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Counterpoint: Progressive policies in Minnesota are working for workers

by | Aug 1, 2018 | Economy, Jobs & Wages

(Note: this commentary was published by the Star Tribune on July 26, 2018.)

As corporate profits soar, working people are rightly demanding fair wages, thereby inciting the ire and criticism of both conservative policymakers and academics. A recent column (“Higher wage is hurting those it’s supposed to help,” July 23) claimed that Minnesota’s higher minimum wage is to blame for fewer fast-food restaurant jobs than in Wisconsin and that it actually harms workers. The facts, however, clearly show Minnesota’s progressive policies are working — especially for working people.

Economic studies examining the effects of minimum wage increases across state borders — at a larger scale to include dozens of states (including Minnesota) and thousands of cross-state contrasts find no or very small effects.  A 2010 analysis by Arindrajit Dube (UMass Amherst), T. William Lester (UNC Chapel Hill), and Michael Reich (UC Berkeley) which considered contiguous pairs of counties nationwide which shared a border with another state found no adverse employment impacts in the restaurant industry due to higher minimum wages in one state relative to another. Studies that only consider one pair of states can produce a wide range of results by chance, and are inferior guides upon which to evaluate the impacts of public policies.

Minnesota’s labor policies and labor market have delivered bigger gains for working families than Wisconsin’s have. Recent research by economist David Cooper of the Economic Policy Institute (EPI) in Washington, D.C., makes abundantly clear that in the postrecession recovery period, Minnesota’s economy is both stronger than Wisconsin’s and growing more equitably, thanks to progressive policies focused on expanding opportunities for working families, such as investing in our schools, our infrastructure and, yes, raising our statewide minimum wage in 2014.

EPI’s analysis found that by virtually every economic indicator available, Minnesota outpaced Wisconsin: number of jobs, wage growth and making progress in closing the gender pay gap, to name a few.

EPI’s analysis of wages in Minnesota and Wisconsin found that between 2010 and 2017, wages grew faster in Minnesota than in Wisconsin at every category in the wage distribution — and that low-wage workers experienced much stronger growth. At the 10th and 20th deciles, inflation-adjusted wages rose by 8.6 percent and 9.7 percent in Minnesota, and by only 6.3 percent and 6.4 percent in Wisconsin.

These wage gains are great news for Minnesota workers and families, who benefit from additional income to meet budget pressures of rising rents, higher gas prices, child care expenses and health care costs, among other expenses.

As a resident of Minneapolis, I can attest that the sky is not falling following the City Council’s passage of a $15 minimum wage ordinance last year. Far from it. The city estimated last year that 84,000 of my neighbors had incomes below the federal poverty level and that the $15 hourly wage would benefit nearly a quarter (23 percent) of the city’s workforce — that’s over 70,000 workers who are also predominantly people of color. As our cities and state address appalling racial disparities, policies such as raising the minimum wage both deliver sound economic benefits and make progress toward addressing long-standing social injustices.

And, finally, let’s not forget that fast-food companies are among the most profitable corporations in the country, and among the least inclined to treat workers fairly. According to its 2017 annual report filed with the U.S. Securities and Exchange Commission, McDonald’s total sales in 2017 were nearly $23 billion, and it returned $7.7 billion to shareholders through share repurchases and dividends for the year. It took two separate recent legal challenges by attorneys general from across the country for over a dozen fast-food chains to cease anti-worker “no poaching” noncompete practices that fast-food companies used for years to depress wages and bargaining power of fast-food workers.

Discussion and debate about raising the minimum wage in our state to $15 an hour will not be without distortions and distractions that seek to raise questions about whether there will be enough jobs to go around for all workers. If Minnesota over the past eight years is any indication, we’re in good shape to offer workers of all ages more jobs at better wages.

And sorry to rub it in, Wisconsin — but we also overtook you in the total number of jobs last year for the first time in history, even though we have some 200,000 fewer people. Facts matter.

Katie Hatt is executive director at North Star Policy Institute, a progressive think tank based in St. Paul.

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