University student Elizabeth Cook is applying for a waitress job that pays $5.15 an hour, or minimum wage.
“But with tips I hope I don’t end up making $5.15 an hour,” Cook said.
Cook, and many other students and low-income workers like her, could eventually make more cash without tips if a recently proposed bill succeeds.
The State Senate will vote Thursday whether to increase minimum wage from $5.15 to $6.65 an hour during the next two years. Some economists said raising minimum wage could benefit students paying for tuition, but others said the increase could cause unemployment.
Minimum wage has not been raised in Minnesota or at the federal level since 1997, said Sen. Ellen Anderson, DFL-St. Paul, who wrote the bill.
She said she predicts the State Senate will pass the bill, but it might be difficult for it to be heard in the Republican-controlled House. The bill must pass the Senate and the House and be signed by Gov. Tim Pawlenty to become law.
Anderson said raising minimum wage would stimulate the economy because workers would invest their paychecks back into the state.
University economics professor John Chipman disagreed and said raising minimum wage would cause unemployment.
“If companies have to pay employees more wages than they are worth,” he said, “then they will just have to lay them off.”
Mike Hickey, Minnesota director for the National Federation of Independent Business, said Minnesota minimum wage should stay at the federal level.
“Minnesota is getting way ahead of its neighbors,” Hickey said.
Servers in Minnesota currently make more money than in other states because there is no tip credit, he said.
Other states require servers to count tips in their wage earnings, Hickey said, and can therefore be paid below the minimum level.
Hickey said most people who earn minimum wage are part-time, young workers.
“This is a student and young-person issue,” he said. “An increase in minimum wage can destroy jobs – ones for teenagers and students especially.”
University economics professor Ann Markusen said even though economists think raising minimum wage increases unemployment, there has been no evidence to support it.
“They think it would happen because all the models and theories say it would,” she said. “But all the studies show that it doesn’t happen.”
A higher minimum wage is important for students because it rewards hard work and helps pay for school, Markusen said.
“If you raise the wage, students can work fewer hours and spend more time on class work,” she said.
She said economists sometimes justify keeping the minimum wage low by saying most people who earn it are young and do not need to support families.
“To say young people are undeserving of a higher wage is discriminatory,” Markusen said.
Jason Mclean, owner of the Loring Pasta Bar, said although many servers are paid minimum wage, earning tips puts them at about $15 to $20 an hour.
“When you figure in minimum wage and tip earnings, they become among the best paid people in the companies,” Mclean said.
Although many students said they favor a higher minimum wage, some said increased costs might lead employers to lay off workers.
Sophomore Chris Reberk, who works at Broadway Pizza, said employees sometimes complain about minimum wage but understands why employers are opposed to raising it.
“What if employers have to cut people because it’s more money?” he said. “Then you’re unemployed.”
