Their View: Minimum wage is about jobs, not justice
A March 22 column in the Alexandria Echo Press titled “Who would oppose raising minimum wage?” in support of the current proposals to raise the minimum wage implied you’d have to be “Scrooge” in order to oppose the idea. While I envy the author’s ability to turn an argument of economic principles into an over-simplified and one-sided storybook tale, the fact still remains that the minimum wage debate is complex and will have lasting implications for low-income workers and the price of goods and services.
I’d like to use the story of ‘Robbing Peter to Pay Paul’ to demonstrate another point of view.
Every few years, proponents for a higher minimum wage recycle stories of individuals that would have their lives greatly improved if elected leaders would just make this “small” change.
But like all decisions lawmakers in St. Paul and Washington make, the impact of changing our laws on wages will have a profound ripple impact throughout our economy.
Like neglecting the tax owed to the Church of St. Peter to pay the Church of St. Paul, a drastic minimum wage change would solve one problem by creating an even larger one, producing no net gain.
Raising the minimum wage for employees from $7.25 to $9 seems like nothing, but when amplified, it will force employers to raise prices on what they sell or produce, lay off workers, limit hours for workers, or a combination of all three. From $7.25 to $9 is a 24 percent increase, $10.10 is a 39 percent increase, and $10.65 (a current proposal in the Minnesota House) would result in a 47 percent increase in costs. If your family’s monthly mortgage rose 47 percent, would you simply “absorb” it? In this fragile economic recovery, both small businesses and large job creators will react accordingly to artificial economic engineering like a massive jump in minimum wage.
The Minnesota Restaurant Association announced last week that nearly all of its members plan to increase menu prices and reduce staff hours in response to a raise in wages. How quickly we forget that many of the “Peters” we would take from are the same low-wage workers that would be frozen out of the job market when we pay “Paul.” In our free market economy, somebody’s monetary gain is always somebody else’s loss – many times it isn’t the loss of the “rich” you read so much about.
Proponents of the idea argue social justice demands a minimum wage increase because the cost of living continues to increase. What if we ask, instead, do the policies of government drive this cost of living up further? With a 30, 40 or 50 percent increase in operating costs, companies large and small raise prices. It brings to mind another traditional dilemma of the chicken or the egg and which came first – does the accelerated increase in cost of living come before or after a minimum wage increase? The two, along with other government policies, are intricately linked.
While I would love to say that all of us at the Capitol can simply put on Santa’s red overalls and magically increase quality of life through a massive wage increase, I am sad to report that the plan will result in coal-filled stockings for the lower class in years to come.
In the meantime, I will take to my sleigh and continue supporting pro-growth economic policies from St. Paul that help create jobs and raise take-home pay for our hardest workers in a sustainable way.
Mary Franson, R-Alexandria
MN House of Representatives