One can favor a higher minimum wage and still oppose making one city a wage island — especially when that one city is home to only one-seventh of a major metropolitan area’s population.
That’s the sound position Minneapolis Mayor Betsy Hodges took last month. She’s been defending it ever since to disappointed advocates for a $15-an-hour minimum wage within the city’s confines, an amount similar to levels set in several other liberal-minded U.S. cities in recent years.
Hodges doesn’t need our help to make her case, but she deserves our applause for her restraint. The first-term DFL mayor is demonstrating the kind of sensitivity to her city’s regional posture and to its need for jobs that candidate Hodges promised to exhibit when she ran for the office in 2013.
After news broke about Hodges’ opposition to setting a separate wage floor in Minneapolis, she took to Facebook to address her critics. “Minneapolis alone doesn’t dominate our region the way Seattle and NYC [New York City] do theirs,” she explained. “We have St. Paul and Bloomington, for example, which are rich with the kinds of jobs and businesses that would be affected by an increase.”
She’s right: Impose substantially higher wages in Minneapolis, and her city risks the unintended consequences that go with being adjacent to cities that offer a similar mix of urban amenities at a lower cost to consumers.
As the National Employment Law Project notes, minimum-wage employers in a metropolitan area tend to serve “city-based customers such as residents, office workers and tourists.” Raise prices — as often happens as minimum wages rise — in a place like Seattle, and those customers will likely grouse but pay them. Raise them in Minneapolis but not in St. Paul and Bloomington, and customers will quickly notice that lower-cost options are close at hand, and take advantage of them. Soon enough, so will those employers whose bottom lines are hurt, no doubt prompting some to cut jobs or move.
“Minneapolis going it alone doesn’t make strategic sense in that environment,” Hodges wrote.
The mayor emphasizes that she still believes higher minimum wages are good for the state and nation as a whole, and that putting more spending power in the pockets of low-wage workers is a plus rather than a minus for job growth. We agree that better pay for low-income workers has significant benefits, but making Minneapolis an outlier in its home state would be poor economic policy.
This brand of economic medicine seems more efficacious when applied gradually in small doses over a large population than in a large dose in one rather vulnerable spot. We’re glad Hodges sees it that way, too.