Advocates of minimum wage hikes are living in a fantasy world

An column in today’s Star Tribune, titled ‘Progressive policies in Minnesota are working for workers‘, begins “As corporate profits soar, working people are rightly demanding fair wages…”

The author seems to be living in a fantasy world. In it, employers are vast corporations whose owners and managers are swimming in piles of cash while paying their workers a pittance. To see how much of a fantasy this is, consider Saint Paul. Its politicians are considering whether to follow the lead of Minneapolis and impose a $15 per hour minimum wage. To aid in their deliberations, they commissioned the Citizens League to report on the labor market in the city. It paints a picture starkly at odds with the fantasy world painted by advocates of minimum wage hikes.

As the Pioneer Press summarized,

-Most of St. Paul’s large employers such as Allina Health, Ecolab, HealthPartners and Securian already pay the majority of their workers at least $15 per hour. Private colleges do the same for full-time employees but not for part-time student workers, who earn about $10.

-Nonprofits that employ disabled people at a special wage that is at or below the statewide minimum worry they will not be able to cover increased costs. They said lay-offs would disrupt their staff-to-client ratios, losing them clients.

-Some franchise and small business owners such as bookstores said their prices were set by publishers and national brands, so they cannot raise prices to cover increased labor costs.

-Without an exemption for young people, a small, family-run restaurant worried about no longer being able to afford to pay summer youth.

Speaking through an interpreter, a low-wage retail janitor “felt strongly that no one should be exempted, including youth workers, believing teens should be able to make the same as adults, knowing that some support their families,” according to the report.

Meanwhile, some immigrant-owned businesses were insistent that they did not want a $15 minimum wage increase because they cannot financially support the increase in labor costs, according to the report.

Contrary to the fantasy, big corporations in Saint Paul are already paying most of their workers at least the proposed minimum wage. The people who would be hit hard would be, instead, smaller businesses. This is the reality.

John Phelan is an economist at the Center of the American Experiment.