Rep. Nelson: Minimum Wage Hike Needed Because Business Aren’t Paying Workers Enough to Survive

State Rep. Marvin Nelson wants to increase North Dakota’s minimum wage because he’s “tired of paying other people’s wages” he told me today during an interview on my radio show.

He’s introduced legislation to do just that, sponsoring HB1263 (PDF) which would raise the wage minimum to $9.25 per hour on January 1, 2018, and tie future increases to the rate of inflation.

Currently the State of North Dakota defaults to the federal minimum wage which is $7.25 per hour.

It’s a commentary on the popularity of Nelson’s proposal, I think, that it has just one co-sponsor.

So why has Nelson concluded that he’s “paying other people’s wages” because of the state’s current minimum wage? He argues that employers are “effectively not paying enough to survive.” According to Nelson, this problem is most acute in rural areas.

He said he doesn’t foresee any problems with a more than 27 percent hike in wages. “There’s really very little in the way of negative effects,” he said.

[mks_pullquote align=”right” width=”300″ size=”24″ bg_color=”#ffffff” txt_color=”#000000″]”There’s really very little in the way of negative effects,” he said.[/mks_pullquote]

I’m not sure that’s accurate, especially for smaller businesses in rural areas who are already struggling to compete amid shrinking markets and heavy competition from businesses in larger communities. If you’re small town grocery store fighting to keep people shopping locally instead of driving into a larger community to shop at, say, Walmart is an increase in your labor costs going to help?

Probably not.

Nelson didn’t buy this argument when I made it to him, but I think big businesses like Walmart love the minimum wage because they have the resources to absorb the additional costs.

You know who doesn’t? Their smaller, regional, “mom and pop” competitors.

The way to raise wages, I think, isn’t through government wage mandates but by public policy which generally promotes economic growth. As we saw during the oil boom years, more economic activity leads to more hiring which leads to competitive employment markets that drive up compensation levels. The government didn’t have to hire businesses in oil patch communities to pay more. They did so because that’s what it took to attract qualified applicants.

I don’t think mandating a wage increase for some guy pushing a broom is all that much help. It’s very likely that inflating the cost of his labor might lose him his job, which is a problem Seattle is dealing with these days.

What’s more help, in the long term, is creating more opportunities for that guy than just pushing a broom.

Easier said than done, I know, but it’s a better sort of philosophy than government price fixing.

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