State Sen. John Marty's efforts to raise Minnesota's minimum wage ("$15 an hour — first Minneapolis, then statewide," June 29) are unquestionably well-intentioned; his advocacy for the least among us is to be admired. And Marty, DFL-Roseville, is correct to be concerned that Minnesotans' real median household incomes are lower than they once were, that income inequality is growing and that there is too little opportunity for those in our state struggling in this anemic economic recovery.
But his medicine — arbitrarily raising wages by government fiat — would only make the malady worse.
Opposition to minimum-wage laws is not grounded in the desire to see the rich richer and the poor poorer. It stems from a common-sense understanding that artificially high minimum wages set by government, instead of allowing the free market to set wages, actually can hurt the people we seek to help by limiting job opportunities for workers who need them most.
Politicians too often forget what economists and business owners understand: Increasing the minimum wage and therefore the cost of labor is not a free lunch; someone has to pay for it. Some assume employers simply absorb increased labor costs in the form of lower profits. But this is not an option for most small businesses that operate in a world of razor-thin margins. What decades of economic research shows is that their bottom lines demand that they react by cutting hiring, reducing work hours and benefits and, if possible, raising prices — all of which hurt Minnesota's workers and economy.
Analyzing nearly five decades of research on the minimum wage, the Congressional Joint Economic Committee in 1995 released a study finding, in addition to less employment, that minimum wage laws lead to longer periods of unemployment for low-paid workers, greater turnover, fewer fringe benefits and increased incentives for automation.
A higher minimum wage is not only a bad idea because of lost wages from the elimination of lower-paying positions, but, maybe more important, because of the loss of on-the-job training. Minimum-wage jobs are critical, usually short-term opportunities for less-skilled workers to enter the labor force and acquire basic skills to build upon and advance with. Two out of three minimum-wage earners are making more than that within a year of getting hired.
There is no question that the take-home pay of hardworking Minnesotans is stagnating. But a minimum-wage hike is not the answer; policies to jumpstart Minnesota's economy — lower taxes, less regulation and smaller government — are.
Andy Brehm is a corporate lawyer in Minneapolis and a longtime Republican activist.
