Minnesota Ahead of the Union

Minnesota Raises Minimum Wage

Amelia Broman

On August 1st, Minnesota raised its minimum wage to $8.00 per hour, putting it among the 23 states that now have state minimum wages higher than the federal minimum of $7.25. The bill, signed by Governor Dayton in April, will increase the minimum wage to $9.00 next August, and to $9.50 the next year. In 2018, the minimum wage will be tied to inflat ion. As the push for a federal minimum of $10.10 proves unsuccessful, many states are choosing to raise their own minimums above the federal level.

For decades, economists have struggled to isolate the true effects of the minimum wage amid a sea of other variables, from the state of the economy to oil prices to population shifts. Advocates of minimum wage increases say it helps struggling families, brings down poverty, and boosts the economy. Opponents say it raises prices and makes it harder for low- skilled workers to find jobs. In theory, higher wages should force businesses to raise prices and offer fewer jobs. Minnesota businesses, especially restaurants, have reported feeling this squeeze. Most economists, however, do not predict large-scale consequences.

Some people question whether the minimum wage is an effective anti-poverty tool. Its original purpose, upon creation in 1937, was to prevent employers from exploiting unorganized workers, especially women and young people. Today, only two percent of hourly workers earn the minimum wage. A third of them are teenagers, and almost 70 percent work part time. The Minnesota increase raised the wages of 60,000 earners, but those who made just above the minimum wage also saw their pay go up. The majority of people who are right above the minimum wage marker are adults and full time workers. Some project the increase will allow this group of people to cut back on their use of government benefits and better support their families. Others argue that increasing the Earned Income Tax Credit would’ve a better option for helping low-income workers with less effect on employment.

Minnesota raised its minimum wage to $8.00 per hour, putting it among the 23 states that now have state minimum wages higher than the federal minimum of $7.25.”

 

The minimum wage is a trade-off, between businesses and employees, job-seekers and job-holders, workers and consumers. A survey of economists by Anil Kashyap, a University of Chicago economics professor, found that the majority believe the trade-off is beneficial. Polls show two-thirds of Americans agree that the minimum wage should be raised. As it becomes a growing political issue, more states may opt to raise their own minimums above the federal level.