Minnesota Raises Minimum Wage to $9.50; No Economic Harms Foreseen

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.

Minnesota experts say no, they’ll be fine:

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.

11 Responses to Minnesota Raises Minimum Wage to $9.50; No Economic Harms Foreseen

  1. Roger Elgersma

    some assume that all there is to it that if you raise wages prices will go up to balance the business’s books. But your point that those wages get spent is the other half that also will affect the balance in the situation. Die hard righties tell me there is only one side and die hard lefties concentrate on the workers needs. Both need to balance together before we find the optimum min wage.

  2. I haven’t heard of any big layoffs in MN, just the usual IBM moving its jobs overseas which they have been doing the last 25 years.

    And those Vikings have a 1.2 billion dollar palace that I know you So Dakota fans want to see. Come on over and spend your money!

  3. mike from iowa

    Wingnut disproven myths die hard. Raising the minimum wage does not kill jobs. Cutting taxes does not increase tax revenues. Obama is not a Muslim from Kenya. etc., etc.

    Simple economics people, when the poor have a few extra bucks they tend to spend them immediately, therefore increasing economic activity in their cities and everyone can and will benefit.

    Now if they would only double the minimum wage, maybe the poors could set aside a few bucks for retirement and post high school education. What the hell good are medical or educational savings accounts for poor people who barely scrape by paycheck to paycheck?

    Another wingnut myth bites the dust, but, won’t die away completely.

  4. Whether an economy can handle a higher minimum wage depends on many economic factors. However, if min. wage doesn’t keep up with inflation, then the rich are making too much money off the backs of the poor. Period.

    Bush’s tax cuts for the wealthy did nothing more than increase Mercedes and Rolex sales (and similar luxury brands). Those tax cuts alone, which Republicans pushed to be made “permanent” (which means “until the very end of time in the universe”) -LOL- restructured our entire economy to favor the super rich. This ‘New Trump Party’ fought like mad to keep the sunset clause written into those tax cuts from being enacted – and to my nausea – succeeded. In 2012, gosh darn Obama signed the American Taxpayer Relief Act, which reinstated many of those asinine tax cuts (as a compromise with the Republican House of Representatives).

    While we STILL give the MEGA-wealthy thousands upon thousands of $ of tax cuts, I can’t even believe that it’s even remotely tough to sell a comparably tiny amount of additional income to the absolute poorest Americans.

    To be extra clear, because Obama and Democrats can’t fully repeal the Bush tax cuts, we simply need a MUCH higher minimum wage. The wealthy may as well be getting away with murder as long as the poor struggle to feed their families and/or buy diapers (conservatives, go ahead and enjoy milking that – out of context – you Trump loving mad-people).

  5. Why not set a national minimum wage at $100 / hour?

  6. With one exception, you Timoteo. You should get the $9.50 with a freeze.

  7. Roger, I agree that an optimum minimum wage exists. It’s higher than $0. It’s lower than $100. I don’t know what the optimum is, and that optimum probably fluctuates yearly (monthly? daily?) with the numerous economic factors Adam has in mind. If we define optimum has maximizing basic worker protection while minimizing economic impact, the empirical data so far suggest that neither South Dakota nor Minnesota have surpassed the optimum minimum wage.

    Timoteo, Minnesota isn’t raising the minimum wage to $100. They’re putting it at $9.50 and, like South Dakota, pegging it to inflation, thus taking into account at least one economic factor.

  8. bearcreekbat

    An optimum minimum wage is a wage sufficient for any full time employee to survive – enough to pay for food, shelter, and the other things that are needed so the employee can work – without other public assistance or welfare benefits.

    It is understandable why some employers oppose such a wage as this type on minimum wage would undermine the employer’s dependence on welfare subsidies to their employees. Every person willing to work a full time job deserves enough compensation to survive. Any employer should have to pay a survival wage to each employee rather than depending on the state to supplement the employee’s wages.

  9. Let it also be known that it’s good for business owners when more customers have more money to spend. New Trump Party wants you think that every time you help the poor you have to screw the rich – it’s defunct oversimplified logic.

  10. I don’t understand how so many so-called economic experts miss the simple truths espoused in this article.

  11. Mark, people have a great capacity for believing what they want to believe, or what their party leaders want them to believe.

    BCB, I am open to the argument that a man’s sweat for 40 hours a week should pay enough to feed, clothe, house, and insure a family, regardless of the nature of the work.

    Adam, agreed: helping the poor helps everybody… except for maybe a certain small elite who depend on keeping the masses so tired and downtrodden that they don’t have time or spirit to watch what’s really happening in politics and vote the bums out.