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Minnesota 2020 Journal: A Guy Walks into a Bar

July 16, 2010 By John R. Van Hecke, Executive Director & Fellow

Tom Emmer articulates a conservative public policy vision for Minnesota. Since Emmer is the Republican-endorsed, conservative candidate for governor, he offers Minnesotans a clear choice for future state policy direction. Will that vision move Minnesota forward or cause further retreat?

Emmer presently represents State House district 19B, an exurban Wright County area curving north and west from Delano. He's a charming, engaging guy. He's also deeply conservative, winning the state GOP's endorsement due to all three factors.

Like many elected and aspiring public officials, it's difficult to separate Emmer's politics from his policy. But, it's not Tom Emmer's politics that concern me; no, it's his policy views.

Over the Fourth of July weekend, Emmer created a small public firestorm by declaring that some restaurant waiters earn more than $100,000 yearly. The hosting restaurant owner quickly refuted this observation
by noting that under very limited, optimal conditions, wait staff could possibly realize a yearly six-figure income, but that no one in his restaurant made that kind of money. Still, it opened a door for Emmer to call for a "tip credit" against the state's minimum wage.

Emmer, in the state legislature, opposes increasing Minnesota's minimum wage. In calling for a tip credit, Emmer advocates lowering the minimum wage for tip-earning waiters and waitresses.

This is the policy issue's nut. It's not the outrageous declaration that restaurant waiters make too much money, somehow robbing restaurant owners of honest income. Emmer's high-income waiters assertion neatly fits into the pantheon of hoary conservative tropes like the "welfare queens" myth. It's a red-herring argument constructed simply to advance a fallacy through distraction.

Since some restaurant waiters earn a high income, this line of reasoning suggests, restaurant owners should be excused from state laws requiring a minimum wage. The high-wage waiter declaration is introduced to emotionally inflame the listener, allowing the policy fallacy to slip past unnoticed. Except that, in Emmer's case, everyone and their sister noticed.

This week, Emmer clarified his remarks and, hoping to recast hospitality industry workers in a pro-conservative frame, suggested that waiters' tips be exempted from income tax liability as a positive trade-off for lowering minimum wage standards. However, under this proposal, waiters stand to lose even more.

My Minnesota 2020 colleague, Fiscal Policy Fellow Jeff Van Wychen, explores the consequences of this conservative public policy shift. Rather than sling around rhetoric, Jeff ran the numbers on Emmer's proposal.

"If we make the assumption that the income of most waiters/waitresses are taxed at the first tier rate of 5.5% (which seems likely), then exempting tips from the income tax would generate an extra 55 cents per hour in take-home pay for the waiter for each $10 in tips (i.e., $10 x 5.5% = 55 cents). 

"Thus, if the minimum wage would drop from $6.15 (the minimum for a high gross establishment under MN law) to $2.13 (the federal minimum for workers who make more than $30 a month in tips), then the waiters would have to receive average hourly tips of $73 in order to break even.  This seems likely a fairly high average hourly tip level for most waiters, so I am guessing that most waiters would be worse off under the Emmer proposal as you describe it."

The larger net effect of Emmer's conservative public policy proposal forces Minnesota further into a galloping economic retreat. The current conservative movement isn't expanding liberty or extending freedom when they insist that government and the necessary taxes required to fund community services are bad. Instead, they're seeking to selectively shift private industry's costs onto the public's shoulders. In fact, only an activist government can implement and enforce conservative policy. The conservative movement repeatedly reveals that it is remarkably comfortable with government's expanding reach provided that government's authority enforces conservative policy.

Eight years of Governor Tim Pawlenty's conservative policy leadership has created a declining, retreating Minnesota. Emmer's vision won't simply extend Pawlenty's direction; it accelerates it. In this century's first decade, we've drifted to the middle among a pack of states that we used to lead. Emmer's policy priorities will lead Minnesota in a sprint to the bottom.

Minnesotans want a progressive policy direction, repeatedly expressing support for strong public schools, affordable health care, a robust transportation infrastructure, and real economic development policy. We are adrift when we should be pressing forward. Only effective, progressive public policy leadership can move Minnesota forward. Conservative policy won't be any better for Minnesota than it will be for Minnesota's waiters and waitresses.

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