State, federal minimum wage laws find new attention
A national debate over raising the minimum wage turned into a local one this week, when Minnesota lawmakers announced plans to increase the state’s minimum wage to one of the highest in the country.
The move highlights a pattern of states taking up the wage issue while a similar proposal faces hurdles on the federal level. The Democrat-controlled U.S. Senate is poised to vote on a bill to eventually raise the minimum wage to $10.10 an hour in the coming weeks, but the Republican-controlled House doesn’t appear to be supportive. President Barack Obama has pushed for increasing the minimum wage.
Business leaders and public officials in North Dakota said this week that the tight labor market is pushing wages up without the government’s help. Some, however, point out that there are still people struggling to make ends meet and could benefit from a wage increase.
North Dakota’s minimum wage is the same as the federal rate: $7.25 an hour. Minnesota is one of the few states with a minimum wage below the federal wage currently, but in most cases businesses have to pay the federal wage.
Minnesota lawmakers introduced a plan this week to raise the state’s minimum wage to $9.50 by 2016 in stages, and allow for automatic increases to account for inflation in the future. Businesses that earn less than $500,000 in gross sales annually could pay employees $7.75 an hour under the bill.
The proposal was making its way through the Democrat-controlled Legislature this week and Gov. Mark Dayton said he’ll sign the bill once it reaches his desk.
Jane Moss, owner of the Boardwalk Bar and Grill in East Grand Forks, said the state’s minimum wage increase won’t have much of an effect on her business. She said most of her employees are making the $9.50 an hour being proposed or just below it.
She said competition for workers locally is keeping wages above the minimum.
“The growth of the community has affected (wages),” Moss said.
Dave Homstad, owner of the Blue Moose Bar & Grill in East Grand Forks, said an increase would have an effect on business if it doesn’t address tip credits. Minnesota currently doesn’t allow tip credits, which would mean tipped employees could earn less than the minimum hourly wage.
“I’d like to see a higher minimum wage than even the $9.50, but put a tip credit in there,” Homstad said. That would mean more even pay between the wait staff and people working behind the scenes, like cooks and dishwashers, he said.
Many said a minimum wage increase in North Dakota wouldn’t have much of an effect. Median hourly wages in North Dakota sits at $17.14, according to the Bureau of Labor Statistics.
Jon Godfread, vice president of governmental affairs for the Greater North Dakota Chamber, said rising wages are an example of supply and demand and the free market at work.
“Many of our jobs are well above the minimum wage, even the proposed (federal) increase,” Godfread said. “We’ve seen in the western part of the state, $15 to work at McDonald’s is not an uncommon thing.”
Still, Godfread said a higher minimum wage would mean employers couldn’t hire as many people, and cited a Congressional Budget Office report that estimated a $10.10 federal minimum wage would reduce the workforce by 500,000 nationwide once fully implemented. But that same study predicted that wage hike would lift 900,000 people above the poverty level.
And while the labor market in North Dakota is driving competition for workers and increasing wages, there are still people who would benefit from a minimum wage increase.
Ten percent of North Dakota workers make $9 or less an hour, according to federal data. Meanwhile, 3.2 percent of hourly workers make minimum wage or less compared to 4.3 percent nationwide, according to the Bureau of Labor Statistics.
U.S. Sen. Heidi Heitkamp (D-N.D.), who is a cosponsor of the bill to raise the minimum wage to $10.10 an hour, said someone working 40 hours a week on minimum wage makes about $15,000 a year.
“I don’t know anyone who puts in 40 hours of work who makes $15,000 a year can make ends meet in North Dakota,” she said. Minnesota Democratic Sens. Al Franken and Amy Klobuchar are also cosponsors of the bill.
Heitkamp also disputed the notion that people who make minimum wage are working part-time jobs while in school. She pointed to an Economic Policy Institute report that showed the average age of a person who would be affected by a higher minimum wage is 35.
That same report said 28 percent of people who would see a pay increase under a $10.10 minimum wage have children, and 55 percent work full-time.
The U.S. Senate may vote on the minimum wage bill in May, Heitkamp said. But a jump to $10.10 may be too much for the House.
Rep. Kevin Cramer, R-N.D., said he’s not in favor of raising the minimum wage, and added that reducing regulations is a better way to improve job opportunities. Don Canton, spokesman for Sen. John Hoeven (R-N.D.), also argued that raising the minimum wage would mean fewer jobs.
Heitkamp said she’d be willing to consider a lower minimum wage hike or extending the time period in which the minimum wage increases.
“I’m open to a discussion about how we can readjust the minimum wage bill so that we can actually get a minimum wage bill done,” she said in a phone interview.
With the lack of a federal wage increase for now, some states and municipalities are taking matters into their own hands. Maryland lawmakers voted this week to raise its minimum wage to $10.10 an hour, and Seattle has been debating raising its minimum wage to $15 an hour.
North Dakota Rep. George Keiser, a Bismarck Republican who chaired the House’s Industry, Business, and Labor Committee, said he hasn’t heard of a minimum wage bill being drafted here, and wasn’t sure if one would have support among legislators.
North Dakota tends to follow the federal government’s lead in minimum wage. The state rate has been the same as the federal one since 1992, according to the U.S. Department of Labor.
Rep. Corey Mock, (D-Grand Forks), said he would support a minimum wage increase here, but he said a more pressing issue here is addressing the cost of living issues, like affordable housing and daycare. He said he’d also like to see what Congress and other states might do.
Senate Minority Leader Mac Schneider (D-Grand Forks) said he’d vote for a minimum wage increase, but didn’t pin down a specific raise he’d support.
“The vast majority of (North Dakota employers) pay above minimum wage already,” Schneider said. “But I do think it would have a benefit to some of those individuals who maybe aren’t experiencing the full benefits of North Dakota’s good economy.”