More on the minimum wage

Yesterday’s Minneapolis Star Tribune editorial supporting an increase in the minimum wage in Minnesota to $7.00 deserves much more attention. The Star Tribune editorial plays into a Democratic effort that seeks to use the Democratic majority in the Minnesota Senate to roll House Republicans (holding a tenuous majority) and present Republican Governor Tim Pawlenty with the unpalatable alternative of signing or vetoing the bill. I wrote about the editorial in “Faith and economics at the Star Tribune.” The only thing the editorial gets right is the scent of weakness that it picks up on the Republican side.
Many readers wrote with excellent points on the subject. The Star Tribune editorial is extraordinarily misleading for such a short piece, but is otherwise par for course at the Star Tribune. Here are a couple of considerations overlooked in the editorial.
The editorial refers to fourteen other states including Oregon and Washington as having already raised their minimum wage. I took a look at Oregon. The minimum wage in Oregon is $7.25 as of January 1, 2004, and is adjusted annually for inflation by a calculation using the U.S. City Average Consumer Price Index for All Urban Consumers for All Items.
The current federal minimum wage is $5.15. Oregon’s minimun wage was raised in stages beginning in January 1997. It was raised from $5.50 to $6.00 in 1998 and $6.50 in 1999. The raises in the minimum wage roughly coincided with a long period of stagnation in job growth. In 2004, job growth made a slight recovery after more than three years of stagnation. Before 2004, Oregon had held the highest or second highest unemployment rate in the country for 41 months. See the January 14, 2005 AP story “Oregon unemployment rate drops to 6.8 percent.” It would be nice if the Star Tribune had provided some context to its encouragement of Minnesota’s emulation of Oregon.
The Star Tribune editorial implies that raising the minimum wage is a good method of reducing destitution among the poorest workers. Put to one side the fact that the editorial passes over in silence the effect of the earned income tax credit, which by itself belies the point of the editorial. The Star Tribune fails to provide any information to substantiate the implication of its editorial, and in fact it appears to be erroneous.
The Employment Policies Institute has calculated the average family income of employees who would benefit from an increase in the minimum wage based on Census Bureau Data (click here). According to the EPI breakdown (based on 2003 data), the average family income of Minnesota’s destitute minimum wage workers is…$57,421. Funny that the Star Tribune didn’t get around to entertaining this consideration in its editorial either.
There is much more to be said on the subject, but my last point this morning is political. It’s time for a gut check on the part of Minnesota Republicans.

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