Effect of minimum wage increased debated among south Washington County lawmakers
A minimum wage increase will be a bump for low-earning Minnesota workers, or it will be a bust for the state’s economy.
Those were competing predictions by south Washington County lawmakers who fell on opposite sides of the minimum wage debate. That debate culminated with Gov. Mark Dayton’s signature Monday on a new law that will increase the minimum wage for large employers to $9.50 by 2016.
“I believe that we should pay people a fair wage for their work,” Assistant Senate Majority Leader Katie Sieben, DFL-Cottage Grove, said as senators debated the measure last week.
“I’m disappointed,” said Republican Rep. Denny McNamara, R-Hastings, after he voted against the bill in the House on Thursday. McNamara said it will put Minnesota’s minimum wage among the highest in the nation once fully implemented.
The current state minimum wage is $6.15 an hour, but most Minnesota employers fall under the federal wage of $7.25. Businesses will have to follow the higher state wage.
The new wage would be phased in over three years, with employers showing gross sales of at least $500,000 annually paying $8 starting this August, $8.50 in 2015 and $9.50 in 2016.
Smaller firms would be required to pay $6.50 this year, $7.25 next year and $7.75 in 2016.
Receiving the same wage as small businesses will pay bill will be teens, youths in training and some foreign youths working in resorts.
Wages would increase to match inflation beginning in 2018, but no more than 2.5 percent a year. The state labor commissioner could suspend the increase in bad economic times.
The phased-in increase is important, said Rep. Dan Schoen, DFL-St. Paul Park, who like Sieben supported the Democrat-pushed bill.
Schoen said he heard from people who lobbied for the increase, including by dropping a stack of hand-written letters from constituents on his desk during the House debate. Schoen said he also talked with business owners concerned about the increase and its economic impact. He said he understand their concerns.
“But every time this has happened in the past, people cried foul and the economy only improved,” Schoen said. “People have more income. They spent it.”
An estimated 2,356 residents of House District 54A, represented by Schoen, earn a minimum wage, he said, citing data provided by the state’s Department of Employment and Economic Development.
There are another 2,170 people earning minimum wage in McNamara’s District 54B, according to the state figures. More women than men earn the minimum wage.
The increase will be a problem for border communities, McNamara said. The minimum wage is $7.25 in Wisconsin, Iowa, North Dakota and South Dakota.
“It’s going to put us at a competitive disadvantage with our neighboring states,” McNamara said.25
A sticking point in Democrats’ negotiations was whether to index the wage with inflation, which was initially sought by House leaders. Schoen said approving the inflationary index will mean lawmakers won’t have to engage in a “terribly divisive debate” every few years.
“I have been a supporter of putting inflation into it because I think the indexing helps keep the value for workers into the future,” Sieben said.
McNamara echoed other Republicans in claiming the minimum wage pact was part of a deal by Democrats to sign off on a new $77 million Senate office building near the Capitol.
“I just think that’s a huge mistake,” McNamara said.
Don Davis of the Forum News Service contributed to this story.