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MN2020 - Tuesday Talk: The Data-Driven Case for Minimum Wage Increase
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Tuesday Talk: The Data-Driven Case for Minimum Wage Increase

February 25, 2014 By John Van Hecke, Publisher

Arguments for and against increasing Minnesota’s minimum wage from $6.15/hour to a proposed $9.50/hour largely turn on emotional appeals. Declaring that increasing the minimum wage is “right” or “wrong” is an important consideration but it obscures objective financial and economic analysis.

How can data inform the minimum wage debate?

Analysis from Minnesota’s Raise the Wage Coalition suggest that a $9.50/hour minimum wage disproportionately affects women and will result in $470 million overall in increased consumer spending. A recent Congressional Budget Office report finds that federal minimum wage increases would have a strongly positive impact on earnings but would also cause job reductions among the very lowest income earners.

Those are different arguments from “right vs wrong.”

How do we evaluate proposed minimum wage increases? What analysis and policy should we consider?

This morning, from 8-9:30am, join Minnesota 2020’s John Van Hecke to discuss the best ways to evaluate minimum wage policy change.

 

 Post your comments or questions in the box below, scroll down to see the ongoing conversation, and use "refresh" to see new comments.

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25 Comments:

  • Peter Rachleff says:

    February 25, 2014 at 7:23 am

    I encourage those concerned with minimum wage issues to consider a shift in framework.  If we are really interested in seeing an improvement in workers’ wages and living standards, a decrease in poverty, and a shift towards greater equality, our focus ought not be which data set to rely on, nor which dollar-and-cents figure to promote for public policy and legislation.  Historical research has demonstrated clearly that it is has the demise of the labor movement, the shrinkage of the percentage of the workforce unionized, which has underpinned the plunge in workers’ real earnings and the yawning gap between income quintiles.  What is needed is a new wave of unionization.  Interestingly, it is precisely among low wage workers—in fast food, retail, healthcare, and childcare—that we are seeing the kind of momentum, enthusiasm, creativity, and organization emerge that can generate the energy and leadership for a resurgence of a labor movement.  For them, the $15 an hour wage has been a rallying cry.  I encourage progressive activists, policy wonks, data crunchers, and activist-scholars to join on board this movement, give it whatever support we can, and explain to the wider public how and why our entire society can benefit from a better organized working class, higher wages and benefits, and diminished inequality.

    • John Van Hecke says:

      February 25, 2014 at 8:59 am

      Thanks, Peter! Many activists have been disappointed or at least perplexed that the legislative debate seems to be capping a state minimum wage increase at $9.50 per hour. Where’s the public case for $10.10, the Obama Administration’s proposed federal minimum wage increase? More critically, as Peter notes, the $15/hour argument is gaining traction, just not among Minnesota public policymakers. $15/hour might be a reach but I know that if it’s not raised as a wage alternative, particularly as an amendment to the bill, it won’t happen.

    • Herb Davis, Jr. says:

      February 25, 2014 at 9:04 am

      I totally agree with what Peter R said.

      Anything less than $15. is almost not worth the effort. If we can’t find a way to limit the pain of working for poverty wages we need to support groups that will negotiate for something better than $9.50 which still seems like a rotten way to live. $9.50 still leaves people eligible for government assistance(taxpayer subsidies of their employers).

  • John Van Hecke says:

    February 25, 2014 at 9:04 am

    Good morning. Minnesota’s state legislature convenes today. They’re taking up legislation increasing Minnesota’s minimum wage from $6.15 to $9.50 an hour. The federal minimum effectively raises Minnesota’s minimum to $7.50. President Obama has proposed a $10.10/hour federal minimum. Minnesota policy leaders are debating $9.50/hour. How do we make the case to keep the minimum wage increase at $9.50 rather than something less?

    • Herb Davis, Jr. says:

      February 25, 2014 at 9:07 am

      Tell the DFL that if they don’t do at least $9.50 we will support a third party candidate and they will end up the minority party. They will understand and the Green Party will gladly accept our support.

      • John Van Hecke says:

        February 25, 2014 at 9:12 am

        Herb, you’re advocating for the political/electoral strategy to realize a $9.50/hour minimum wage. What are the pros and cons of this approach? What other strategies might be effective?

        • Herb Davis. Jr. says:

          February 25, 2014 at 9:33 am

          You have that right, it is political. It might work, it might not. We obviously have to take a chance or admit that the we and the DFL don’t care about the very poor hard working folks and are willing to use them as pawns in our political games as we go about consuming and intellectualizing about the quality of life this very rich state and nation might provide to the poorest amongst us.

  • John Van Hecke says:

    February 25, 2014 at 9:20 am

    Working on a state minimum wage increase for the past year, I’m struck by absence of a data-driven case for an increase. Advocates and opponents offer a strong case for “rightness” or “wrongness”. While I’m personally persuaded by moral and ethical arguments for increasing the minimum wage to $9.50 an hour, I know that not everyone shares my view. How can we best use economic and financial analysis to increase the minimum wage? Who aren’t we including in this discussion that should be engaged?

    • Lee Egerstrom says:

      February 25, 2014 at 9:28 am

      I’ve got to weigh in on this. What should be obvious to all - but apparently isn’t - is that the current state and federal minimum wage rates are not sustainable for the American and Minnesota economies. Seventy percent of U.S. GDP depends on individual and household consumption, or purchasing power. Poverty doesn’t keep the cash registers or the U.S. economy rolling.

  • Joe says:

    February 25, 2014 at 9:21 am

    The one thing that’s important to evaluate in Minnesota’s minimum wage fight is the lack of hard data from conservative groups. Sure, they have anecdotal theories, but haven’t produced much in the way of economic analysis to contrast Economic Policy Institute’s numbers that have been so strong in making the case for a minimum wage increase. Is their lack of data relevant when it comes to evaluating $9.50?

  • Retha Dooley says:

    February 25, 2014 at 9:25 am

    I challenge any and all legislators who support the $9.50 an hour minimum wage to try living on that wage themselves. I will guarantee you that they would quickly see what a farce it is to think that $9.50 an hour is a “living wage”.  I understand that some legislators will say that $9.50 an hour is a start, but it is similar to telling a drowning person that you will remove a lot of the water in which they are drowning, but the water will still be over their head, and thus they will continue to drown.  It is unconscionable to me that we have “working poor” in this great state of Minnesota, as well as, in the rest of the country.  What can we possibly be thinking?

    • Nancy says:

      February 25, 2014 at 9:53 am

      I have a hard time reading this Retha, most legislators work for less than a dollar an hour if you take in consideration the time they put in on committees not during the session and the time they are on the clock every time they go out in public.  Most have a second job and have their spouses work too, I think a bit of compassion goes along way all the way around.

  • John Van Hecke says:

    February 25, 2014 at 9:40 am

    Here’s a potent argument for increasing Minnesota’s minimum wage to $9.50 an hour. It will affect 357,000 Minnesotan workers; 57 percent of those are women. Passing a minimum wage increase will have a direct, positive effect on over 200,000 female workers and their families. The wage boost represents a $470 million increase in spending power. Almost all of that money, since its earned by minimum wage workers now, will translate immediately into consumer spending. How come no one is talking about this?

    • Lee Egerstrom says:

      February 25, 2014 at 9:54 am

      The $470 million in additional purchasing power is the baseline measure. Add to that savings to the local and state economies that will come as a result of the $9.50 lifting some, though not all, of our working poor out of poverty.

  • Joe says:

    February 25, 2014 at 9:45 am

    While data drive policy writing, emotion and people’s stories drive policy change.

    • fred says:

      February 25, 2014 at 10:04 am

      are these people talking on this page concerned with with the wage level just talking to each other? if you can manage other peoples business that well more power to you. I would like to see it set at $17.76, for a start, and every 4TH OF JULY adjusted up.

  • Mark Freeman says:

    February 25, 2014 at 9:54 am

    This may seem redundant, but if in fact we choose to raise the wage, won’t that also improve the amount of disposable income brought into the retail sector?  Won’t we see a potential impact in demand on goods and services because more people have an adequate amount of dispsable income (supply) to make an impact and improvement on the economic situation of all?

    Or does it go back to we, as a society, “spinning our wheels” because the wealthy business owners will just shift the cost of the wage increase into an unequal amout of price increases?

    Maybe we need to look more at a total shift away from demand for a minimum wage, to an actual determination of what we need for a “Living Wage”?  Or even more radical, how about we look at a “maximum Profit” level for ALL businesses?

    • Nancy says:

      February 25, 2014 at 10:07 am

      I was thinking on this line a couple weeks ago.  If the min. wage is increased, cost of good and services, particularly those goods and services that rely on min. wage workers, will go up, so it will all equal out to this same place again down the road?  I don’t have a solution, but the idea that we are at least talking about this I think will help immensely.

  • Lee Egerstrom says:

    February 25, 2014 at 10:01 am

    Add the following to the list of things that John refers to as not being said. While I doubt the subject will even come up at the Legislature, hearings on raising the minimum wage ought to spark discussions on best and worst ways we subsidize businesses and entire business sectors. When the working poor must be helped by federal (SNAP), state and local assistance programs, the burden of meeting basic needs is shifted from business payrolls to the tax rolls. Keeping wages well below poverty lines is an enormous, non-transparent business subsidy that has the additional negative impact of slowing the economy.

    • Mark Freeman says:

      February 25, 2014 at 10:10 am

      I agree totally with Lee.  As we see businesses, especially oil, receive huge tax subsides, but we do not help the least among us, it sems that we will eventually reach a point when most of us in the society will have nothing. 

      Could this be a receipe for economic disaster, or even a potential economic/social breakdown?

      We need to be more concerned with PEOPLE and less worried about business health, and profit levels and margins.

  • Christeen Stone says:

    February 25, 2014 at 11:47 am

    After reading through the many comments and agreeing they do cover all angels and I agree with their opinions, I would like to give you my point of view. I came to Minnesota at age 19 having worked in San Antonia’s up scale Department store. My salary was $10 per week, I worked a 54 hour 6 days per week job, fortunately was still living at home. We had been approached by a Union Representative and were told if we talked to them we would be fired.

    I went to work at W T Grants here for twice as much and a 42 hour 5 day work week. As a result I was able to buy myself a fur coat and all the other necessities for that blizzard of 1940 and I am still a Minnesota resident. It makes me sad to see we too have lost all those good principals and are willing to let big Corporations rule us. I sincerely hope we can get at least the $9.50 wage with a study required, to bring it up to a living wage. My Bible tells me “The workman is worthy of his hire”. Taxpayers would not be subsidizing the Corporations and Businesses and the people who work could do so ,with pride they were paying their own way.

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