 1, 2016

•Subsequent increases, beginning Jan. 1, 2018, indexed to inflation but not to exceed 2.5 percent per year.

Source: House and Senate majority communications

A reasonable plan for raising the state's minimum wage

  • Article by: Editorial Board
  • Star Tribune
  • April 8, 2014 - 6:01 PM

Low-wage workers’ long wait for a pay raise finally appears about to end. A bill to raise the state minimum wage for the first time since 2005 has cleared a legislative conference committee and is expected to land on Gov. Mark Dayton’s desk later this week. Some 357,000 Minnesotans stand to benefit by 2016, when a new $9.50-per-hour minimum is fully phased in. (See accompanying text.)

In one sense, this boost in the state’s wage floor is 11 months overdue. With DFLers in charge of both chambers of the Legislature and the governorship last year for the first time in 22 years, an increase was expected to sail into law in 2013. Instead, it stalled in conference committee.

But in another sense, an increase is much tardier. The Legislature has long shirked its responsibility to keep this key labor standard apace with a changing economy. Today’s state minimum of $6.15 per hour for large employers and $5.25 for small ones has been surpassed by the federal $7.25 minimum and by all but three other states that have minimum-wage laws on their books. Only those employers that do not engage in interstate commerce pay the state’s paltry minimum today.

The pattern of long lags in legislative attention to the wage floor factored into the dispute between House and Senate DFLers that held up action last year. House proponents of a higher minimum pushed for a big step, to $9.50 by 2015, followed by annual automatic increases pegged to inflation. The Senate — and this page — wanted a smaller, less-disruptive increase, without the autopilot link to inflation. Senators shared our concern that indexing the wage floor to inflation could drive wages higher at the start of an economic downturn, leading to more job losses than might otherwise occur.

The conference committee’s final product hews nearer to the House’s original position than the Senate’s. A robust coalition of labor, faith communities, nonprofit advocates for the poor and the governor made that happen; so did the passage of time. The $9.50 wage the House approved seemed like a big leap a year ago. This year, with President Obama calling for a new federal minimum of $10.10, it seems more reasonable.

The conferees bowed to our concerns in several respects. They slowed down by one year the phase-in to $9.50 and by another year the start of indexing. They preserved a distinction between large employers, with gross sales of more than $500,000 per year, and small ones, whose minimum wage will climb to $7.75 in 2016. They created a $7.75 “youth wage” for 16- and 17-year-olds and a 90-day training wage for 18- and 19-year-olds.

And they created a mechanism for suspending an automatic inflationary increase when economic indicators reveal “a potential for a substantial downturn in the state’s economy.” Authority to make that call would rest with the state commissioner of labor and industry — which, in effect, means the governor, since that commissioner serves at the governor’s pleasure. A protocol for a catch-up boost in the wage floor after a recession is also spelled out.

Republican critics of the minimum-wage increase complained Monday that control of the wage’s indexed increases was misplaced and that it belongs with the Legislature. But spreading responsibility among 201 legislators holds none of them truly accountable. In fact, diffused legislative decisionmaking is one explanation for inaction since 2005. Resting responsibility with the governor for averting an ill-timed increase will inject the issue into gubernatorial politics, where it likely will command more public notice and input.

As Dan McElroy, a former state finance commissioner who now represents the Minnesota Restaurant Association, said: “If you’re going to do an index, it should include this.”

McElroy was among a number of representatives of small businesses who forecast that the wage increase that now appears imminent would lead to a loss of jobs, higher prices for consumers or both. In some circumstances, they may be right. But a higher minimum also will put more spending power into the pockets of hard-pressed Minnesotans, giving them a greater measure of self-sufficiency and less dependence on taxpayer-financed income support. Their spending will translate into economic gain for all, while giving Minnesotans the satisfaction of putting a little more of their money where their values are.

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