A day after President Barack Obama announced his intention to raise the federal minimum wage, the University of Minnesota hosted a debate to weigh the issue’s pros and cons.
Proponents of minimum wage hikes argue that it spurs consumer spending in a stagnant economy, while opponents say the increase would hurt businesses and threaten jobs. Panelists from both sides discussed the issue on the University’s West Bank at the Humphrey School of Public Affairs Wednesday.
“Every year that you don’t raise the minimum wage, through inaction, inflation eats away at the bottom level of wages that any worker is going to earn in the economy,” said Rep. Ryan Winkler, DFL-Golden Valley.
Winkler is leading legislation in the Minnesota House that would raise the state’s minimum wage to $9.50 per hour.
Political science professor Larry Jacobs moderated the debate, and about 150 people attended.
Obama announced an executive order raising the federal $7.25 per hour minimum wage to $10.10 per hour for federally contracted workers by next year in his State of the Union Address on Tuesday.
The order, which does not need congressional approval, would affect only the approximately 10
percent of federal contract workers who already make less than $10.10 per hour.
Still, Obama supports an increase for all minimum wage workers in the future.
“This will help families. It will give businesses customers with more money to spend,” he said in the address.
For states with minimum wages higher than the president’s suggestion, employees would be entitled to the higher of the two wages.
Currently, Minnesota’s minimum wage is $5.25 for small employers and $6.15 for those making more than $500,000 per year.
One Minnesota restaurant chain, Punch Pizza, recently increased its minimum wages to $10 per hour. The chain received recognition from the President on Tuesday.
AJ Niemiec, general manager of Punch Pizza in Stadium Village, said the pay change wasn’t a political move for the company but one to create better employees.
St. Cloud State University professor and economist King Banaian, who sat on Wednesday’s panel, is against all minimum wage increases. He said raising the minimum wage wouldn’t necessarily help the majority of people living under the poverty line as proponents of higher wages anticipate.
Less than 11 percent of Minnesota’s hourly workers living below the poverty line last year were paid the minimum wage or less, according to the Minnesota Department of Labor and Industry’s 2013 Minnesota Minimum-Wage Report, Banaian told the panel.
He offered alternative solutions to alleviating poverty, like expanding the federal Earned Income Tax Credit program, or the state version, Minnesota Working Family Credit. Both programs allow low-income people who work to pay less income tax.
Former Humphrey School of Public Affairs professor Ann Markusen disagreed, saying both tax programs encourage employers to keep workers at part time so they don’t have to pay benefits.
She said to the panel that raising the minimum wage could help concentrate the programs’ efforts to those who need it most and help alleviate some of the programs’ costs.
Markusen also said increasing the minimum wage would benefit students, both financially and academically.
“For college students, you’re supposed to be studying, and so you should be making more to enable you to put time into studying and still pay tuition,” she said.
Ben Gerber, who works in public policy at the Minnesota Chamber of Commerce, said the emotional argument that comes with the minimum wage debate is the reason many Republicans and Democrats are behind the push.
But he said that emotion can keep people from seeing what it would look like if the new minimum wage was implemented.
“Good politics doesn’t always make for good policy,” Gerber said, “and I think minimum wage is a good example of that.”
Jessica Lee and the Associated Press contributed to this report.
