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Report: $9.50 minimum wage in Minnesota would give raise to 357,000

Joe Sheeran of Minnesota 2020 makes the case Thursday, Oct. 31, 2013, at Dorothy Day House of Hospitality in Moorhead, Minn., for a minimum wage in Minnesota of $9.50 per hour by 2015. Michael Vosburg / Forum Photo Editor

MOORHEAD, Minn. - With new research in hand they say disproves some myths about the harm a minimum wage increase may have, advocacy groups are renewing their push for a floor pay bump in Minnesota next year.

Increasing the state's minimum wage to $9.50 an hour would give 357,000 Minnesotans a raise and inject an additional $470 million of purchasing power, according to research commissioned by the Raise the Wage Coalition, a network of organizations calling for an increase.

Roughly 77 percent of those workers are 20 or older, according to the research, which Minnesota 2020 spokesman Joe Sheeran said flies in the face of the idea that only teens would benefit from an increase. Minnesota 2020 is one of several groups behind Raise the Wage.

"Wages in this area are still fairly stagnant," Sheeran said while unveiling the study Thursday at Dorothy Day House, a homeless shelter in Moorhead. "No one who works 40 hours a week should be forced to live in poverty."

At $6.15 an hour, Minnesota is one of just four states that have a floor wage lower than the federal minimum of $7.25, though most Minnesota workers earn at least the federal minimum.

Democrats' efforts to boost the state's floor pay for the first time since 2005 stalled last legislative session. When the Legislature reconvenes in February, the House and Senate are expected to try to hammer out the differences between the two bills they passed.

The House bill aims to increase the state's minimum wage to $9.50 by 2015, after which it would increase annually with inflation. The Senate bill has a more modest bump, to $7.75 an hour.

Raise the Wage is pushing for the House's approach. Their research points out that the federal minimum wage hasn't kept up with inflation since 1969. If it had, the current minimum would be nearly $11 an hour.

But Ben Gerber, manager of labor policy for the Minnesota Chamber of Commerce, said the groups pushing for a hefty minimum wage increase picked an arbitrary year. Adjust for inflation the 25-cent minimum wage from 1938, the year a floor wage was enacted, and the current minimum would be about $4 an hour.

Gerber said the issue is even more sensitive in Moorhead and other border communities around the state. Putting Minnesota's minimum wage above that of its neighbors would create additional harm on Minnesota businesses, he said.

"If you have to increase the price of OJ or milk in Moorhead" to cover the cost of higher wages, Gerber said "people are going to drive to Fargo to buy that same gallon of milk. That's a huge concern."

Sheeran said an increase to $9.50 an hour would have a "negligible impact" on border towns. He pointed to research published in The Review of Economics and Statistics in 2010, which looked at cross-border counties and found "no detectible employment losses from the kind of minimum wage increases we have seen in the United States."

"Every time we've talked about raising the minimum wage, we've seen these same arguments that it's going to kill jobs, it's going to drive away business," Sheeran said. "Every time, the economy continues to grow."