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EPI Report Shows Minnesota Would Benefit from Minimum Wage Increase

John Clay
JOBS NOW Coalition, August 2012

View published article at www.workdayminnesota.org

Increasing the federal minimum wage from $7.25 to $9.80 per hour would give more than 28 million US workers a raise and generate about 100,000 new jobs over three years, finds a new report by the Economic Policy Institute in Washington DC. In Minnesota alone 463,848 workers would get a raise, boosting consumer spending power by over $600 million statewide. The federal minimum wage has not kept pace with inflation, meaning that the real value—the purchasing power—has dropped.

In the report "How Raising the Federal Minimum Wage Would Help Working Families and Give the Economy a Boost," EPI researchers Douglas Hall and David Cooper show that raising the minimum wage would boost the economy and benefit millions of US workers across demographic groups, including adult full-time workers with families.

"An increase in the federal minimum wage to $9.80 per hour would result in a net increase in economic activity of $25 billion, generating approximately 100,000 new jobs," said Hall. "This hike would have a positive impact across the country, with job creation in every state."

The report includes a wealth of state-level data allowing a concrete look at how the proposed minimum wage increase would play out in Minnesota.

"Raising the minimum wage for working folks just makes sense and will have an immediate effect on their families and the local economy," said Bernie Hesse, political director for United Food and Commercial Workers Local 1189 in Saint Paul.

On July 26, 2012 Sen. Tom Harkin (D-Iowa) introduced the Fair Minimum Wage Act , S. 3453, in the U.S. Senate, calling for an increase in the federal minimum wage to $9.80 in steps over three years, On reaching $9.80 an hour, the minimum wage would then be indexed to keep pace with inflation. A companion bill, H.R. 6211, was introduced in the House of Representatives by Rep. George Miller (D-Calif.).

In the Minnesota legislature, Rep. Melissa Hortman (DFL-District 47B) introduced the Family Economic Security Act on April 30, 2012. The bill contains a provision to raise the state minimum wage. Many states have raised their minimum wages above the federal, because the federal has not kept pace with inflation. If the federal minimum wage had kept pace with inflation since the late 1960s, it would be close to $10.00 an hour today.

Even as the federal minimum of $7.25 per hour lags behind inflation, Minnesota's state minimum wage of $6.15 lags behind the federal. That's the same as having no state law at all because the higher wage prevails.

Cost of living research by JOBS NOW Coalition, a statewide job policy non-profit in Saint Paul, shows that in a family of two full-time working adults with two children, each worker must earn $14.03 per hour to cover the cost of basic needs. Thirty-nine percent of jobs in Minnesota—more than a million jobs—pay less than this family-supporting wage.

"Bringing the federal and state minimum wages close to $10.00 an hour is an important step toward improving the lives of working families and strengthening our state economy," said Kris Jacobs, executive director of JOBS NOW.

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