Minnesota’s minimum wage rises to $9.50 an hour today, capping a three-phase increase from $6.15 an hour prior to 2014. Small employers—firms with annual revenues under $500K—get a break, paying $7.75 an hour.
If we believe South Dakota District 3 Senator David Novstrup and his Republican naysayers, Minnesota’s economy must be going to heck right about now.
Some question whether the recent minimum wage increases have hurt job growth in the state. Recent studies indicate the answer is no, according to Ann Markusen, who directs the Humphrey School of Public Policy’s Project on Regional and Industrial Economics. For starters, she said raising the pay of lower wage workers helps stimulate the local economy.
“Because you are putting more money into the lowest paid workers’ pockets, they are going to spend it and they are apt to spend it in their own communities,” Markusen said [Heather J. Carlson, “Minnesota’s Minimum Wage Jumps to $9.50,” Rochester Post-Bulletin, 2016.08.01].
But employers are going to lay people off, and there will be fewer job opportunities, right?
Again, research says no:
In addition, she said most of the jobs that pay minimum wage are in retail, personal services or the food industry and are selling to people locally. When the minimum wage goes up, all the competitors in the community are impacted so no business has a competitive advantage of over another. Markusen said research has shown that instead of laying off employees when the minimum wage goes up, employers are apt to boost training to try to increase the productivity of their workers. They will also absorb a loss in profits and sometimes will increase costs of products slightly [Carlson, 2016.08.01].
As in South Dakota, the economy in Minnesota will likely cruise along without any harm from the higher minimum wage. Remember that when you vote NO on Referred Law 20 this November and protect the minimum wage for South Dakota’s young workers.