While private-sector employees suffered job losses, Hennepin county employees will soon get raises
Earlier today, the Star Tribune reported that
Hennepin County on Tuesday became the only public-sector government organization in the Midwest to offer its employees a minimum wage of $20 an hour.
The new wage will affect 480 employees that include office specialists, food-service workers, community health workers and case-management assistants. The increase, which could bump an employee’s annual salary as much as $10,000, starts March 28.
“It’s really humbling to know that something we are doing has other large organizations watching,” Commissioner Angela Conley said after the unanimous vote. “Hopefully they will follow suit.”
The wage increase will cost the county $2.2 million over four years, a minuscule slice of its 2021 budget of $2.2 billion. Departments will draw that money from their budgets.
The move has been criticized, and for the right reasons
Commissioner Chris LaTondresse said his office has received a few calls that the wage raise is a poor use of taxpayer money, particularly at time when people lost jobs during the pandemic.
Government-mandated lockdowns have indeed dealt a heavy blow to small businesses. Low-income workers have also faced massive job losses, many of which are yet to be recovered. It is quite shocking, therefore, that at a time when the private sector is reeling from the effects of the lockdown, Hennepin County wants to use taxpayers’ money to raise salaries for government workers.
The nature government is to blame
In addition to being ill-timed, this fiasco should tell us something about the nature of government. That is, more often than not, the government spends too much, and on the wrong things.
Last year, American Experiment’s report, ‘Closing Minnesota’s budget deficit,’ argued against raising taxes to close what was then predicted to be a budget deficit. Instead, we called for spending cuts. Yet despite the deficit turning into a surplus, legislators are still calling for tax hikes.
Why is this so?
State and local governments generally face little accountability in how they spend money, which means few or no incentives to spend it wisely. Milton Friedman put it simply, that “if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government.”
If our government were run like a business, lawmakers would have an incentive to keep costs low. Wages would be based on productivity, and not some other external motivator like equality, as in the case with Hennepin County.
Other economic implications
The decision by Hennepin County to raise its minimum wage has other far-reaching implications on the labor market.
For one, Hennepin County competes with numerous private sector firms, including small businesses. The County’s minimum wage hike could, therefore, shift highly-skilled and productive workers into less productive government work. Research has documented, for instance, that local companies raise wages to keep up with big corporations like Amazon. The same could be true for private sector firms that need to keep up with Hennepin County. This could result in job losses or higher prices.