The details of minimum wage laws show why they are so harmful
With dozens of supporters and opponents filling seating and standing up against the hearing room walls, St. Paul City Council Member Dai Thao spoke passionately in favor of altering a proposed schedule for implementing a $15 citywide minimum wage.
In the end, his pleas to slow an initial rollout of wage increases for small businesses successfully moved the council, but failed to convince a coalition of unions and social justice advocates that he has often counted among his supporters.
“I see a sign in front of me — if you delay my raise, you’ll delay my rent,” Thao told the council. “Well, the same argument applies for (undermining) small and minority-owned businesses. … We should not be fighting each other.”
Councillor Thao managed to get the initial rollout for small businesses slowed, with $1 or 75-cent wage increase each year at the outset, instead of a nearly $2.
The minimum wage for small businesses would climb to $9, instead of $10.50. It would increase to $10 a year later — and reach $15 by 2026.
The minimum wage for micro businesses — those with fewer than five employees — would pay $8.75 instead of $10.25. They would pay $9.50 a year later — and $15 by 2028.
One council member called this “a sensible compromise”. But it isn’t. Setting different rates for small and large businesses exposes the sheer falseness of arguments for a legally mandated minimum wage.
The people waving the signs at the council meeting had a point. We often hear minimum wage hikes justified on the basis that workers are facing increased costs of living. But if this is true for the employee at a small business it is also true for the employee at a big business. If you really and truly believe that raising minimum wage is necessary to combat increased living costs, than you should be completely opposed to any differential in the rate paid to employees of big and small businesses.
Advocating different rates for different sized employers is a sign that the advocate actually believes there is some cost to minimum wage hikes. We know this to be the case. These advocates appear to as well, they just shrink from openly admitting it.
In truth, large businesses in Saint Paul are already paying their workers at least $15ph. This measure has always been about raising costs for the city’s small businesses. Slowing the increase is a sign that, whatever they might say, Saint Paul’s policymakers realize that it will have very real costs. If only they would be honest about it.
John Phelan is an economist at the Center of the American Experiment.