Effort to boost minimum wage shows promise

03/28/2005

Dane Smith, Star Tribune
March 28, 2005

Two governors and eight years after Minnesota last raised its minimum wage, the perennial effort to bump it up from $5.15 an hour stands its best chance in years.

But it’s still far from a sure thing.

A proposed increase to $7 in two stages by 2006 already has been approved by the DFL-controlled Senate. DFLers are aggressively branding the current minimum as an outrageous slight to hardworking folks on the bottom rungs. Republicans dismiss the hike as unnecessary and a job-killer.

But the opposition clearly is softening, in large part because the GOP House majority is so much smaller. And Gov. Tim Pawlenty has hinted that he might sign a smaller increase than the one passed by the Senate.

“The governor has voted for reasonable minimum wage increases [as a legislator] in the past,” said spokesman Brian McClung. “But the wage passed by the Senate is too big a leap at one time.” McClung declined to say how big an increase Pawlenty would approve.

A smaller hike, to $6.65 an hour, has been proposed by state Rep. Tom Rukavina, DFL-Virginia. With a razor-thin GOP margin of 68 to 66, Rukavina said he is convinced that he would get at least the two Republican votes necessary for House approval.

Improved as the prospects are, the bill still hasn’t been heard in a House committee. There are fears that its fate will be similar to previous years, when unexpected complications arose.

Rep. Tim Wilkin, R-Eagan, chairman of the Commerce and Financial Institutions Committee, said he intends to give the bill a hearing in the next couple of weeks. He also said he opposes the hike and doesn’t think it will be approved by his committee, which would block the bill from reaching the floor via the normal route.

That leaves DFLers with the option of trying to attach the minimum wage as an amendment to one or more related bills on the House floor. And it could become part of the global negotiations between Pawlenty, House Republicans and Senate DFLers at the end of the session.

The debate this year in committees and in various forums, as always, is providing a stimulating perspective on the differences between the parties on matters of economic theory, income gaps and social justice.

Advocates say that an increase would be the least lawmakers could do for those on the lowest wage rungs who have been ravaged financially by recession and wave after wave of federal and state benefit cuts in programs from health care to day care to transit service to college tuition.

“Stressed-out families with bigger bills, lower paychecks, and multiple part-time jobs are beginning to lose the ground that their parents thought they had gained in attaining a middle-class standard of living,” said Kris Jacobs, leader of the JOBS NOW Coalition, a nonprofit group.

“The most serious problem in American economic life is the loss of ‘start-from-nowhere’ careers and the kind of independence that comes with being able to pay your bills, buy a house and put your kids through school,” Jacobs said.

But business officials and conservative Republicans also use class arguments of a sort, arguing that the smaller, more marginal businesses, owned in many cases by middle-income folks, are the most threatened by a sizeable minimum wage hike. And they contend that the hike could have the perverse effect of hurting the very people it’s intended to help, by shrinking the number of entry-level jobs.

“Most economists agree that the first impact of a higher minimum wage is lower levels of entry-level employment,” says the Minnesota Chamber of Commerce website. “It will likely cause employers to either find ways to reduce employment, increase productivity or pass on the increased labor costs to the customers.”

Employees at eating and drinking places account for a full third of all minimum-wage workers, and many of them are waiters or waitresses whose income is often well supplemented by tips, said Wilkin. His concern for the hospitality industry, perhaps the most assertive interest group in hearings and lobbying, accounts primarily for his opposition, Wilkin said.

A key battleground eventually might be the so-called “tip credit,” dubbed the “tip penalty” by its foes and long sought in Minnesota by restaurant owners. The tip credit, which some neighboring states have, sets a lower minimum wage for people who wait on tables or get tips.

Republicans might bargain away the minimum if the tip credit is installed, but Jacobs and Rukavina said they will fight hard against any such concession. While tips at a few upscale restaurants might produce substantial income, most restaurants do not, they argue.

“Creating a tip penalty turns the minimum wage into a cap on wages for tipped employees,” Jacobs said.