SAINT PAUL AREA CHAMBER OF COMMERCE: Minimum Wage Study Committee: Week 11 Recap

Saint Paul Area Chamber of Commerce issued the following announcement on Aug. 7.

The Citizens League Minimum Wage Study Committee met on Thursday, July 19, 2018, at the University of St. Thomas. Check out last’s week recap on the tenth meeting here if you missed it.

Looking back at last week’s meeting, a few committee members still are in need of some clarification of DT&H work, particularly distinguishing program participants and program workers. Additionally, the community reports since last meeting piqued the curiosity of many members.

This week’s research report was presented by Man Xu, a colleague of Thomas Durfee, from the Humphrey School of Public Affairs, University of Minnesota. The findings addressed the questions, “Who are most affected by a change in the minimum wage in terms of its impact to the ‘benefits cliff’?” and “What industries grow fast in the City of Saint Paul?” The data also identified which industries will be most impacted by a minimum wage adjustment. To look at this week’s report, click here.

Which indicators make a household more sensitive to a minimum wage change in terms of its impact to the ‘benefits cliff’?

  • Whether a head of household is married or single
  • Is a family member pregnant
  • Number of children in the household
  • Ancillary costs such as childcare, rent, etc.

The growing industries in Saint Paul (based on NAICS – industry identifier - code)?

  • Retail (NAICS code 44-45)
    • 63% of jobs within this industry pay less than $15/hour
    • Represents 14% of all jobs
  • Administration/waste (NAICS code 56)
    • 66% of jobs within this industry pay less than $15/hour
    • Represents 15% of all jobs
  • Health care (NAICS code 62)
    • 34% of jobs within this industry pay less than $15/hour
    • Represents 28% of all jobs
  • Accommodations and food (NAICS code 72)
    • 63% of jobs within this industry pay less than $15/hour
    • Represents 16% of all jobs
An interesting observation that can be made from the data provided is that, in Saint Paul, the highest “birth” rate of companies is in those sectors with a high percentage of jobs that pay under $15/hour. What can be concluded from this remains unclear: is it that we should not be concerned because these sectors paying below $15 are growing faster than average, so we can “afford” to lose a few without impacting our overall growth? Or is it that we should be concerned because the higher growth rate is because of the lower wages being paid? The data does not support a conclusion either way, but what we do know is that the effects of a minimum wage change will be concentrated in these sectors.

Next week’s meeting will begin the work of discussing and then, ultimately, drafting recommendations. In preparation, the members reviewed what they have learned in the last 10 meetings. The goal was to provide summaries and identify takeaways and any still-unanswered questions that require further research.

Across most all meetings, four reoccurring topics remain of primary importance: exemptions, phase-in, tip adjustments, and rate. These topics, in addition to enforcement/compliance, undoubtedly will be areas of specific focus in the recommendation process.

A few important data points: 

  • The poverty rate in Saint Paul is 22.3%.
  • Of all Saint Paul residents, 40,000 both live AND work in Saint Paul.
  • 8,000 of those 4,000 residents are earning less than or equal to $1250/month
  • The impact of a minimum wage change will be felt mostly in the retail, admin/waste, health care (home health care), and accommodations/food sectors. These sectors also represent the vast majority of Saint Paul’s smallest – and often immigrant-owned – businesses.
What we know so far: no matter the recommendations made, there will be offsets.  For every family who experiences an increase in wages, others will lose hours, lose jobs, experience increased employment costs (healthcare, etc.). For every restaurant that passes along increased costs to customers in the form of higher prices or a “service charge,” others will automate their work, lay off workers, or reduce hours.

The ongoing struggle here is the cost/benefit analysis.

For your own consideration, we would like to direct you to a Pioneer Press article from July 22, written by Fred Melo, “Immigrant workers, business owners say $15 an hour could make all the difference – for better or worse” linked here.

Original source can be found here.

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