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Minnesota Inflation Adjusted Minimum Wage Amendment (2014)

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A Minnesota Inflation Adjusted Minimum Wage Amendment was not on the November 4, 2014 ballot in Minnesota as a legislatively-referred constitutional amendment. The measure would have increased the hourly minimum wage to $10 on January 1, 2015 and adjusted the wage annually based on inflation.[1]

The proposed amendment was sponsored in the Minnesota Legislature by State Senator Ann H Rest (D-45) as SF 2917.[2]

Text of measure

Ballot title

The ballot title would have read as follows:[1]

Shall the Minnesota Constitution be amended to establish a minimum wage at a rate of at least $10 per hour that is increased each year by the rate of inflation?[3]

Constitutional changes

The proposed amendment would have added a Section 18 to Article I of the Constitution of Minnesota:[1]

Sec. 18.

(a) Every employer must pay each employee wages at a rate of at least:

(1) $10.00 per hour beginning January 1, 2015; and
(2) the rate established under paragraph (b) beginning January 1, 2016.

(b) Beginning January 1, 2016, and each subsequent year, the minimum wage in paragraph (a) is multiplied by the ratio of the annual implicit price deflator for government consumption expenditures and gross investment for state and local governments as prepared by the United States Department of Commerce for the most recently available year, to the 2013 implicit price deflator for government consumption expenditures and gross investment for state and local governments as prepared by the United States Department of Commerce.
(c) If the United States Department of Commerce does not prepare an implicit price deflator, the legislature may select and utilize a mechanism that produces a measure that most closely resembles the implicit price deflator.
(d) The legislature may provide by law for a higher minimum wage than required under this section.

Support

Sen. Thomas Bakk (D-3) explained the rationale behind utilizing an amendment instead of a statute for the minimum wage law. He said, "The constitution is intended to protect the rights of the minority. These low-wage workers are a minority of Minnesotans. This gives them some protection that their wages would keep up with inflation. It meets my test that this is important enough that it belongs in the constitution."[4]

Supporters

Opposition

Opponents

Media editorial positions

Opposition

  • Minneapolis Star Tribune said, "Like the rejected amendments in 2012 — one to ban same-sex marriage, another to require a government-issued photo ID to vote — the minimum wage’s relationship to inflation is very much within the Legislature’s purview. It has nothing to do with state government’s foundation or function."[5]
  • Rochester Post Bulletin said, "Bakk said 10 of the 11 states that index their minimum wage to inflation did so after constitutional amendment. Just because other lawmakers in other states abdicated their legislative responsibility doesn't mean Minnesota should follow suit."[6]

Reports and analyses

Economic Policy Institute

Economic Policy Institute (EPI), an economics think tank that supports an increased minimum wage, analyzed the relationship between higher state minimum wages and changes in economic conditions to hypothesize about the effects that would be generated by the Fair Minimum Wage Act of 2013, which would increase the minimum hourly wage to $10.10. Multiple initiative campaigns have cited the research as a supporting argument. EPI developed the two following key points:[7]

  • Such an hourly amount would restore the minimum wage to an inflation-adjusted value equivalent to the minimum wage in 1968. “It is important to also recognize that today’s minimum wage has not fallen to exceptional lows out of economic necessity. Over the past 45 years, the U.S. economy has vastly expanded, and productivity (our ability to produce goods and services for the same amount of work) has more than doubled. Yet the minimum wage—our agreed-upon standard for the minimum amount a worker in our society should be paid—has been left to stagnate and decline.”
  • An increased minimum wage would create more consumer demand and thus create more jobs and spur economic growth. “Research over the past two decades has shown that, despite skeptics’ claims, modest increases in the minimum wage have little to no negative impact on jobs. In fact, under current labor market conditions, where tepid consumer demand is a major factor holding businesses back from expanding their payrolls, raising the minimum wage can provide a catalyst for new hiring.” Such an increase would indirectly raise the wages of an additional 27.8 million workers, who would receive about $35 billion in additional wages over the phase-in period.

To read the full report, see here.

Congressional Budget Office

The Congressional Budget Office (CBO) issued a report on the “principle effects” of increasing the minimum hourly wage to $9.00 or $10.10. An increase to $10.10, they concluded, would have a more substantial effect on wages and employment than $9.00. The CBO made the following conclusions about raising the minimum wage:[8]

  • An increase to $9.00 would reduce total employment by about 100,000 and an increase to $10.10 by approximately 500,000. The CBO postulated that this would happen because employers would raise commodity prices to offset wage increases.
  • An increase may be accompanied by reductions in real-income due to inflation and higher consumer prices.
  • The aggregate income, after increases and losses, would still be net positive for low-income families. The aggregate would be an increase of $2 billion.
  • A minimum wage hike to $10.10 would boost an average family's income by about three percent.
  • The hike would also move about 900,000 people above the poverty line. Currently, 45 million people live below the poverty line.
  • Raising the minimum wage would cause a small decrease in federal budget deficits for several years following.

To read the full report, see here.

Path to the ballot

See also: Amending the Minnesota Constitution

The Minnesota State Legislature was required to approve the amendment by a simple majority in both legislative chambers to place the amendment on the ballot.

Similar measures

The following measures related to minimum wage increases were proposed for the general election ballot in November:

See also

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References