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Who Benefits: Demographic Impact of a $9.50 Minimum Wage

October 08, 2013 By Raise the Wage Coalition

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If Minnesotans receive the minimum wage raise they deserve, working people would benefit from a $470 million spending power increase, giving a much-needed boost to sales at businesses statewide. Women would be especially impacted, as they comprise 57 percent of those likely impacted by a potential $9.50 minimum wage, according to Raise the Wage Coalition member JOBS NOW.

Examining Minnesota employment data for workers whose wages are below $9.50 (and those slightly above who would likely see a raise due to the "spillover effect"), JOBS NOW estimates that a $9.50 an hour minimum wage would mean a raise for 357,000 Minnesotans.

This includes more than 200,000 women, who would gain a $256 million annual purchasing power boost. A $9.50 minimum wage would also would begin helping Minnesota address the growing poverty disparity between white Minnesotans and people of color. More than 83,000 workers of color would see a raise, including 22 percent of black workers (23,548), 29 percent of Hispanic workers (30,337), and 17 percent of Asian workers (29,714).

A $9.50 minimum wage increase would boost wealth by $31 million for Minnesota’s black community and by $43 million for the Hispanic community, according to JOBS NOW findings.

The organization’s report finds 77 percent of workers potentially impacted by a $9.50 wage are 20 years old and above, dispelling the myth that teenagers comprise the majority of those earning minimum wage.

Raising the wage is also important for the state’s broader workforce because its economic rebound has been heavily fueled by low-wage service sector jobs. Forty-five percent of all Minnesota’s recent job openings are part-time, according to the Department of Employment and Economic Development’s latest jobs vacancy survey.

Raising the wage to $9.50 would put Minnesotans at the bottom of the pay scale back on par with 1960s inflation-adjusted wage levels. Had the federal minimum wage maintained its purchasing power since 1968, it would today be over $10.70 an hour, or $22,256 a year for a full-time worker, according to the US Bureau of Labor Statistics. Furthermore, had minimum wage kept pace with average productivity gains, as it did in the decades leading up to the 1960s, it would today be about $22.00 an hour.

Instead it has stagnated and is nowhere near enough to even meet basic living standards in Minnesota. JOBS NOW Cost of Living research shows that in a Minnesota family of four with two full-time working parents and two children, each parent needs to earn at least $14 an hour to meet even basic needs.

Raise the Wage Coalition urges the Minnesota Legislature to act on policy that raises the state’s minimum wage to $9.50 an hour early in the 2014 legislative session.

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24 Comments:

  • Mike Downing says:

    October 14, 2013 at 8:34 am

    This article asks the question “What do people deserve?”. In this context, I deserve:
    1) An increase in my pension (I haven’t had an increase in 10 years.).
    2) My property taxes decreased to 2% of my income (They are 10% of my income.).
    3) My mom does not deserve the Alzheimer’s Disease that she has struggled with for 8 years.
    4) Our daughter does not deserve the continued harassment and bullying from her ex-husband.
    In this context, we all think we “deserve” more.

    The better question is “What do people deserve when they have rejected getting an education or improving their skills?” We all had minimum wage jobs when we did not have an education or skills. These jobs helped us understand we had to increase our education and improve our skills. Today we live in a vastly more technical world where we now compete against other states and other countries and we must therefore improve our education and skills..

    The only solution to a “livable wage” is getting an education and skills necessary to earn a “livable wage”.

    • Dan Conner says:

      October 14, 2013 at 10:28 am

      Mike, your response ignores facts included by the writer.  As she states, 77% of the minimum wages workers are over the age of 20.  While that is not too late to change your mind about education, our country has experienced a major demographic shift over the years.  Now, a preponderance of people are relying on minimum wage jobs to live.  The die was already cast about education.  These minimum wage workers are now relying on their pay to live and feed a family on.  Also, the US has moved a significant portion of its higher paying manufacturing jobs off shore.  China and India are now the chief beneficiaries of that.  Many of these laid off manufacturing employees rely on minimum wage jobs to live.

      The excessively love minimum wage jobs not only pigeon-holes the wage earner in poverty, but his/her family as well.  The children of these parents don’t have a chance at the American dream, compared to the relatively spoiled children of prosperous parents.  Our country has lost a preponderance of its economic mobility because of this.  Our country used to lead in this are years ago, and now we are the worst among industrialized nations.  Instead, we seem determined to preserve a class structure permanently differentiating the poor from the rich, with no chance of movement.  Frankly, it is a crime that our country wastes enormous intellectual and manufacturing potential by pigeon-holing a significant part of our population in permanent poverty, with no opportunity to exit.  We need a GI bill for the poor.  We need to get back to the intent of our nation where we are united and willing to help each other, lest we die by ourselves.

      What galls me is the incredible selfishness of some in our society.  The “i’ve got mine, and to hell with you,” is not the rock we want to build the foundation of our country.  Our country prospers most and the people are happiest when everyone’s boat is floated.  No one is talking about the hammock of laziness.  Instead we must give EVERYONE opportunity.  It is their choice to use or not use it.  This might also serve as a great anti-crime program.

      I think the rich might worry someday that their lax gun policies might enable the poor to buy guns to use against the rich and their businesses.  Who knows, more Dillingers and Bonnie and Clydes?  After all, what do the powerless and hopeless risk?

      • Ginny says:

        October 14, 2013 at 12:59 pm

        I see Mike’s comment as another one of the conservative “values” of everyone is on his or her own. Pull yourself up by your own bootstraps—too bad if you don’t have straps or boots. That’s your own fault.
        It’s this kind of attitude that is undermining our society. This is a systemic problem. Your personal problems have little or nothing to do with what you “deserve” or don’t deserve. That just muddies the water and does not logically and rationally belong in this discussion.
        I believe the U.S. is declining as we continue on in this selfish way. We can’t flourish as long as some people are considered too “undeserving” to help. If people don’t have enough money to live on, with one job, they have no money to buy things. Our society rests on consumerism—unfortunately—so what happens when people can’t buy? Watch as we crash again.

        • Dan Conner says:

          October 24, 2013 at 12:02 pm

          I agree Ginny, but even these “rich” don’t pull themselves up by their “bootstraps.”  70% of the wealth in our country is INHERITED.  The rich didn’t work at all to get that.  They were just lucky enough to come from the right womb.  Most of the richest people in our country make the vast majority of their money from INVESTMENTS.  Not earnings from work, but investments.  Look at the Waltons for example.  First, they inherit their money and then they kick back in their hammock and watch their unearned income roll in.  Investment income has to by taxed more heavily, heavily enough that it will be reinvested.

          I have long contended that it is the rich that are the “takers.”  Today, 25% of the big corporations pay NO taxes.  In fact, many even get refunds and credits.  Today, large corporations pay less than 10% of the taxes in our country.  40 years ago they paid over 25%.  We have already undergone a reverse Robinhood” society, where the people who already get too much are incentivised to get more.  The poor are further beat upon and disincentivised to get LESS.  That’s criminal and unpatriotic.

    • Ginny says:

      November 6, 2013 at 12:08 pm

      Mike
      We are talking economics here, and we are talking about human beings. We are not talking about devastating diseases and social issues that plague almost every family. I don’t know why your relative has to put up with an abusive ex. It is probably a public policy issue—domestic violence—although maybe you think this is her own personal problem and not a societal issue and that she should just deal with it by herself. Same with disease. Is this a societal issue. Yes, it is. And individuals cannot deal with it on their own.
      “Deserve” is the label you use for all of these conditions, including low-wage work. Low-wage work is NOT an individual problem. It is a societal problem. Not everyone does have opportunity, and you can simply look at the statistics to verify this. Opportunity means having enough money to go on to school and enough time to go to school, something not open to those who are working low-wage jobs (maybe 2 or 3) and raising a family. Some super-motivated people, usually those with some support (here comes society again) can do it, but most of us can’t. I put myself through school, but it was much cheaper then, I didn’t have a family, I could manage a job and school. That is not available to everyone.
      The real solution to a livable wage is to force companies (because they will not do this on their own; look at the vast sums of money they spend to defeat these measures) to pay a decent wage and provide decent benefits. Companies have increased their profits hugely in the last few decades; wages have gained almost nothing—I believe the figures are about 1.something%. Meanwhile, and I quote from that radical media outlet ABC,  businesses have been relentless in cutting costs. They’ve also stockpiled cash rather than build new products or lines of business. And they’ve been earning larger chunks of their profits overseas. . . . Corporate profits equaled 12.5 percent of the economy in the April-June quarter, just below a 60-year high reached two years ago. Profits of companies in the Standard & Poor’s 500 have nearly doubled since June 2009. Big companies like Kellogg, FedEx and Best Buy have been slashing costs in the face of slowing revenue.  Despite sluggish revenue, their profits are up.”
      So, company profits are way up (these figures are just for this year; over a 20-year period they are monumental) but they do not want to pay a living wage because it cuts into those profits. Meanwhile, workers’ pay has virtually remained stagnant for 40 years. Workers are making LESS than they did 40 years ago. Did you know that?
      Tough about your taxes. Don’t whine. You have a job that apparently pays well.

    • Jenn says:

      April 14, 2014 at 10:01 pm

      I work a full time job in corporate America where I have sacrificed and climbed the corporate ladder.  In addition to my full time job I own a business that I have worked incredibly hard to build.  Now my business in northern Minnesota will be forced to close its doors due to the increase in minimum wage and the seaonsality of my business. Quite the opposite of all of the predictions will occur…three employees will not benefit, they will lose their jobs.  Jobs they love and that fit their needs not as a primary source of income but a passion.  From the lowest minimum wage to the highest…there is no happy medium just pendulum swinging and fingers crossed that this approach inflates the economy.  Oh and did I mention that the $12k in sales and use tax I pay Minnesota per year will also cease.  Ignorance is alive and well I the state capital.  Instead of planning for the mandated and severe increase in minimum wage, I am planning the closure of my Bemidji based business.  Thank you for crushing my dream of business ownership. 

      I have done well for myself, but I am not selfish.  I recognize that I am blessed and so I give back to my community.  As a small business owner, I would have been able to budget and support a marginal increase for my employees, who I care deeply about.  The outcome is beyond marginal and beyond the ability of my business to maintain.

  • Rog B says:

    October 14, 2013 at 9:54 am

    Define “livable wage”. 

    How can an individual make enough money to pay the bills, feed the family, and afford a post-high school education on minimum wage?  Your solution is to get educated.  How?, when you don’t earn enough for the basics to live on???

  • Mike Downing says:

    October 14, 2013 at 1:25 pm

    Liberals believe everyone (except for the successful) are victims and deserve something from the successful, i.e. government redistribution via taxes from the successful. Liberals believe no one is responsible for their own choices and decisions. Liberals believe family is government. Liberals do not believe in the principles that this country was formed upon by our Founding Fathers.

    Conservatives believe the physically and mentally challenged are true victims and truly deserve a hand up from society. Conservatives believe in individual responsibility and that we and our family are responsible for our choices and decisions. Conservatives believe in the principles that this country was formed upon by our Founding Fathers.

    • Ronald Leurquin says:

      October 15, 2013 at 12:56 pm

      Using such a broad brush to paint everyone into just those two camps makes it hard to have any sort of conversation or ability to find some areas of agreement.

      Since Reagan there has beena war on the middle class going on, and the upper end of the income scale has quite handily been wining.  This is not a liberal/conservative thing at all, just reality.  Maybe I could find different words to use in place of war on the middle class, but if thats the sticking pint then you dont really want to find any common ground anyhow.

      We dont need to raise taxes on the rich so much as we need to have more equitable taxation.  some dont pay ‘income’ taxes becuse they dont earn enough to pay it.  That doesnt mean they are deadbeats or vicitms, they still pay plenty of other taxes that many dont even realize they pay.

      Ive been a strong advocate of redefining ‘income’ and then having a flat tax to fund government.  My proposal would be to define anything coming into your pocket of monetary value be defined at ‘income’.  this way stock options would have a value and be taxed, inheritances would be taxed, gifts would be taxed, capitol gains would be taxed, dividends and interest would be taxed.  With all that income to tax, the rate could be quite low.  I would be very inclined to eliminate all deductions of any kind, but a open to a discusion on keeping some of them if there is a good enough arguement to be made for keeping them.


      Another posible scenario that Mike might like would be something on the order of separate but equal.  Conservatives can pony up thier taxes to pay for the things they approve of, and then only partake of those things, and the liberals can do teh same.  Let me pay for universla health care for liberls, abortion for liberals, solar energy tax incentives for liberals, etc, etc, etc.  Let Mike pay taxes for corporate welfare for conservatives, wars that the conservatives want, etc, etc, etc.  And somewhere in there would be some taxation of us both for things we both use like roads, police, fire, etc.

      Unfortunatley i think there would be too much problem setting something like this up for it to work.  And then figuring out what the rules are for swtiching teams/sides when you star to think the other side is better, well…...

      Eh, why bother.

    • Dan Conner says:

      October 21, 2013 at 9:27 am

      Arrogant and condescending responses are destructive to the discussion.  Those arrogant souls have no idea about what “Liberal” stand for.  Hell, they don’t know what conservatives stand for, except they associate it with selfishness, and that’s fine with them. 

      As far as responsible is concerned, conservative are a far cry from that.  Responsibility doesn’t mean a champion of self-centeredness.  It means one able to favorably impact your environment and others around you.  I don’t think selfishness, greed, and arrogance are favorable.  Successful?  I think success is a quiet confidence and the propensity to not “blow your own horn.”  There is an insecurity problem with those who obsess about success, leaving a question about whether they are successful.

      And “founding fathers?”  I think conservatives who like to name drop, better first read about what these “founding fathers” and our Constitution stand for .  They also might try the Declaration of Independence.  The founding fathers stood for binding a nation of people of common interests and goals together, in an effort to achieve aspirations.  It is not the vision of selfishness with people hoarding their “stuff” in some childish “mine-mine.” attitude.

      The conservative system for judging mentally challenged and “true victims” is a joke.  They have no definition, except to stoop to the lowest common denominator and deny them all.  I seem to notice that the truly successful people, e.g., those that have actually earned and built their wealth from nothing, are the ones who empathize with those still struggling to make it.  It is those who have inherited, or been bless with much parental financial help, that seem most resentful of others.  It truly is a cognitive dissonance. It’s as if they have an insecurity about their own contribution to society.  They demean others, in order to feel better about themselves.  And what group is easier to pick on than the poor?  It’s kind of like dragging others down to their level.

    • Ginny says:

      October 28, 2013 at 4:00 pm

      As soon as you start making wide generalizations like this, you completely undermine anything you say. It is arrogant and completely inaccurate to, 1. lump everyone into a single category as to what we or they or anyone believes. It is even more arrogant to tell us what we believe. We all know better.
      If you want to give your opinion, say so. Use “I” statements. If you believe that the only victims are those physically and mentally challenged (and who defines that?), all right. But don’t tell us what all liberals or all conservatives believe. That’s just nonsense.

  • Mike Downing says:

    October 15, 2013 at 12:34 pm

    Michael Barone has a new article out today: “What to do About America’s Low-Skill Workforce”. It is based on the Organization for Economic Cooperation and Development’s (OECD) report on adult skills, based on 166,000 interviews in 24 economically advanced countries in 2011 and 2012.

    “The OECD report finds a wider range of skills in the U.S. than in other countries surveyed. Americans with only high school educations perform worse than their counterparts in all but one other nation.”, i.e. the U.S. was 23rd out of 24 countries…

    “The OECD sensibly calls for better education and more adult skills training.” Nowhere in the report is a minimum wage even brought up as a solution. Education and improving skills is the one and only solution…

    http://townhall.com/columnists/michaelbarone/2013/10/15/what-to-do-about-americas-lowskill-workforce-n1723593/page/full

    • Ronald Leurquin says:

      October 15, 2013 at 2:21 pm

      Intersting article, too bad it was on sucha right wing site.  I prefer some moderation wtih my information rather than a Fox like slant.
      There was a lot missing from the article as far as looking at the whole picture though.  Yes, education in the US leaves a bit to be desired, and i wont try and offer soluytions to that as its well outside of my realm of knowledge.  We need to better educate our youth, period.
      As for emmigration, well, maybe we could start by punishing emplyers for emplying non-documented workers rather than all the other ‘border patrol’ kinds of efforts.  If they couldnt find work here do you think they would still come?  personally I thin far fewer of them would come if they knew they wouldnt be able to find work.  How do we stop that?  Punish employers.
      Try going to some ther country and get a job withouth the right papers?  You likely wont, period.
      Minimum wage didnt make the cut in that article.  Neither did a discusion on they types of jobs available in any of those countries.  Many other countries do a far better job of protecting jobs for thier citizens than the US does.  We should be promoting jobs in the US and creating incentives for emplyers to create jobs here, nto in some third world country where there are few regulations on anything.  dont blame unions for that, or government regulation; blame free trade laws and lack of tarrifs, or even a requirement of Made in America for governemtn contracts.

      I could go no here, but not sure anyone is actually out there listening.
      Would have thought this issue would have garnered more conversation.

    • Dan Conner says:

      October 24, 2013 at 12:10 pm

      The joke of the conservative obvious assessment of education and poverty, is that they further defund education and demean the poor.  And of course, only in the minds of the Tea Party does less educational opportunity and further demeaning help the poor achieve more.  Instead, I believe the rich and ignorant Tea Partiers have no intention of helping the poor.  They want to maintain a social and economic disparity.  After all, if helping others means less to them, they screw everyone else.  The epitome of selfishness.

    • Dan Conner says:

      October 25, 2013 at 1:55 pm

      Where is Mike now?  I guess the recent news of disintegration of the Republican Party is causing him worry/doubts.  How long can selfishness exist without others to rationalize it with?

  • Peter Brown says:

    October 24, 2013 at 4:21 pm

    Dear Friends at Raise the Wage Coalition - - -

    Thanks for tackling this important issue.
    1.  Has the Raise the Wage Coalition considered supporting the $15/hr minimum wage level advocated by some? 
    2.  If so, what factors did the Raise the Wage Coalition consider when deciding to go for the $9.50 level rather than the $15? 
    3.  Was there dissent among Coalition members over that decision? 
    4.  Is there a list available of Coalition members? 
    5.  How does an organization become a member of the Coalition?
    6.  Does the Raise the Wage Coalition have a position paper explaining why $9.50 is the best level to advocate at this time? 
    7.  Or does it have links to papers/reports that discuss the best level to advocate for at this time? 

    Thank you for responding to these questions. 

    Peter Brown 612-824-6533

    • Dan Conner says:

      October 25, 2013 at 1:54 pm

      1. Not only do I support $15/hr, I would support an inflation adjusted $20/hr.  Not only would this provide social justice, it would spur economic growth by increasing consumption.
      2. First, economic justice and fairness and, second, a needed economic shot in the arm.
      3. ???
      4.????
      5. ????

      I am sick and tired of the rich, and people who are financially satisfied, from justifying screwing the vast majority of the people in our country to perpetuate their disparity of income.  It is a rationale for gross selfishness.  They choose to be a big cog in a little, little gear, instead of a nation building smaller cog in a big, big gear.

  • Kevin says:

    November 1, 2013 at 7:50 pm

    I think that people on the bottom of the pay scale do need help but raising the minimum wage is not going to help them.  It is going to keep them in the same position they are currently in and not benefit very much from the boost.  My reasoning is quite simple.  Lets say we have a woman of Hispanic origin that is making the current federal minimum wage of $7.25 per hour.  Now if we raise the minimum to “help” her she would get a raise of $2.25.  This in my opinion is a good thing but there is a larger issue that is being over looked and that is some one has to pay for the raise.  So if she gets an additional $2.25 per hour then the cost of goods that her employer manufactures has to go up at least $2.25 per “x” number of units to compensate for the rise in pay.  Thus maintaining the same position she is currently in at a higher rate of pay.  It also pushes those of us that are in the middle closer to the bottom thus making the numbers for poverty up instead of down.  The only solution I see to making things more fair for everyone below the top is to eliminate the greed that has created this situation in the first place.  I know this will never happen in our society.

    • Ginny says:

      November 3, 2013 at 8:29 pm

      Kevin
      Your comments are pure speculation. The evidence says otherwise. The National Employment Law Project found that two-thirds of all low-wage workers are employed by large companies rather than small businesses, and that the vast majority of the largest low-wage employers in the country are earning strong profits and can afford higher wages.  Since the minimum wage has lost so much value over the last several decades, employers today are actually being allowed to pay less – in real dollars – than they were in the late 1960s.
      Nor does the evidence support the claim a higher minimum wage will result in much higher costs. Instead of what your mythical example suggests, costs of goods or service will rise about .21 per cent (compared to current .20 percent). People did not lose jobs as a result.

      But what does happen is that workers get closer to a wage that allows them to live on their work. Fewer people will have to work 2-3 jobs. Other consequences: we know that wages of some companies, e.g. Walmart, are so low that Walmart helps their employees sign up for government benefits, like food stamps. That means WE, the taxpayer, are paying that difference. If people do not have to work so many hours at a couple of jobs, families can be strengthened because parents are home more while children are home. Fewer kids come home to an empty house. That can cause trouble. Children need a stable homelife and if they experience food insecurity—or even homelessness because of the low wages of parents, they are probably doomed for life—that’s what the statistics say.
      And your evidence?
      Many employers and small businesses, in fact, support minimum wage increases.

      • Kevin says:

        November 5, 2013 at 1:11 am

        The point of the comment made is simply if a company wants an 80 percent profit margin or what ever they decide they want then that is what they will get even if it means raising prices to attain it.  Then the cycle starts all over.  I never stated I was against raising the minimum merely that there has to be a better way to break the cycle.  I however am also not too keen on being back in that boat if the minimum is raised.

        • Dan Conner says:

          November 6, 2013 at 10:27 am

          Kevin, I think you need to take and economics course.  First, competitive businesses don’t set prices based on their “wants.”  It is the markets that determine price.  In other words, when a business raises prices they try to calculate the lost sales.  If the business is highly competitive, raising prices might cause “zero” profit.  It all depends on the elasticity of demand.  You know businesses don’t just sit around and say they’re going to make “X” profit and therefore charge “X” price.  They can charge only what the market allows.  In many cases businesses do not pass along ANY increases in cost.  That’s because their market is very competitive, as it should be in a free market economy

          Your whole premise is flawed..

          • Kevin says:

            November 6, 2013 at 10:58 pm

            I have taken AN economics class and understand the concepts of supply and demand.  I also understand quite well the principles of how to operate a business.  I am just going to say this one last thing because no one seems to get what I am trying to get across.  I have worked a multitude of crappy dead end minimum wage jobs and am quite aware of the percentages that are referred to as turn over most times it is in the 1000+ percentile.  Apparently I am just too stupid as I seem to be getting called in an indirect manner to understand the fact that raising the minimum wage up to a “living” wage is apparently a good thing not to mention I am an evil conservative.  I HAVE STATED TWO TIMES AND NOW THREE TIMES THAT I THINK RAISING THE MINIMUM IS A GOOD IDEA.  I JUST THINK THAT THE PEOPLE IN THE MIDDLE WAGE RANGES ARE GOING TO GET PINCHED IN THE PROCESS.  I give up on trying to explain my thought process any further.

    • Dan Conner says:

      November 4, 2013 at 9:25 pm

      Kevin, your argument is flawed from because labor doesnot represent the total cost of goods sold.  In addition, ther is the economic proclivity of employers to not pass off the entire increase in cost, especially in these times of high profits.  In order for employers to remain competitive, they absorb a part of increase in cost of business.  In short, increases in labor cost usually results in a very small increase in product cost.

  • Ginny says:

    November 6, 2013 at 11:53 am

    What does it COST to pay low wages that people cannot live on? To start with, you the taxpayer pays to try to provide a decent income for companies who are too greedy to pay a living wage. Some companies even help their low-wage workers get federal benefits like food stamps.
    You also pay in higher prices for high turnover. Every low-wage employer has high turnover as its workers move on to better jobs, if they can find them. That means when you walk into a McDonald’s or a WalMart (if you do, I never spend money at those places) you to often get general incompetence and indifference. Think these workers’ hearts are in their job if they are paid wages they can’t live on, and are mistreated (according to things I’ve read about many of these companies some of whom force employees to work off-the-book and refuse adequate bathroom and lunch breaks?
    The economy suffers when people do not make a decent wage. They are not paying much in taxes; they are usually unable to move ahead much because they have few means to move on to get a better education and they are too exhausted from working all the time to go to school or take classes and raise kids. Did you know most low-income workers are adults and have children? What kind of a world are you going to see when those kids grow up and continue in those footsteps because they do not have opportunities, either?
    And who wants to live in such an inhumane world? Well, we are doing so right now. Welcome.