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Signs a "Min" Wage Won’t Cost MN Jobs

GRAPHIC: Economists say there are a lot of myths about the minimum wage, and one of them is that it reduces employment. Image courtesy EPI
GRAPHIC: Economists say there are a lot of myths about the minimum wage, and one of them is that it reduces employment. Image courtesy EPI
December 20, 2013

ST. PAUL, Minn. – Many folks think raising the minimum wage would cost jobs, but there are signs that isn't true.

Critics have said a higher state minimum could make Minnesota employers cut hiring.

But according to economic studies, that hasn't happened in places that have done it before.

John Puckett, owner of Punch Pizza, says you can make back the cost of increased wages through a better and more stable workforce.

He says he knew it would be a big investment for a small company to start paying new hires $10 an hour.

"So, it only makes sense from a financial standpoint because it will enable us to keep people, keep our best people, and attract great people to our company," he explains.

The Minnesota Legislature is likely to look at setting a state minimum wage during the next session.

According to Nan Madden, director of the Minnesota Budget Project, economists have spent years comparing states that have raised the minimum wage to neighbors that haven't.

She says they've often been surprised to see that increasing low-end pay hasn't cost jobs. Some of the studies found businesses make up the price of higher wages though reducing what they have to pay out due to high turnover.

"What do they save in terms of hiring and training costs, by being able to stabilize their workforce by providing a higher wage?" he says.

Some very successful businesses in the service sector pursue a conscious strategy of investing more in their employees.

Puckett says it isn't a choice made for the sake of good publicity or a short-term boost to morale, but because it pays off over years. He says he had two models in mind when considering the long-term, bottom-line implications.

"We're doing it, not only to reward our good staff, but when we look in the future, we think – like what it's done for Costco or In-N-Out Burger,” he says. “It'll enable us to build a better company by having better people, and better service and quality."


Dan Heyman, Public News Service - MN