Column: Closing the wage gap
David BardFor the Budgeteer News In the coming months, I will be offering analysis of and opinions about various local issues. I am convinced that lively, intelligent conversation is vitally important to the quality of community life and to democ...
For the Budgeteer News
In the coming months, I will be offering analysis of and opinions about various local issues. I am convinced that lively, intelligent conversation is vitally important to the quality of community life and to democratic politics. I believe that raising questions can be as important to that conversation as reasoned opinions, so I may, on occasion, raise more questions than offer opinions.
In a Jan. 3 column in our sister newspaper, the Duluth News Tribune, Drew Digby, a member of the Duluth Planning Commission, noted a number of positive signs for our local economy. He also wrote: “In Duluth, the gap between those workers whose jobs leave them in poverty and those earning more than $50,000 a year is growing.” Lower-middle-income households in Duluth have been in significant decline in recent years.
The issues surrounding growing economic inequality locally and nationally are complex, but might one way to address the growing wage gap in our area be an increase in the minimum wage in Minnesota?
The current legislatively mandated minimum wage in Minnesota is $6.15 per hour. However, because the federal minimum wage is $7.25 per hour, that is our effective minimum wage. Working 40 hours per week, 52 weeks per year at this hourly minimum wage of $7.25 yields a gross income of $15,080.
Think about your own household and ask how far that amount would go to cover basic expenses, even for a single person.
There seems to be growing momentum for increasing the minimum wage in Minnesota. Recently, the News Tribune argued that the case for an increase in the wage made sense, but strongly suggested that the hourly wage of $9.50 that passed the Minnesota House last session was excessive.
Where does that amount come from? At least one source for suggesting an increase in the minimum wage to $9.50 per hour is the Legislative Commission to End Poverty in Minnesota by 2020, established in 2007.
One key strategy for ending poverty identified in the Commission’s report is restoring work as a way out of poverty and one tactic within that strategy was an increase in the minimum wage. In its report, $9.50 per hour was used as an example of a minimum wage that would have a significant impact on reducing poverty and helping restore work as a way out of it.
There are negative economic repercussions in raising the minimum wage. Employers may hire fewer people. The cost of products and services produced and provided by workers earning that minimum wage will increase.
There are also positive economic effects of raising the minimum wage. There is more money in the hands of people who tend to spend that money on needed goods and services, thereby stimulating the economy. There have been some solid studies supporting the overall positive impact of raising the minimum wage.
So, what if we looked at an increase in the hourly minimum wage to $9.50 as a starting place for conversation? What if that conversation included employers who are directly affected by hikes in the minimum wage? Could we arrive at a figure to increase the minimum wage that has some broad consensus?
If $9.50 an hour is really the minimum wage we need to get to in the near future, perhaps we can come up with the means of getting there that smooths the transition for employers and consumers.
In the end, raising the minimum wage may not happen as amicably and smoothly as I envision.
In the end, though, it makes sense for both the well-being of our economy and the well-being of our community.
David Bard is a husband, father, pastor, ethicist, and teacher. He is delighted to live in Duluth where he grew up.