Young workers make up a disproportionate share of the unemployed. They comprise 13 percent of the labor force, but make up 26 percent of the unemployed. Young workers are concentrated in sectors of the economy that are particularly sensitive to business cycle fluctuations, such as retail trade and leisure and hospitality, which fared badly during the recession. Unemployment spells early in a young person’s work life can have lasting negative effects for the future produce yet another barrier to our young people being able to find work.
The proposed increase to $9.50 an hour would be the second highest state minimum wage in the country and by far the highest in our region. Among Midwestern states, Illinois has the highest minimum wage at $8.25. The minimum wage in Montana is $7.80 and in Michigan it is $7.40. All of the states that border Minnesota conform to the current federal minimum wage of $7.25. Moving the minimum wage this drastically will inevitably cause jobs and businesses to be moved to other bordering states.
Minnesota legislators should learn from what happened in Washington State and Oregon. In those states, both similar to Minnesota in size, there have been 50,000 fewer restaurant jobs created since they enacted excessive minimum wage hikes, similar to Minnesota’s, that were tied to inflation and did not consider tips as wages. We support creating a tipped employee tier, where tipped employees who make $12/hour or more including tips would maintain the current minimum wage level. During the 2013 session this proposal received bipartisan support and a 65-65 tie vote in the House. A higher minimum wage that doesn’t recognize tips will mean fewer hours for employees, higher prices for customers and make it more difficult for restaurant operations to grow or expand -- hurting the very employees an increase is supposed to help. More properties may change their business models toward counter-service or customer ordering via iPads, and this could amplify the trend, meaning fewer good paying jobs for servers.