As Minnesota considers becoming the state with the highest minimum wage, perhaps as much as $9.50 an hour, the debate has been predictable. DFL lawmakers argue for something closer to a “living wage” for hard-working, struggling low-income Minnesotans. Republican lawmakers counter that raising the minimum wage will harm job-creating business owners.
Bifurcating Minnesota’s minimum wage is a common sense, compromise solution. Minnesota should establish a minimum wage for hourly employees who cannot be claimed as dependents and a lower minimum wage for those who can — a “non-dependent minimum wage” and a “dependent minimum wage.”
Many minimum-wage earners are teenagers working part-time jobs. According to the Minnesota Department of Labor’s most recent report on minimum wage, 93,000 hourly employees in Minnesota earned $7.25 an hour or less in 2011. The “or less” part is due to some exceptions under federal and state laws resulting in some hourly employees making less than the federal minimum wage of $7.25 an hour. Of these 93,000 workers, one-third were 15 to 19 years old in 2011, and 72 percent of these 93,000 workers were part-timers.
A bifurcated minimum wage is good public policy. Some might argue that it does not make sense to pay one worker more (or less) for doing the same job. “The market pays for the work, not the worker” is an economically sound argument. It is also the argument for abolishing minimum wage laws altogether. If you believe in the merit of minimum wage laws, it is a small step to bifurcation. Once society makes the choice, in some instances, to pay the worker rather than for the work, it only makes economic sense to ensure that the right types of workers are benefiting and that employers (directly) and their customers (indirectly) are not overpaying for that public policy choice.
Said another way, is there a sound public policy reason for paying a 16-year-old Minnesota “sandwich artist,” dependent on his or her parents for support, $9.50 an hour to do work that teenagers in other states are paid $7.25 to do?
Administering a bifurcated minimum wage would be simple. New employees already must complete an IRS Form W-4. The first line of the Personal Allowances Worksheet provided with the W-4 asks, “Enter ‘1’ for yourself if no one else can claim you as a dependent.” Minnesota could simply require hourly employees who are eligible for the non-dependent minimum wage to complete this line and provide a copy of the worksheet with their Minnesota income tax return. Workers not entering a “1” on that line could be paid the dependent minimum wage. This worksheet could be compared against the worker’s IRS Form 1040 filed with the state, which also asks if someone else can claim the worker as a dependent. In cases of fraud, fraudsters would be subject to penalties and their employers entitled to restitution.
Federal and Minnesota laws already provide for a “youth minimum wage.” Under federal law, teenagers may be paid $4.25 an hour during the first 90 consecutive days of their employment. In Minnesota, the “youth minimum wage” can be as low as $4.90 during that time. The law already permits employers to treat younger workers differently due to their assumed lesser economic needs.
Employers would be prohibited from discriminating against non-dependent applicants. Employers would benefit from a bifurcated Minnesota wage that permits lower wages to be paid to employees who can be claimed as dependents. In exchange, employers would be prohibited from inquiring into whether an applicant could be claimed as a dependent and from choosing one applicant over another to pay the dependent minimum wage.
Bifurcation is bipartisan. By getting behind bifurcating Minnesota’s minimum wage, Gov. Mark Dayton and DFL legislators would show they are not deaf to reasonable business concerns without abandoning their desire for higher wages for low-income Minnesotans. By promoting a dependent and non-dependent minimum wage, Republican legislators would show that they can skillfully play their role as the minority party and support common-sense approaches that reduce the impact of minimum wage hikes on businesses.
Tom Corbett is a Stillwater resident and former City Council candidate.