Jenifer Loon: Expect job losses if minimum wage leaps
EDEN PRAIRIE, Minn. -- We all know decisions have consequences. An effort to address one problem may lead to the creation of new ones. Actions taken by government, especially as they impact the economy, are no exception.
We also know the past five years haven't been easy. The worst recession many of us ever will experience in our lifetime took its toll on our nation's families, industries and institutions, with millions of people out of work and millions more looking for better jobs.
And the lowest-paid workers are some of the hardest hit by our sluggish recovery. Meanwhile, the historic growth of government and high taxation in Washington and St. Paul has reached levels that threaten what progress we've made, and jeopardize the American dream for countless others.
In his column for the Grand Forks Herald today, Rep. Ryan Winkler, DFL-Golden Valley, writes about his bill in the Minnesota House to raise the state's minimum wage to $9.50 an hour, a 55 percent increase over the state's current rate of $6.15 an hour and 31 percent higher than any of our neighboring states.
In fact, Winkler's bill would put Minnesota's minimum wage at one of the highest in the nation by 2015.
I joined others -- including many Democrats -- in opposing this legislation last session, because of the negative consequences that likely will result.
Republicans agree with Democrats that many Minnesotans aren't taking home enough in their paychecks. But we disagree on the solution.
The best opportunities for good-paying jobs come from enacting the smartest economic policies for all Minnesotans. That means streamlining government to keep wasteful spending in check, taxes reasonable and private-sector jobs growing.
When combined with historic tax and fee increases, higher health care costs and new mandates on small businesses passed by Minnesota Democrats, Winkler's proposal to skyrocket our minimum wage could very well hurt the people it is meant to help.
A report from Minnesota's Department of Labor and Industry tells us that more than half of all minimum wage workers are in the restaurant and retail industries. Thirty percent of them also get overtime, tips or commissions, and 48 percent of all workers earning this wage are part-time workers under age 24.
More than a third are age 19 or younger.
The minimum wage is a starting wage, and most workers advance quickly.
Whenever government forces the minimum wage to go up, job opportunities for young and inexperienced workers go down. A hike of 55 percent could result in 15 percent fewer jobs for entry-level workers, and minorities bear the brunt of these diminished job opportunities.
As of March, when we debated this issue in the Legislature, nine of the 10 highest mandated minimum wage states in America had significantly higher unemployment rates than Minnesota.
The restaurant industry would be particularly hard hit by this change. As a member of the House Select Committee on Living Wage Jobs, I listened to hours of public testimony on this idea. Many restaurant owners told us their hands would be tied by this high wage, which would force them to raise prices, lay off workers, reduce hours or close their doors.
It also would accelerate the replacement of human workers by modern technology in order to save costs. These outcomes will reduce the purchasing power of low-wage and low-skill workers.
A more reasonable place to start would be to match the federal minimum wage of $7.25, an increase that presents less risk to the thousands of jobs that could be impacted.
The minimum wage debate is not about employers versus employees or class warfare. It is about more jobs instead of fewer jobs and more opportunities for young and low-skilled workers.
When we meet again next spring to consider the issue, I hope legislators will consider these important facts.
Loon, a Republican, represents Eden Prairie in the Minnesota House. She is a member of the House Select Committee on Living Wage Jobs.