(00:00:00) Today's midday is about the controversy surrounding an increase in the minimum wage. It's being debated in the individual states. And in the Congress the House of Representatives recently voted to increase the minimum wage and the Senate is expected to take up the issue this week possibly as early as today. The Bush Administration has threatened a veto if the bill is not to its liking in the first half hour today. We'll hear an independently produced documentary entitled minimum wage maximum controversy. And in the second half hour will visit with two guests who will join me in the studio Minnesota's Labor and Industry commissioner can Peterson and John fossum director of the industrial relations Center at the University of Minnesota, but to begin the documentary minimum wage maximum controversy. (00:01:04) Can I help you? Why would that be a large fry 1955 at the window? Thank you. 349 89 it's either pay a medical bill or eat. It's either pay for a hotel room to stay or eat. Sometimes it's either have heating or eat. I'm begging you and I'm urging you to please raise the minimum wage has an increase in the minimum wage will result in reduced employment of low-wage (00:01:44) workers increased unemployment of low-wage workers (00:01:47) higher prices and reduced employment in the last 15 or so years. Only once did employment go down after an increase in the minimum wage and that was during a period of General recession. Women who have children care for (00:02:10) people that are basically raising the minimum wage or part-time workers part-time workers who are students part-time workers who are subsidizing social security with and also you have people who are supplementing income (00:02:23) raising the minimum wage supporters call it economic Justice opponents say it is an economic disaster and will hurt the very people it is supposed to help in the next half hour. We will hear both sides of the debate on whether we need a higher minimum wage and what effect it might have on the economy. According to the Bureau of Labor Statistics in 1988 about five and a half million workers earned the 335 an hour minimum wage were less another 10 million workers were paid over the minimum but under 450 an hour taken together over 15 million over one in seven of all us workers earn at or near the minimum wage. Anyway, you look at it. The minimum wage is an issue that touches many people. It is a labor and a business issue. It is a woman's issue a minority issue and a youth issue 50 years ago in the midst of the Great Depression President Franklin Delano Roosevelt signed, the fair labor standards act establishing the federal minimum wage. I've been a 1/3 of a Nation kill house Hill plaid kill Murray. The test of our progress is not whether we add more to the abundance of those who have much it is whether we provide enough for those who have too little good evening the Pennsylvania House of Representatives today approves a measure to raise the state minimum wage to 465 an hour. The measure now goes to the state senate where it is expected to face stiff opposition half a million, California minimum wage workers when a pay raise the state industrial welfare commission votes today to increase the minimum wage to four dollars and twenty five cents an hour. The federal minimum wage is and has been three dollars and 35 cents an hour for more than eight years. This is the longest period without an increase since the minimum wage was first enacted 50 years ago. Across the country State legislatures and commissions have begun acting on their own to raise State minimum wages above the federal level. The California Industrial welfare commission voted to increase the California minimum wage to four dollars and twenty-five cents an hour. The new California minimum wage is one of the highest in the country. We will focus on the debate in California as a microcosm of the national debate on the minimum wage. Figuring out who earns the minimum wage is often like asking if the glass is half-full or half-empty it all depends on how you look at it. According to the Bureau of Labor Statistics nationally a little more than a third of all minimum wage workers are teenagers about a quarter are between the ages of 20 and 24 and somewhat less than half our ages 25 and over. Those opposing an increase such as department store President Gerald Blum combine the 20 to 24 age group with teens and say teenagers and college (00:06:32) youths between the ages of 20 and 24 represent almost half of the entire minimum wage Workforce (00:06:39) supporters of an increase such as Tom Rankin research director for the California labor Federation combine the 20 to 24 age group with the 25 and over group and (00:06:50) say the vast majority over 70% are adults over the age of 20. (00:06:56) Both statements are true. It is untrue. However to claim the majority of minimum wage workers are teenagers studies show. There are more minimum wage workers over 30 than under 20, although the majority of minimum wage workers are not teens it is true that a high percentage of all teens do work at the minimum wage. I don't have bills to pay. I love my mother don't have no rent on that thing. I stay at home with my mother, but now I have to pay her and then there's my telephone building is my work clothes and things like that help her out around the house to supporters and opponents of a higher minimum wage have differing views on the importance of teen earnings many of those opposing an increase argue that because teens are living at home with their parents. They are mainly earning spending money and therefore the 335 an hour minimum is adequate. Father John Seymour is with a Los Angeles Church and community group calling for a quote moral minimum wage of 501 an hour many of the students probably most of the students in the state of California that are working at minimum wage and Below $4 an hour are working not simply to buy a few extra clothes to go to the take their girlfriend to the movie or to buy their senior ring, but they are working to support their families. Now if you interview students who are working at minimum wage, you'll see that the money that they earn is counted upon as income for that family. Both sides of the debate also have different views on where minimum wage jobs lead. Jim Abraham's represents the California hotel and motel Association. A lot of the jobs are low-skilled don't need a lot of (00:08:49) experience don't need a lot of Education. It's a lot of a lot of young people that's their first job with the understanding that it's a stepping stone and it's not going to be the end of the Lions where they can gain (00:08:58) some skills gained some experience in earn some money (00:09:03) with the idea that they're going to move on and up and (00:09:05) out. I wish the minimum wage or the idea of a stepping stone and fortunately it's not clear Brown is a labor Economist at the University of California at Berkeley. We have two sectors in the economy. One were people pretty much thrash around and bad jobs primarily minimum wage jobs. (00:09:22) Sometimes sub-minimum (00:09:23) wage or slightly over the minimum wage and then we have a protected sector where people do have career ladders and stepping stones, but that's not true of people who are stuck in these minimum wage jobs. There is no training. There is no idea of a career progression this particularly affects women says Marjorie fujiki with equal rights Advocates the u.s. Commission on civil rights. That most women earning low wages are in typically quote-unquote female occupations service workers clerical 's and operatives these occupations provide little opportunity for advancement. So there's little chance that these women will work their way out of the minimum wage. According to the Census Bureau two-thirds of all minimum wage workers are women woman worker is twice as likely to be earning the minimum wage as a man most minimum wage jobs are in retail sales restaurants and other services all of which have a high percentage of women workers Claire Brown has done extensive research on women in the labor force women are excluded from better jobs women's work tends to be devalued and women are certainly given less power in the labor market so that to the extent that we're going to have a large range of poorly paying jobs, you're going to end up with people filling those jobs that are considered less valuable in our economy. And of course, once again, that's that's women. That's also people of color and also young people call Gorski represented the California retailers Association on a state panel evaluating increasing the minimum wage. He argues that It is not discrimination, but a matter of skills, (00:11:13) who do you get for 335 an hour people who are making 335 are doing it because there's a reason not because it's being forced down. There's a reason and the reason is supply and demand and people skills that they have or do not have to (00:11:26) offer. Black workers are almost twice as likely and Latinos are one and a half times as likely to earn the minimum wage as our white workers. That's according to the federal minimum wage study commission which in 1980 completed the most comprehensive review of minimum wage issues to date while minorities are more likely to earn the minimum wage the vast majority over 70% of all minimum wage workers are white the government reported yesterday the consumer Prices rose 1.4% for the second month in a row for the first time inflation began to spill out into the economy more broadly last month's figures showed worsening inflation and medical care and entertainment the stock market today was down in active Trading. Since the late 1960s, the minimum wage has been raised many times, but the increases have failed to keep up with inflation to restore the purchasing power. The federal minimum wage had a 1968 today. The wage would have to be 570 an hour at 3:35 an hour a minimum wage worker with a full-time job earns one hundred and thirty four dollars a week or just under 7,000 dollars a year after taxes. This puts a single worker with no dependents just above the federal poverty line a single worker with one or more dependence is under the poverty line. For years. I've been busting my rear to make a living but it ain't made for years. I've been trying to pay all my bills to pay paid. Jesse Dela Cruz is a retired farmworker. I could never afford to send my kids in school with decent clothing. We ate the poorest good which is rice beans and potatoes. It's very sad to see your family go hungry. It's a wonder that mind survive De La Cruz describes the situation of a friend by the end of the week. She figures how much money she earned it's not enough. So I told her what could the job and go to the welfare department and that's the only way they could make and she says, but I hate to I'd rather work and I said, you're going to have to feed your family pay your rent or be out in the street. Which do you choose go out to cake at 3:35 an hour or go to welfare department. The argument that is most often advance for increasing. The minimum wage is it will combat combat poverty and reduce the burden on social welfare programs. (00:14:21) These contentions are contradicted by the statistical evidence and the economic (00:14:24) research studies by the national Commission on employment and unemployment (00:14:28) statistics show that insufficient (00:14:30) employment to few earners and large family size are the significant contributors to Poverty not low Wages. That's agricultural Economist. James Holt minimum wage worker put kicked him be 35 per hour working 40 hours a week. Your income will be a hundred thirty roughly one month will not come to 550 detection of text. You let income will be 450 only. Well just imagine you 450 per month just enough to pay your house rent. What about your pills for their electricity guess telephone Medicare Transportation, etc, etc. The new for twenty five an hour California minimum wage boosts full-time earnings to just under 9,000 dollars a year. This does not keep a family of three out of poverty. Jim Abraham's argues that the minimum wage should not be a family wage (00:15:31) a number of people who talk about it in terms of a wage earner having to support a family of two or three or four people really are talking about the minimum wage as not being merely a reasonable compensation at a reasonable level for the type of work that the employee performs but instead are talking about it in terms of income transfer (00:15:51) those supporting an increase say the minimum is not enough even for a single worker supporters say there are two million workers with full-time jobs who are in poverty in California, and in other states a single mother with a child gets more on welfare than working full-time at the minimum wage. A nakahara is a community educator working with the, California coalition. Mission for a fair minimum wage people want to work people want (00:16:19) to work and they want to be able to survive survive and support their families on the wage that they earn and it seems like whether not what the in the minimum wage was intended. There are working people earning the minimum wage who have (00:16:32) children and families to raise. So what are they supposed to do? They ought to be able to earn a livable (00:16:36) wage (00:16:44) so far we have looked at who earns the minimum wage and if the minimum wage is adequate the heart of the minimum wage debate. However is often about the effects of an increase next we examine the question of whether or not increasing the minimum wage will result in the loss of jobs followed by a look at the effects of an increase on minority workers and proposals for a youth sub-minimum wage. Referring to economists habits of saying on one hand, but on the other hand President Harry Truman once said, he would give anything for a one-handed Economist on one hand James Holt Consulting agricultural Economist with the California Farm Bureau economic. Theory on the consequences is clear unequivocal and substantiated by the empirical results an increase in the minimum wage will result in reduced employment of low-wage workers restaurant entrepreneur Chuck Frank describes how his business will respond to the new hire California minimum (00:17:46) wage. It isn't that we are going to lay people off will that may in fact become an eventuality. It's that we are very seriously going to look at expansion and whether we want to create more minimum wage job opportunities available in the future, if you're creating jobs at four and a quarter versus 335 one is inclined to create less of those (00:18:08) jobs on the other hand recently. Group of 54 prominent economists led by Nobel Prize winner Lawrence Klein sent a letter to Congress urging a higher minimum wage in part. The letter reads (00:18:21) some have argued in opposition to the proposed higher minimum wage that it will cause unemployment yet six times. This nation has raised the minimum wage and the historical experience offers no evidence of significant employment and business disruption. (00:18:39) The claim that increasing the minimum wage causes job loss and the claim that this has not happened in practice may be partially reconciled statistical studies on how raising the minimum wage effects employment assume all other factors affecting employment are held constant when department store President Gerald Blum says for every 10% increase in the minimum wage employment opportunities for teenagers drop by 80,000 to 240,000 jobs. This assumes that all other factors affecting employment are constant when Tom Rankin of the California labor Federation says (00:19:15) historically it simply has not been true that when the minimum wage is increased a job loss has (00:19:21) resulted. This is saying that if there were negative effects of increasing the minimum wage, they have always been outweighed by more important factors affecting employment such as the state of the economy and government policy. Those supporting a higher minimum wage believe it will help workers and will help rather than hurt the economy Professor Claire Brown if employers truly believe that the workers that they hire are not worth for twenty five an hour when the wage goes up. Then those employers will take steps to find ways to make the workers more productive. They will be organizer jobs. They will give them more skill training so that the employer gets more out of his or her work force people will get used better at the workplace. If we get employers to pay them decent wages Economist Sam Bulls at the University of Massachusetts argues that many countries with higher minimum wages have outperformed the US economy (00:20:18) in Sweden. They decided that they would push the low wages up pushing labor and capital into those sectors of the Swedish economy, which were very productive what that did was it propelled the Swedish economy to the leadership in those industrial areas Swedish wages have risen much more rapidly than the It states they've moved much more rapidly towards an equal Society while the United States has moved towards a much more unequal society and Sweden has increased its share of World Trade while the United States has decreased its share. I think the record speaks with just a single voice on the question treating workers fairly makes economic sense. (00:21:00) Some opponents of raising the minimum wage argue that it will cause inflation and that it will make it harder for the u.s. To compete internationally most economists. However, both those the posing and supporting and increased agree that the minimum wage has little effect on inflation and they point out that most minimum wage jobs are in restaurants retail sales and other services for which there is no International competition. Any time something bad happens in the u.s. It happens worse to black people. The effects of the minimum wage are particularly of concern to minorities who faced both low earnings and high unemployment. Conservative economists Joel. Hey and Michael Byrne stem of Stanford University's Hoover institution argue that when the minimum wage goes up minority workers are most likely to lose their jobs writing in the San Francisco Chronicle. They say (00:22:07) we see a clear pattern of the inverse relationship between the minimum wage and minority employment in the United States. The minimum wage law in effect is (00:22:16) racist Father John Seymour believes that keeping the minimum wage low is racist this 335 an hour in this effort to keep the minimum wage down is another way of exploiting minorities in California. These are the people who are most affected by the minimum wage. The minimum wage is one way of keeping the oppressed oppressed. This is one way of keeping the people at the bottom of the barrel at the bottom of the barrel. This is one way of keeping women down. This is one way of keeping minorities down on the question of Their minority workers are more likely to lose their jobs when the minimum wage is increased the federal minimum wage study commission concludes (00:23:00) the persuasiveness of that assertion rests on an a priori argument rather than unconvincing (00:23:05) empirical evidence. Black Asian and Latino organizations have generally supported higher minimum wages a number of civil rights organizations and spokespeople are currently leading efforts to raise the federal minimum wage. Business and in the past some minority organizations such as the national black Conference of Mayors have supported instituting a special lower minimum wage for youth as a way of dealing with high youth unemployment. John rezian of the Hoover institution. When you have a choice (00:23:40) between lower-priced teenagers versus somewhat higher priced Adult Services, if they in your mind yield approximately the same output, you'll go for the cheaper Youth Services. If you want youth to have a somewhat better chance to obtain employment then offer them the chance for that employment by a lower wage floor for that group (00:24:11) Tom ranking of the California labor Federation says, uh sub-minimum wage for youth won't work and is basically (00:24:18) unfair if someone were to propose a sub minimum for blacks because the unemployment Rate for blacks is higher or for Hispanics because the unemployment rate for Hispanics is higher. They simply wouldn't get a hearing on that because everyone would immediately say that's racist Ami it's just as unacceptable to propose a sub-minimum wage for teenagers to solve their unemployment problem as it is for a minority group. (00:24:49) The Bush Administration is calling for a training wage a sub-minimum wage for beginning workers proponents say this would encourage firms to hire and train new workers opponents fear that it gives employers and incentive to replace older workers with new hires who can be paid less. Restaurant entrepreneur Chuck Frank believes. The minimum wage issue is one of economic philosophy. (00:25:26) I believe that the government should not set wage rate. I believe that the free Marketplace is what should determine wage rates on a regular basis and I think anytime the government interferes with it that they end up in effect end up hurting the people that they're trying to (00:25:43) help economist John rezian of the Hoover institution believes. We Face a trade-off between higher wages and job (00:25:51) opportunities where my heart goes out to is the person that can't find a job at the new high minimum wage other people seem to be more concerned about the fact that those getting the current minimum wage are earning a wage that is less than satisfactory and their heart goes out to them (00:26:11) Economist samples believes. It is a choice. Of economic (00:26:16) Direction. Well, the two ways that America could go economically today one is to go the route of Taiwan South Korea South Africa to try to compete for the lowest wages and the worst working conditions in the world and to try to keep our Goods cheap by that route. The alternative is to be ahead of the game by being a high-wage country that is committed to fairness and to valuing human (00:26:42) labor Father John Seymour believes. It is a question of if we are going to be our Brother's Keeper. This is a moral issue. 335 an hour does not provide for proper living it provides for poverty living and it's time to raise the minimum wage and raise it substantially and so let us take a moment now and bow our heads and ask our Father in heaven for bread a whole loaf of bread. Let us ask for 501 an hour Our Father who art in heaven Hallowed be thy name the minimum wage controversy pits small and medium business against a coalition of church labor Community women's and minority groups. These forces are now organizing lobbying and debating the minimum wage issue in Congress and in state legislatures across the country. (00:27:42) The minimum wage is not designed to be an income transfer mechanism is designed to compensate people for the work that they actually perform (00:27:49) we have to ask as a society. Are we willing to pay 39 cents per basket of strawberries why the people who pick those strawberries or malnutrition and live in shacks and their children live in poverty (00:28:01) the free market always determines what some job is worth. I think when you're looking at minimum wage jobs, you're looking at essentially no skill level (00:28:11) jobs minimum-wage wages are so low that these people can't even afford to rent a house. You can't even afford to get (00:28:19) sick. The weight of the economic research is conclusive and overwhelming but the impact of a statutory minimum wage is to reduce employment and increase (00:28:27) unemployment. Well, I think it's basic in any society (00:28:30) that people begin even a living wage. If not what happens to the whole principle of working for a living this documentary called minimum. Age maximum controversy was written and produced by Carlos Davidson. He is an independent producer in California. The narrator was Charles Bloomer and funding for the independent producer was provided by the Eastman fund the funding exchange new lamba trust the Skaggs foundation and the Vanguard Foundation documentary had to do with minimum wage debate in the state of California, but that certainly frames the issue for us here in Minnesota. And also nationally the House of Representatives passed a minimum wage Bill a few weeks ago. It is now on the Senate calendar and it couldn't come up for Action as early as today. But action is likely or at least we're told that it's likely sometime this week and the Minnesota legislators also discussing an increase in the minimum wage this session. We're going to spend the rest of the are talking about minimum wage issues with two guests who've been kind enough to come into the studios today. Mr. Kent Peterson is commissioner of the Department of Labor and Industry and mr. John fossum is director of the Relation Center at the University of Minnesota gentlemen, thanks for joining us today can first a question for you. If I might what is the minimum wage in Minnesota right now? Minnesota is one of the I believe Six States and maybe a few more now to have higher minimum wage than the federal level We have basically our minimum wage here for those who are which call federally covered employees is 385 an hour. It'll go up to 395 and our January 1st 1990 and that covers 90 95 percent of all the employees in the state how would this be affected if the federal minimum is increased sounds like it would be outdated. It would go up the same levels of fellow same levels of federal. Okay. Why do we have a different wage in Minnesota? I think that the legislature felt that it had a backup in 1981 is last time we change the minimum wage in by 1987. It became clear around the country that it was time to raise it. And so the Minnesota Legislature took that up. And considered it and decided it was time to give Congress wasn't going to act it was going to act and so it raised its minimum wage in a 3 phase 3 step process Jennifer's 88 89 90 John fossum. Not question for you. Does the minimum wage serve a useful function today? Yes, Bob minimum wage serves a useful function because it places a reasonable floor on wage levels that provide a person an opportunity to make above poverty level wages over period of time minimum wage has been really social legislation aimed at creating a floor for the building of compensation structures and organizations and for providing an incentive for individuals to be employed rather than not working. How do we decide what a suitable minimum is because as we heard in the preceding half-hour some of the minimum wage workers are teenagers who are working to buy shoes and clothes and take their their their friends on dates and others are trying to support families. Well, I think if you look over the history of minimum wage legislation, most of it has been based on ideas related to social justice. What should people be paid for being employed and what's a reasonable level to keep people above the poverty line you noticed in the program there were lots of different constituencies that we're talking about the minimum wage and many of those who talked about it talked about it in terms of a just wage and I think these sorts of social issues are the things that drive what the level of the minimum wage would be from a legislative standpoint now customarily it's rather interesting that the minimum wage has tended to be set at about 50% of the average manufacturing wage in the US and when minimum wage starts to lag substantially behind that over time, we find the Congress or the state's act to bring it up to that point. So it tends to lag what's happening in the real wage area. Can Peterson how many minnesotans are working at the minimum wage now? Bob we're not quite sure nationally. We know that somewhere around six percent of folks who work at minimum wage. We think that Minnesota probably is slightly less because of the very very strong vital economy. We've had here that it's interesting that although people talk about us losing jobs and you raise minimum wage that when we raise native 78889 the state actually gained jobs. So it's hard to find a correlation between raising the hiking minimum wage and in job loss. We've never had a complaint for me by calling us up and saying that they lost a job because of high minimum wage. And in fact, we have few employers actually called up and saying to lay off people because of minimum wage either what kinds of jobs are these that were talking about in Minnesota minimum wage jobs. Typically, they're outside the metropolitan area. Although there are some in the metropolitan area. They're low skilled jobs, maybe jobs are saying a carwash fast food jobs a lot of Nursing Home. In the non metro area some retail jobs, I think would be fair to say and more kind of mom and pop stores in Greater Minnesota as opposed to Metropolitan Area those type of jobs that we don't think there are that they don't see me an awful lot of them though. Is it mostly just kids or or adults working to support families Bob from our experience. It seems to be roughly track the national average that we have. There's certainly some they're teenagers but they're more more who are teenagers. There are certainly some people are supporting a family on a minimum wage or the to two people work at minimum wage or one person working slightly by the minimum wage and her mother or father working at the minimum wage level. Can Peterson is commissioner of the Department of Labor and Industry and John fossum director of the industrial relations Center at the University of Minnesota John. I know you studied the the effect of minimum wage nationally. What do you think about that that statement that that can just made about there being no correlation between an increase in the Wage and a decrease in employment. In fact employment actually increasing says Ken. Well Bob we talked about economists in the first hour on the one hand this on the other hand that there's another thing that economists are fond of talking about and that's other things equal or holding everything constant and fortunately for society things aren't held constant. If you were to look at the results or the effects of minimum wages, and if you could hold things constant, there is evidence that an increase in minimum wage does have an effect on reducing employment. For example, some studies looking at the experience of teenagers suggest that a 10% increase in the minimum wage is related to a bottle one percent reduction in teenage employment. I'm not saying that that's an increase in unemployment because some of these teenagers might drop out of the labor force, but as Ken noted there is not a lot of evidence that there's job loss related to increases in Mum wage because they're usually put in during expansionary periods or where you're catching up after a lot of inflation is already taken place and most of the evidence shows that following changes in minimum wage employment has increased over the next couple of years. So in the in the very short run, yes, it probably does have some negative employment effects, but in the longer run and if you take that over one or two year period probably does it the Minnesota minimum is higher than the federal right now is can point it out. But there's legislation at the Capitol that would increase it still further. What would that do? It would just basically track the federal wage as the increase went up. I think the house built upon the past House Representatives and washed and raised it over three year period of 455 an hour and as I understand the legislation now being seen the legislation would do the same thing for Minnesota that 455 an hour. Someone was kind enough Sarah Mayer was kind enough to calculate. For me would amount to 90 100 dollars a year for a full time person working minimum wage as opposed to sixty-seven hundred dollars a year currently who can possibly survive on that kind of money poverty level wage for a family of four is 11,000 612. So that gives you an idea if you are supporting a family for or family of three, it's 9,000. It's tough. I think it's very difficult to you could certainly survive but it's very difficult to pay pay the rent pay the food what incentive is there for anybody to work at that level when they can go on welfare and actually do better but I'm not sure you can do better. I don't I'm not I'm not in the welfare in the Human Services because I'm not sure you can do better and Welfare, but I think a lot of you probably wouldn't qualify for welfare for one reason or another and also the certainly the wet work. Ethic is very strong here Minnesota's we all know so I globule just referred to further work and then the minimum wage is what the whole point of this is trying to inject some Humanity in the workplace. You know, John's calling out social justice. And that's what it's all about in with the minimum wage. It's not just a small bit of humanity in the workplace. You know, if we would have more job opportunities, we dropped our minimum wage at 50 cents an hour would be hiring everybody. But what the cost what's the social cost of that and we know that people would have a very difficult time surviving. Well, isn't it true that right. Now there's actually a shortage in the labor market and a lot of businesses couldn't possibly get anybody to work for the minimum wage under any circumstance certainly in Minnesota in the metropolitan area seems to be a shortage and a lot of a lot of other communities are but there are communities some counties in Minnesota still have between 8 and 10 percent unemployment those places. I expect to be able to track some people at minimum wage, but for the most part in metropolitan areas and larger communities, it's very difficult to pay someone minimum wage. I think go into any McDonald's or Burger King asks, the kids are the people there with herning. It's always about them their wage. What about this the Various sub minimum proposals that are that are being discussed. We heard some in the program and there are some that Congress is considering as well John. Well, there are there are variety of things that are being considered here. For example, right now Bob the the bill that's in Congress is has with it a 60-day training wage for people who have no previous experience and the aim behind us is to encourage employers to hire people and give them some on-the-job training the Bush Administration proposal would have a six-month training wage and they don't have a linkage with previous experience and one of the concerns about this is that perhaps employers would hire people for a relatively short period of time and lay them off and and not necessarily provide the experience but the sub-minimum wages motivation is to get employers to hire first time employees offer them some on-the-job training so that they'd be either more qualified for that employer or have better opportunities in the labor force overtime. Can I remember some time ago Minnesota used to have what they called a tip credit which allowed a lower minimum wage for four people in the restaurant business assuming that tips would make up that and more is that still on the books Minnesota. We limited tip credit. Oh you did at this is the first year we did over a three-year period and this is the first year you that you pay waiters waitresses people would generally get tipsy pay met the minimum wage and they're able to keep their tips and as a supplement to their other income and that's that's frankly Bob. It's the only part of our minimum wage loss due to controversy at all. We do get restaurant tears and others calling us up complaining about that issue. But for the most part we don't get any kind of receive and I talked a little bit but that training wage. Oh, that's right. Yeah in a way it's nuts that who are we trying to kid? These are not these minimum wage jobs are not trained to be brain surgeons or to fool around the tank particles. These are basically low-skilled jobs in the usual. Are a couple hours to a couple days to perhaps a week or two of training the idea of a six-month training wage is just it's basically another way to gouge those the bottom of the economic ladder. It just it's fundamentally wrong from a just a social policy point of view. My puny doesn't doesn't do anything you just basically an excuse to pay people less John you agree with that. I think there is some concern that employers might especially under the bush proposal might abuse the opportunity to pay a sub-minimum wage for people who would be considered to be in a training status who might not actually be and I think that Ken's point is well-taken is that most of these jobs are not particularly High skilled jobs and employers not going to pay somebody at the minimum wage if they figure they're going to have to pay six take 60 days to train them to do the job. These are things that people can learn quite quickly one thing. I'd like to add to what Ken has said before. On the effects of minimum wage changes in Minnesota a lot of times when minimum wage changes take effect. They have an effect in the local labor market only a lot of the low page paid jobs are in retailing eating and drinking establishments and things like that. And these are these are filled in a local labor market. They don't compete with companies and other towns or anything like that. So the minimum wage probably doesn't have much effect on employment where it could have an effect is in low wage Industries, like apparel some wood furniture manufacturing like but we don't have much of that in Minnesota. So employers aren't going to have an argument that they're they're putting a competitively poor situation vis-à-vis Employers in other states as we raise ours. How about inflation? Does raising the minimum wage have a negative impact on inflation. Well, that's very hard to say it it certainly it certainly isn't going to reduce inflation. But as Ken noted before the relatively few employees that are covered by this the place that it might have an effect is the extent to which it ripples through the compensation structure of an organization in an organization. You pay people different levels because you want them to do certain things you want people to Aspire to jobs that pay more and gain the skills that get into those occupations to the degree that you reduce differences between jobs people may reduce their motivation to improve in general though. I think it's not going to have a major effect for most employers especially here because they're already paying substantially more than minimum wage for these types of jobs. Do you think that I on a national level though? It may be the sort of thing that pushes up wage rates generally across the board wage rates have been fairly. Train, but as we enter a period where prices seem to be going up there could be some some concern that a big push in in wages could really cause a lot of trouble. Well Bob to an extent, I think this this is maybe more of a symbolic issue for the for the Bush Administration and I'd compare it away with the air traffic controller strike at the beginning of the Reagan Administration the action that the Reagan Administration their did really stiffen the backs of employers all over the country and and resisting collective bargaining demands. And this is really the first test that the Bush Administration is facing in the employment area if they're seen as capitulating to it it may it may be perceived by people that wages will be allowed to increase substantially faster than they have been in the past. I think in and of itself a change in the minimum wage law probably would have little or no effect on wage rates. John fossum is director of the industrial relations Center at the University of Minnesota can Peterson Commissioner of Labor and Industry for the state any thoughts on this particular issue. Can I get unfortunate the Bush Administration sees that? Linkage between inflation and minimum wage and also between passage of this there's some that argue that if Congress enacts a minimum wage, then they'll enact all sorts of other types of pro so-called pro-labor legislation. It's kind of a sky is the sky will fall in argument. If you pass this, you know, oh my God, this guy will fall in and we'll get all kinds of us have passed the camels nose Under the Tent, right? And in fact that there are several issues. I think that minimum wage is basically to get to help those people the bottom of the economic ladder is it's not that much more complicated than that and at a time when we're running behind we haven't raised it in seven or eight years. It seems like inflation seems to it seems time to do it and don't let it doesn't have you don't have to go into all the other issues. Although I favor a lot of the other issues are before the Congress that the talk about Labor issues, but I think that the most part minimum wage is a different issue because it does it does talk to people that generally not not in labor unions. They're not they're not organized the People that for one reason or another some are young but some are also old that systems are left behind by a lot of the prosperity were having throughout the country today politically. Where does the push for minimum wage come? Ken I think a lot of it comes from labor unions in some ways. I think they it may be some self-interest with some of these ripple effect that John was talking about but also historically labor unions have been very interesting this issue and I think it's part of oftentimes labor unions have a broader social Vision than just taking care of their own members and I think in part it is that that they just want to the concern about it. In other parts are just comes from minority groups other groups are interested in a more Humane workplace that those type of people and liberal Democrats people like that. They're not necessarily tied to labor movement, but also feeling that people just deserve a little more money can what are your studies tell you about who pushes for the minimum wage and why organized labor, I mean after all there isn't a unionized workers in the country that makes the minimum wage or even for anything close to it. Well Bob, I think that going back to Ken's point. There are some there some particular Killer groups that are interested in it. The labor movement has has been interested in a variety of social legislation because they think it's important to have an effect on the workplace to improve it. There are a variety of people benefit from changes in minimum wage laws in their variety that there might not be much change from minorities. For example, there's not a lot of evidence that there are a great positive or negative effects as a result of changes in minimum wage laws labor union members tend to benefit from it wages tend to be somewhat higher after after minimum wage laws change men tend to benefit more than women, but you're going to find women's groups generally very strongly in favor of improving minimum wages. There's there's a collection of people who have strong beliefs about how the social system should go together that support these laws irrespective of what their Economic Consequences might be. They believe that this is this is an important social statement. It's interesting on the minimum wage is gosh. It's that every six or seven years when you get onto raising it they go through we go the same arguments. There's always some variation of a training wage introduced or a youth wage or No Enterprise Zone wage, and then the people talking and there's the same sort of arguments that go on at this is just one way of lowering things and it is the same argument used to cover Labor Relations and washed and early 70s. And we raised at that time as basically the same arguments same people going back and forth. But I do know it's just that in the same group to well who are the opponents then generally certain business groups Chamber Of Us Chamber of Commerce is always a big opponent. I think a lot of people hospitality industry are in Minnesota because the tip credit they're certainly very active in that area and other business groups like that. They Chamber of Commerce put out some statistics saying that seven and fifty thousand jobs would be lost. If in fact you change their minimum wage, but then the University of Michigan but on other studies and it's 70,000 jobs. We lost and here in Minnesota we have on a Jobs been lost because in the white so it's hard to tell I do know those are the basically business groups and I think a lot of them feel they make a connection between minimum wage and other other labor issues, which doesn't need necessarily to exist. You said a little while ago that one of the reasons one of the justifications for minimum wages to make the workplace more Humane to sort of set a floor beneath which people shouldn't have to work and floor beneath which you can have some sort of modest standard living anyway, but are there better ways of achieving that through than through minimum wage legislation would there would there be other kinds of training programs or other sorts of things that would be a more efficient way of doing this you're not going to end I think all is it do not be in poverty because of an increase in minimum wage train better training better education particularly in those people in the real hard hard-core poverty areas. It's probably better way of the long term you'll help people at more than the minimum wage. Although the same time. They're always be some people who Gain, from an increase in minimum wage but for to retake on the issues of poverty, I think we have to increase our job training. We've got to increase our do a better job of educating our people. That's the only way in the long run. We're going to solve the the real tough problems of poverty. I think one of the interesting issues here is that minimum wage has never been indexed to anything all of the changes in minimum wage have been voted on by Congress of the various state legislatures. So you have a change in the minimum wage and then it just sort of gradually drifts down as wage rates in general go up the real value of it drifts down and then you have a huge debate about another eight or ten years later and the the same people who said there aren't going to be jobs. And the other people who said There are going to be jobs get together and then you raise the minimum wage. I think if you wound up indexing it like you have social security taxes and things like that these sorts of issues would go away but Congress and especially the opponents of minimum wage have Very reluctant to do this and they usually hold out the the requirement that you don't index it as one of there is one of the reasons for finally going along with changes. Well, this new bill would do that would have a board take a look at at the end inflation every year make a report to Congress and then make recommendations, I guess right but even the opponents of our hip have admitted that and have said to the opponents that this would not be indexation. So it's a touchy issue with Congress. Don't a lot of economists think that Cole has generally automatic cost-of-living adjustments are not helpful to the economy whether it be in labor contracts or in Social Security or whatever that it just essentially keeps inflation going once it's begun. Well, yes to an extent but the coal is would always tend to lag changes that have already taken place as opposed to the extent that somebody would anticipate that it's going to happen. It could have an effect but say for instance Social Security the changes in Social Security result from changes in cost of living that have already taken place same with changes in tax rates or tax basis can fossum director of the industrial relations Center at the University and can Peterson Commissioner of Labor and Industry with us in the last five minutes here can who is exempt from paying the minimum wage in Minnesota? If anyone basically, the only ones are exempt are employees of employers seasonal recreational businesses small Resorts employees in the fishing industry and several other small very small groups. And so their base and Farms to the basics some certain Farms, it's you he need information on a call our office at six one two, 2 9 6 2 2 A 2 because these definitions get very fine and it almost at a point where you have if you have any questions call us up and we can help you out your specific business. If you think that you may fall into one of these categories what do people who are not covered by the minimum wage make what does that market set rate tend to be I think it is just very I think on fishing boats at expected by lot higher than for some reason we just we've always exempt Fisheries another one switchboard operators at small independent phone companies are not covered but I would expect that there are paid higher than minimum wage to and so I think it's very that, you know, it's hard to say suppose. You're a homeowner new have a the kid down the block come and cut your grass. Are you subject to paying him the minimum wage, you know, if you can come to work for that the most part I he should be considered independent contractor to see others others aren't covered. I should also point out the babysitter's aren't covered. Turns out elected politicians aren't covered either. And so the next time you hear them give themselves a raise to point out. They're not covered by minimum wage. All right, gentlemen, one final question and and we will and will end the conversation. You've probably addressed this in one form or another throughout the half-hour but why not simply let the marketplace set the minimum wage can it doesn't work the kind of I've noted that the economist who are you to let the marketplace covered do it there. None of them make minimum wage, they're all lot higher than the minimum wage that it seems there are certain jobs our society which that there isn't a lot of competition for and there's not ended but still at work needs to be done. And so it's best to set some sort of floor and to have just to ensure that people will work and do insert certain amount of economic Justice. You know, one of the figures I was just playing with right here was that this guy from Pillsbury got bought out. Got a four million dollar severance package when you left. Yes, he made four million dollars and work five or six months. It's still it's this isn't the issue is he's a demagogue I recognize but if you have taken that four million dollars and divide it up just this minimum wage, we're talking minimum wage increase or talking about that cover 1600 workers for a year. I don't think we're talking about a lot of money. I think the in this and in this case, we're really trying just insert that little bit of social justice little bit of humanity in the workplace kind of awesome a final thought. Well, I I would add one other thing to this putting a floor at a certain wage level is going to rule us out of being in certain industries. For example, do we want to be like a third world country and do we want to have the type of Third World jobs that there might be there if you have a minimum wage you're essentially saying those should be done someplace else. We don't we don't want those jobs are those Industries here, and I think that's an important aspect as well as the social justice thing. Gentlemen, thank you very much for coming in. It's been an interesting hour and I appreciate your participating in it. Thanks a lot. Again Peterson commissioner of the Department of Labor and Industry at the state of Minnesota and John fossum director of the industrial relations Center at the University of Minnesota briefly. Look at the weather the forecast for Minnesota is calling for cloudy and blustery conditions today. Although the cloud cover will begin to decrease from the West there could be a few rain or snow showers in the East this afternoon high temperatures will be mostly in the 40s Statewide then tonight. It'll be partly cloudy and continued cold the low from the upper teens in the north to around 30 in the South tomorrow partly cloudy East with increasing cloudiness in the west and high temperatures will be mostly in the 40s in the Minneapolis. St. Paul area. The high should be in the mid-40s this afternoon will be a Sprinkle possible along with the chance of seeing the Sun from time to time. The winds will be out of Northwest 15 to 30 then tonight partly cloudy. Do the low in the upper 20s tomorrow partly cloudy once again and familiar old theme high temperature mid 40s. Good afternoon. This is Gary eichten high water the big takeover and the big game are all in the news this afternoon and we'll have to report an MPR Journal. Look at the flooding in the Red River Valley. We'll have the latest on the northwest takeover story and we'll preview the Twins home opener tonight at the Dome. We invite you to tune in five o'clock in our music stations, 5:30 on our news stations coming up tomorrow during the noon hour. We have live coverage of a national Press Club appearance the Secretary of Veterans Affairs Edward too risky. We'll be at the national Press Club Podium and I hope that you will be listening as well. Today's broadcast of midday was made possible with financial assistance from the James are Thorpe Foundation. This is Bob Potter speaking. You're tuned to ksjn Minneapolis-Saint Paul cloudy skies in the Twin Cities 42 degrees. The wind is from the north at 17 miles an hour.