City to vote on wage research

Local business managers are concerned a higher minimum wage would increase prices.

Espresso Exposé manager Dana Heinz prepares a drink on Monday. In August, Minnesota wages were raised to $9, and the findings of a newly preposed study could lead to another increase.

Alex Tuthill-Preus

Espresso Exposé manager Dana Heinz prepares a drink on Monday. In August, Minnesota wages were raised to $9, and the findings of a newly preposed study could lead to another increase.

Nick Wicker

Minneapolis could follow in the footsteps of cities nationwide if the City Council approves a research project looking into the costs and benefits of raising the minimum wage 
Tuesday.
 
If council members give the study the green light, the project could yield a new recommended minimum wage come March. However, council members remain divided on the issue, and some business owners say they had concerns about higher costs.
 
Tuesday’s presentation would cement the project’s objectives and give city officials the final go-ahead to choose researchers to lead the task, said David Frank, the city’s economic policy and development director.
 
Some experts say raising the minimum wage would cause tension between businesses and employees.
 
Increasing the minimum wage leads to unemployment, which can drastically jump if a higher pay rate is implemented too quickly, said Art Rolnick, Humphrey School of Public Affairs senior fellow and co-director of the Human Capital Research Collaborative.
 
The statewide minimum wage rose to $9 per hour Aug. 1, which Dana Heinz, a manager at Espresso Expose in Stadium Village, said helps her pay for school at the Aveda Institute.
 
The state Legislature sets the minimum wage threshold, but city leaders can create ordinances to raise it. Last year, state legislators passed a new measure to raise the state’s minimum wage to $9.50 an hour by 2016.
 
Heinz said she thinks another increase would force Espresso Expose to hike its prices again after it did so in August.
 
“We do have Starbucks across the street to compete with,” she said, “and they can afford to keep their prices pretty low.”
 
Proponents of a higher minimum wage would rather see fewer employees at an establishment getting better pay than more workers with lower 
compensation, Rolnick said.
 
“As a society, we need to balance things,” he said. “Suppose I tell you for every 100 workers who benefit by raising the minimum wage, five lose their job. That’s a tough
balancing act.”
 
Researchers have conducted projects like Minneapolis’ in cities across the country — including Santa Fe and Seattle — and some of them subsequently raised their minimum wage, Frank said.
 
Matt Hawbaker, stock manager at the Book House in Dinkytown, said the shop wouldn’t be able to afford a higher minimum wage.
 
Though he said raising the minimum wage could be positive for large corporations, he said the same wouldn’t necessarily apply to smaller businesses.
 
The Book House is also at a disadvantage compared to its competition, online book vender Amazon — which can afford lower prices — unlike the Dinkytown store, Hawbaker said.  
 
“In the ‘U’ area, specifically, small businesses have really been squeezed in the last several years,” he said.
 
The Book House might consider raising book prices if the minimum wage increases, he said.
 
Rolnick said raising the minimum wage gradually could keep businesses afloat.
 
“Make sure the side effects — the loss of employment — isn’t too great,” he said. “That’s one way of managing it.”