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John Van Hecke: Minimum wage hike could mean $8.3 million for area

Generally, workers who make the holidays happen live in poverty. Yet, many of the major retailers they work for bring in multi-billion dollar profits. Companies like Walmart and Target cleared $15 billion and $3 billion respectively in 2012, according to Fortune Magazine. These companies tend to set the industry’s wage standards and they can afford to do better by their frontline employees.

Minnesota Department of Employment and Economic Development (DEED) numbers show that the three industries we most closely associate with the holiday season—department, clothing, and sporting goods stores—pay a median wage of just $9.05 an hour, meaning half of the workers make below that level.

If the market isn’t going to correct this wage failure, it’s time policy sets a new minimum wage to ensure Minnesota’s working families make what they need to meet basic living expenses. Not only is it a matter of economic equity, but it’s a smart economic development strategy.

According to several studies released by Minnesota’s Raise the Wage Coalition—a broad association of faith, labor, nonprofits and service organizations—a $9.50 minimum wage would impact 357,000 Minnesotans, boosting their purchasing power by $470 million.

Minnesota 2020 estimates that in Senator Kent Eken’s district, 6,300 people would see a raise, growing the purchasing power for the parts of Becker, Norman and Clay counties he represents by an estimated $8.3 million.

It’s also estimated that 5,800 workers in each of Sen. Rod Skoe’s district, which includes Becker County, and Sen Bill Ingebrigtsen’s district, which mainly covers Otter Tail County, would see a combined $15 million earnings boost.

With 70 percent of the nation’s economy based on consumer spending, it’s critical for policymakers to put more power back in consumers’ hands.

During Minnesota’s 2013 legislative session, both chambers passed new minimum wage bills, with the house setting the new level at $9.50 an hour and the senate passing a modest 50 cent increase to $7.75. The Raise the Wage Coalition is calling on lawmakers to adopt policy setting Minnesota’s minimum at $9.50 by 2015, indexed to inflation, with federal conformity to family leave and a 40-hour week, and no penalty for tipped workers.

Statewide, 77 percent of people impacted by the $9.50 minimum wage are 20 and older, dispelling myths that teenagers would be the main recipient of the increase. It would also go a long way in supporting working families, boosting parental wages for 137,000 children.

Fears of an increased minimum wage causing mass business closures and layoffs have all been disproven by a wide body of national research, including three different studies conducted with authors carrying titles from presidential advisor to UC Berkley economist.

A 2010 study, published by Harvard’s Review of Economics and Statistics, comparing states’ border counties nationwide shows that states with higher minimum wage have no negative employment and strong positive earnings impacts in low-wage sectors.   

Raising Minnesota’s minimum wage is smart economic policy. It’s time we start putting purchasing power back in the hands of those most likely to reinvest it at area businesses.

(John Van Hecke is the Minnesota 2020 Executive Director.)