As the Supreme Court upholds Minneapolis’ $15ph minimum wage, is it time to junk the state minimum wage?

Yesterday, the Minnesota Supreme Court announced its unanimous decision to uphold Minneapolis’ $15 minimum wage. This is bad news for the city economically, but it does raise an interesting question: if localities are permitted to set their own minimum wage rate above the state rate, why should they not also be free to set one below it?

To preempt, or not to preempt, that is the question

There will, no doubt, be attempts in St. Paul to push legislation to prevent – ‘preempt‘ – localities from hiking their minimum wage rates as Minneapolis and St. Paul have done. Reacting to yesterday’s news, Doug Loon, president of the Minnesota Chamber, said

“We believe the decision perpetuates an unsustainable trend by local governments to act outside of their traditional authority”…

“It is now up to state policymakers to explicitly prohibit these ordinances so employers can spend less time understanding and complying with duplicative or inconsistent laws and devote more time to innovating, growing and hiring new employees.”

And, just as doubtless, there will be opposition to such ‘preemption’. When he vetoed a preemption measure in 2017, former Governor Mark Dayton explained that

“Local governments can be more adept at responding to local needs with ordinances that reflect local values and the unique needs of their communities. State government does not always know what works best for every community, and may lag behind when improvements are needed.”

In a diverse state like Minnesota, this is a fair point. According to the Economic Policy Institute’s Family Budget Calculator, a household with 2 adults and 2 children in Hennepin County would face $98,483 annually in various costs. In Mahnomen County, the figure would be $77,572 – 21% lower. According to the Bureau of Labor Statistics, the Average Weekly Wage in Hennepin County was $1,345 in the second quarter of 2019, in Mahnomen County it was $694 – 48% lower.

Given this diversity, does it seem sensible that the state government in St. Paul should dictate a one size fits all legal minimum wage for the whole state? Or was former Gov. Dayon right?

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