John Clay: $9.50 minimum wage lifts up women, children, people of color

John Clay is an economist policy director for the JOBS NOW Coalition.

The Minnesota Legislature is expected to take up the $9.50 an hour minimum wage bill in the first weeks of the 2014 legislative session. Raising Minnesota’s minimum wage to $9.50 an hour would mean a raise for 360,000 working Minnesotans and significant gains in purchasing power for women and people of color, according to a soon-to-be-released Jobs Now Coalition report. The analysis looks at the number of Minnesota workers whose wages are below $9.50, as well as those above this mark who would likely see a raise due to what economists call the “spillover effect,” as employers adjust pay scales upward.

Although about 150,000 fewer women are employed in Minnesota than men, a greater number of women are working low-wage jobs. As a result, the majority of the 360,000 workers who would benefit from a $9.50 an hour Minnesota minimum wage – 202,133 workers – are women. A stronger minimum wage policy would boost purchasing power among Minnesota women by nearly $256 million annually. Empowering women is a key tool in eradicating poverty and closing the equity gap that hampers educational opportunities for Minnesota children. At last count, more than half of the state’s working mothers were their families’ primary bread winners, according to the Center on Women and Public Policy at the U of M’s Humphrey School. Its February 2012 report further found that “68 percent of female-headed households in rental housing … are paying costs that exceed 30 percent of their income.”

This has a profound impact on Minnesota children. As of 2011, nearly 260,000 children were living with parents who considered working poor, according to the Annie E. Casey Foundation’s Kids Count data center. About 137,000 Minnesota children would benefit if the state raised the minimum wage to $9.50 an hour. Children from families with sufficient financial resources are far more likely than children from economically disadvantaged families to start kindergarten ready to succeed in school and later in life, according to research cited by Children’s Defense Fund of Minnesota. An additional $1,000 of average annual family income throughout early childhood can result in higher reading and math scores for children in low-income families.

A minimum wage bump to $9.50 also would begin helping Minnesota address the growing disparity in wealth among white Minnesotans and people of color. While the statewide poverty rate is 12 percent, it’s 28 percent for people of color, and 37 percent for African Americans, according to data compiled by St. Paul-based Wilder Research. More than 83,000 workers of color would see a raise. That includes 22 percent of black workers, 29 percent of Hispanic workers and 17 percent of Asian workers. A $9.50 minimum wage offers an important tool, with other anti-poverty efforts, to begin building wealth.

Our upcoming report shows that workers across the demographic spectrum would benefit from a $9.50 an hour minimum wage, and that annual consumer spending power in Minnesota would increase by $470 million, giving a much-needed boost to sales at local businesses.

– John Clay, policy director for JOBS NOW Coalition, originally authored this report for Minnesota 2020’s blog.