A state Senate committee Wednesday approved legislation that would raise the minimum wage in Minnesota to $7 an hour by July 1, 2006. The measure now goes to the full Senate for a vote.

Proponents, including labor unions and churches, said low-wage workers deserve to earn more and the extra money they make will benefit the entire Minnesota economy. Opponents, primarily businesses, said government should not force companies to pay a higher wage and it would hurt the economy.

Seven years ago, Congress set the federal minimum wage at $5.15 an hour. Since then, 15 states and the District of Columbia have mandated a higher minimum. If the minimum wage had kept pace with inflation since the 1960s, it would be $8.46 an hour.

"To have the strongest economy of the 21st century, we do not leave the lowest-wage workers behind," the bill's author, state Senator Ellen Anderson, testified before the Senate Jobs, Housing and Community Development Committee. A wage of "$5.15 an hour really doesn't meet that basic standard of fairness."

Legislators held hearings last fall in Alexandria, Chisago, Park Rapids and Worthington, and heard that the need for a higher wage is greater in rural areas than in the Twin Cities, Anderson said.

Senator Ellen Anderson (center), author of the minimum wage bill, testifies before a state Senate committee. Also speaking were (from left) Tarryl Clark of the Minnesota Community Action Association, University of Minnesota Professor Ann Markusen, Minnesota AFL-CIO Legislative Director Brad Lehto and Joint Religious Legislative Coalition Director Brian Rusche.

Benefits one-fifth of workforce
About 550,000 Minnesotans ? one fifth of the workforce ? would benefit from a minimum wage increase, University of Minnesota Professor Ann Markusen testified. That number includes not only workers who earn just the minimum wage, but also workers at the $7- or $8-an-hour level who will experience an upward push in their pay.

Under the legislation, the wage would go to $6.10 an hour July 1 of this year and $7 an hour in July 2006.

Markusen, an economist at the Humphrey Institute of Public Affairs, described research findings that indicate minimum wage increases benefit the economy. "There is no evidence an increase in the minimum wage will hurt small business," she said. "It will not cause job loss or capital flight."

She called the proposed wage increase modest and said it was in line with previous increases passed by Congress and the Legislature.

Other speakers said a higher wage is a matter of fairness.

"A person's labor should provide for basic needs," said Brian Rusche, director of the Joint Religious Legislative Coalition. His organization represents Catholic, Lutheran, Jewish and Muslim faith communities ? all of whom support a higher minimum wage, he said.

While union members rarely earn the minimum wage, they overwhelmingly support an increase that would benefit lower-paid workers, said Brad Lehto, legislative director of the Minnesota AFL-CIO. "We believe that it's the right thing to do."

Opposition from business
The Minnesota Chamber of Commerce opposes any increase in the minimum wage, Tom Hesse, vice president of government affairs, testified. "The market is working and has worked," he said.

Mike Hickey, representing the National Federation of Independent Business, urged the Legislature to hold off action to see if Congress raises the wage.

State Senator Michele Bachmann, R-Stillwater, said laws like the minimum wage "tie cement blocks on businesses," adding, "If Minnesota is not a friendly place to do business, those jobs will go across the world."

On a partyline vote of 6-9, the committee rejected a proposed "tip credit" amendment that would have allowed employers to count tips as part of employee pay for purposes of complying with the minimum wage. The committee then voted 9-6 to approve the minimum wage increase.

In recent years, the DFL-controlled Senate has passed minimum wage increases, only to see them fail to get out of committee in the Republican-controlled House. Anderson said she believes it can pass the House this year. Companion legislation, authored by Rep. Tom Rukavina, DFL-Virginia, has been introduced in the House.

For more information
To track legislation, visit the Legislature's website, www.leg.state.mn.us