The minimum wage would rise 30 percent under legislation approved by a state Senate committee. Advocates say it is long overdue.

Members of the state Senate Jobs, Energy and Community Development Committee approved S.F. 3 on Wednesday and sent the measure to the full Senate.

The bill, authored by Committee Chair Ellen Anderson, DFL-St. Paul, increases the minimum hourly wage for large employers from $5.15 to $5.90 on July 1, 2004, and to $6.65 one year later. The measure increases the minimum hourly wage for small employers-those with less than $500,000 in gross annual sales-from $4.90 to $5.65 on July 1, 2004, and to $6.40 one year later.

The bill also provides for annual increases, beginning on July 1, 2006, in the minimum wage levels by the percentage increase in the Minneapolis-St. Paul consumer price index for the previous calendar year.

Ann Markusen, a professor of public policy at the University of Minnesota, said the minimum wage has drastically declined in real terms since the 1960s.

The minimum wage of the late 1960s was more than $8 an hour in current dollars, she said. Minnesota has long led the nation on the minimum wage, she said, but the entire increase made in the mid-1990s has since been wiped out by inflation. S.F. 3 makes up about half the loss, Markusen said.

She said workers currently making up to $8.50 an hour will see an increase in wages. Employers often pride themselves on paying more than the minimum, she said, and like to maintain a spread between actual wages and the legal mandate. No past increases in the minimum wage have caused job losses, Markusen said, primarily because most employers paying the minimum serve local markets, so all competitors are also paying the increased wage.

Wage increases do not eat into business profits, she said, but are traditionally passed on to consumers as higher prices. Markusen said higher wages help businesses, because low-wage earners tend to spend more of their income quickly.

Representatives of the Children's Defense Fund, Women Venture and Minnesota Community Action Association also spoke in support of the bill. They emphasized the positive social and economic impacts on low-income families and possible savings in welfare programs, child care subsidies and transportation programs.

Brian Rusche of the Joint Religious Legislative Coalition said claims of job losses made by employers are overblown. The business community should look at wage distribution if it wants to help workers, he said. "Those who see the market as a deity have lost a vision of commonwealth and the common good," Rusche said.

Todd Perkins, a business owner from Mankato, said his company chose to increase the wages of its lowest-paid employees. The company had to focus on the goal, he said, and convince higher-paid employees to take less compensation. Perkins said the company has experienced positive results, including fewer operational difficulties and lower employee turnover.

Kris Jacobs, JOBS NOW Coalition, said the minimum wage is not just a Metro Area issue. While the cost of living is lower in Greater Minnesota, she said, wages are even lower.

Minnesota should keep its minimum wage in sync with the federal mandate of $5.15, said Mike Hickey of the National Federation of Independent Business. Raising the minimum wage in Minnesota will put businesses in border communities at a competitive disadvantage, he said, since all surrounding states are at $5.15.

Federal data, Hickey said, show that minimum wage earners are not heads of households. Only 12 percent of Minnesota workers earning the minimum wage are primary breadwinners, he said, while 60 percent are part-time workers. The majority of workers earning the minimum wage are teens and students living at home, Hickey said.

If the minimum wage is increased, he said, "job loss is going to occur-the question is how much and where." He noted that Washington and Oregon have two of the nation's highest minimum wages and have two of the nation's three highest unemployment rates.

Tom Hesse, Minnesota Chamber of Commerce, said the market is working: employers who want to pay their employees more, like Perkins, can and do.

Sen. Carrie Ruud, R-Breezy Point, offered an amendment providing that the wages of tipped employees are locked at their current level. The amendment provides that if a tipped employee does not earn enough in tips to equal the higher minimum wage, the employer must make up the difference.

The amendment was defeated on a 6-8 roll call vote. Members then advanced the bill on an 8-6 roll call vote.

This article is adapted from the Senate Briefly, the online newsletter of the state Senate. It can be found on the Legislature?s website, www/leg.state.mn.us