OUR OPINION: Study effects of raising wageEarlier this year, the Minnesota House approved raising the state’s minimum wage to $9.50 an hour. The Minnesota Senate approved raising that wage to $7.75 an hour.
By: Tom Dennis, Grand Forks Herald
Earlier this year, the Minnesota House approved raising the state’s minimum wage to $9.50 an hour. The Minnesota Senate approved raising that wage to $7.75 an hour.
And the Minnesota House and Senate both remain in Democratic hands.
Given all that, and given the fact that Democratic Gov. Mark Dayton also wants the minimum wage to rise, the House and Senate very likely will split the difference in 2014 and send to Dayton a bill raising the state’s minimum to somewhere north of $8 an hour.
Now, here’s something else the lawmakers should do:
Commission a rigorous study of the new law’s effect. Because solid data matters when it comes to the minimum wage, an issue that remains unsettled at the highest reaches of economics.
“The impact of the minimum wage on unemployment is a divisive issue among economists.” That’s economist Adam Ozimek talking, and few in his profession would dispute his remark.
There used to be a lot more consensus. In 1978, for example, the American Economic Review reported that when it comes to the minimum wage, 90 percent of economists surveyed agreed with traditional economic theory. It holds that raising the minimum wage boosts unemployment among low-skilled workers.
Contrast that to 2006, when a survey polled doctoral-degree-holding members of the American Economic Association. The survey found that 38 percent of respondents supported increasing the minimum wage, 14 percent wanted it kept the same, 1.3 percent wanted it decreased and 47 percent wanted it eliminated, Wikipedia reports.
In other words, economists today are scattered all across the opinion spectrum.
Why the change?
That brings us to the other truism about the minimum wage: As mentioned above, solid data matters.
In 1992, a landmark study by David Card and Alan Krueger helped fracture the earlier consensus. Card and Krueger researched the effect on fast food restaurants of a minimum wage hike in New Jersey. Before the hike, New Jersey had the same minimum wage as did neighborhing Pennsylvania, so Card and Krueger compared their New Jersey findings with what happened in Pennsylvania.
The economists’ conclusion: Raising the minimum wage increased rather than decreased employment in New Jersey restaurants. Economists have been arguing about those results ever since, and the Card-Krueger study influences public policy to this day.
Could Minnesota add to the sum of knowledge? You bet, especially if the work were to begin now. In Minnesota, a minimum wage hike is expected next year. That means data could be gathered about employers’ situation in advance of the increase as well as after it takes effect.
Likewise, comparisons with one or more of Minnesota’s neighboring states also could be useful.
In their columns in the Herald today, Reps. Ryan Winkler and Jenifer Loon of the Minnesota House differ profoundly in their predictions of what will happen if Minnesota increases its minimum wage. Well, Minnesota probably is going to pass that increase, given the composition of the Legislature.
Let’s take this chance to study what happens, see which predictions come closest to the truth — and help settle the national debate about this issue once and for all.