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Minimum wage hike questioned: legislative proposal would increase rate to $9.50 an hour

BEMIDJI – A legislative proposal to increase Minnesota’s minimum wage to $9.50 an hour does not appear to have a large base of local support.

Minnesota, with a minimum wage of $6.15 an hour, is one of four states with minimum wages lower than the federal rate of $7.25 an hour. The federal minimum wage applies to most businesses, though some are governed by state law.

Mike Smith, owner of MJB Home Center in downtown Bemidji, said he doesn’t believe such an increase would directly impact his business, but added that an extra $2.25 an hour was a big jump in the wage rate.

He wondered whether it would be better to phase in such an increase over several years.

“To jump all in one year, I think, that would be too big,” he said. “I think it would impact a lot of employers.”

Tuleah Palmer is the executive director of the Northwest Indian OIC, which supports American Indian families by providing programs and resources that promote and strengthen lifelong learning and wellness, workforce and career development, economic sustainability and asset development.

She questioned whether a wage increase would result in higher prices for goods and services or whether employers would decrease workers’ hours or lay workers off to make up the difference.

“I don’t think that’s the best way to address poverty,” she said.

Reed Olson, co-owner of Wild Hare Bistro, said a higher minimum wage would require all businesses, regardless of whether they were exempted from paying the higher wage, to increase rates to compete for quality employees.

“It does put a lot of pressure on us,” he said. “For small businesses in an economy that’s not doing really well, that would basically be … a job-killer for us.”

He said such an increase would likely result in fewer worker hours or fewer workers.

“If it went to $9, I don’t know what we’d do,” he said. “It would be really dangerous.”

Minnesota’s proposal, introduced Wednesday in the state Legislature, followed President Barack Obama’s State of the Union remarks from advocating for increasing the federal minimum wage to $9 an hour.

Rich Siegert of the Edgewater Group, which owns and operates numerous businesses such as the Hampton Inn & Suites and the Green Mill, said businesses pay what the market will bear.

At the minimum wage, he said, businesses often higher younger workers who need the additional time and training to learn their jobs.

But if the state ups the minimum wage, he said, “We’ll pay higher wages and then go after people that are more trained.”

“If we have to pay higher wages, more money, and then still do all the training, the work, I think you come out on the shorter end,” Siegert said

Noting that such a scenario likely would lead to higher prices for goods and services, he wondered, “Are you gaining anything?”

Palmer shared similar concerns, stating that the community needs to develop more living-wage jobs.

“No. 1, a livable wage is absolutely necessary,” agreed Audrey Thayer, coordinator of the ACLU-MN Greater Minnesota Racial Justice Project in Bemidji.

According to the JOBS NOW Coalition, a statewide research and policy coalition dedicated to promoting jobs that pay family-supporting wages, the average cost to meet the basic needs of a family of four with two workers is $51,500.

To cover those costs, each worker would have to earn $12.37 an hour, JOBS NOW reports.

Thayer said an increase in the minimum wage would unfortunately hurt small businesses, but that many local employers already pay rates above the minimum wage.

“I think it’s a good move,” she said. “Make more money, spend more money … I think it’s time for a living wage in our community, for our working community here.”

Lori Paris, president of the Bemidji Area Chamber of Commerce, said she recently sent a survey to Chamber members asking for comments on whether a minimum wage hike would impact their businesses and whether it would impact the community.

Three-to-one, she said, responses indicated it would not impact their businesses.

But there was about a 50-50 split on whether such a hike would affect the community, she reported.

At this time, the Chamber has not taken a position on the proposal, she said, but the issue will be discussed at upcoming meetings.