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Did Bakk trade away the minimum-wage measure for Capitol-repairs bonding bill?

MinnPost photo by James Nord
Senate Majority Leader Tom Bakk is shown speaking at a May 21 end-of-session press conference.

What will it take for Minnesota’s DFL legislators to pass a minimum-wage hike next year and overcome the backroom politics that some lawmakers say doomed it during this session’s last days?

Democrats leaving this year’s legislative session said they went home disappointed that the DFL-controlled House and Senate couldn’t agree on a compromise to increase the state’s minimum wage.

The House pushed for a hike from the state’s current level of $6.15 to $9.50, while the Senate went for $7.75. Minnesota’s minimum wage, which hasn’t been raised since 2005, is far below the federal rate of $7.25 an hour.

 Estimates of how many workers the hike would affect range from the nearly 100,000 Minnesotans who would get a raise at the $7.75 level to about 350,000 who would qualify for higher pay at the $9.50 level.

There’s sharp disagreement, however, about who’s to blame for the impasse.

Differing versions

Two Republicans and one DFLer told MinnPost that the minimum wage bill – and a proposal to toughen the state’s anti-bullying law in schools – fell victim to last-minute political maneuvering between DFL and GOP legislative leaders.

DFL Rep. Ryan Winkler and two Republican legislators who declined to speak on the record say Senate leaders came to a deal that secured a bonding bill for Capitol repairs and ensured an orderly end to the session in exchange for no action on those two policy provisions.

Winkler, the chief House sponsor of the minimum wage legislation, said Republican lawmakers told him of the deal. He described his understanding of it to the Star Tribune just after the session ended May 20.

Senate Majority Leader Tom Bakk and a Senate staff spokesman deny such a tradeoff.

The Senate unveiled the minimum wage hike as a key priority in the first days of this legislative session but never could reach a compromise with the House.

 “We just kind of ran out of time to get an agreement with the House on raising the minimum wage,” Bakk told reporters at a press conference the morning after the session ended last week. “I do believe we’re going to come back next session and do that.”

But end-of-session dealing appears to have played a role in sidelining the minimum-wage legislation, Winkler and the Republicans say.

Bakk, however, denied the existence of such a compromise when asked about it in the hours after session finished. He and the other DFL leaders blamed the lack of progress on the tight timeline.

Bakk’s denial conflicts with a very specific recounting of the agreement that Republicans say occurred in the Senate.

Winkler told MinnPost that he was standing next to House Speaker Paul Thissen at the speaker’s rostrum when Minority Leader Kurt Daudt told Winkler about the agreement.

Deal or no deal?

Thissen said in an interview that he had heard about a supposed deal but didn’t have any specific knowledge of it. He hadn’t discussed the issue with Bakk or Hann.

When asked about the diverging stories, Winkler responded, “Well, that may not have been a deal, but all the Republicans believe it was a deal. One way or another, somebody’s misinformed.”

Winkler said that on the final day of session, when conference committee meetings were scheduled on the minimum wage, DFL senators simply didn’t show up. He also made a couple of offers to the Senate that weren’t accepted. Senate minimum wage advocates appeared unable to sell a hike above $8 to some of their colleagues, including several rural and suburban Democrats.

DFL Sen. Chris Eaton, who led negotiations on the Senate side, said she had secured 30 votes for a compromise bill, which is short of the Senate’s 34-vote majority.

She also said that some senators were under pressure from the business community, and “I wasn’t getting a lot of assistance from the leadership to push them to vote for it.”

At about dinnertime on the final night of session, Eaton and another Senate conferee brought Winkler’s final minimum wage offer to Bakk.

Bakk responded, “It’s too late. Don’t even answer,” Eaton said.

“But I did anyway,” she said, informing Winkler that she didn’t have the votes.

Eaton also said she had heard rumors of a deal to ditch the wage increase but couldn’t verify if they were accurate.

Last-minute time crunch

Winkler said that as the number of contentious issues that lawmakers had to deal with dwindled, he hoped that the minimum wage bill would be able to be solved.

Amos Briggs, the Senate DFL spokesman, blamed lawmakers’ failure to reach agreement on the time crunch.

“By all accounts, the minimum wage legislation stalled this session because the Senate and House conferees could not reach consensus on exactly how much to raise the minimum wage,” Briggs wrote in an email.

“The House chair called the first minimum-wage conference committee hearing on the final day of session, and unfortunately, the committee was unable to reach an agreement under the time constraints of the Legislature’s constitutionally mandated midnight adjournment.”

The final hours of the 2013 legislative session were certainly rushed. Here’s a recap of how legislative sources say events played out.

Republican senators strongly opposed the bullying measure and were set to debate it for hours, all but ensuring a sloppy end to the session. Democrats would have needed to use their majority status to cut off the debate, which they wanted to avoid for political reasons.

Bakk was also pushing for a bonding bill that included the Capitol renovations. He made it clear to reporters and other lawmakers that he wasn’t leaving the session without securing funding for the repairs.

The project, which was already partially funded, could have been temporarily waylaid without the bonding bill’s additional $109 million allocation.

House and Senate Republicans had been fighting against a full-size bonding bill this year, and DFLers needed their votes to get to the 60 percent majorities required to pass such infrastructure packages.

Bonding bill push

With three days left in the session, House Democrats tried and failed to gather enough Republican votes for an $800 million borrowing bill that included the Capitol project.

The chief House sponsor appeared resigned to the possibility of no bonding in 2013.

But Bakk was undeterred, and the House and Senate ultimately sent Gov. Mark Dayton a $156 million package, which included the Capitol project.

“It was a strong priority for me to make sure that these renovations of our state Capitol continue, and I think we were at significant risk of that not happening this session,” Bakk told reporters shortly after session ended, just after midnight last Tuesday.

To make that happen, Bakk came to an agreement with Senate Minority Leader David Hann that the Senate would drop the minimum wage negotiations in return for GOP votes on a bonding bill, a Republican with knowledge of the deal told MinnPost.

Hann and Bakk met late the night before the session ended to discuss the bullying bill, which Republicans were prepared to debate through the night. That long debate would have severely limited the amount of time the DFL had left to wrap up the state budget and finalize other bills.

In an effort to “find an orderly way to exit the session,” the lawmaker said, Hann agreed to limit debate on the omnibus tax bill if Bakk would table the bullying bill.

Bakk asked if Hann would consider delivering some GOP support for a bonding proposal. The Republican leader had been on record opposing bonding this session.

In a turnaround, Hann agreed to provide Republican votes for the borrowing bill if Bakk shut down the already-floundering minimum wage hike, according to the legislator.

Bakk denies a deal

Bakk denied to MinnPost that any such deal existed shortly after midnight on the final night of the legislative session. When asked if there were trading around the bullying bill and minimum wage hike for Capitol bonding, he responded, “No.”

Bakk has been out of town this week and unavailable for further comment.

“Sen. Bakk returned home to his district late last week to meet with constituents and area officials and to spend some time with family at their cabin (mostly out of cell range, I’m afraid),” Briggs wrote in a Wednesday email.

Briggs deferred to Bakk when asked about the supposed deal or why there is disagreement between parties about what transpired at the end of the session.

The borrowing legislation was the key.

Speaker Thissen told reporters the day after session that the bonding bill was “the piece that allowed us to finish up the session,” referring to a House-Senate standoff where both chambers were holding onto bills to try to gain leverage over the other body.

Winkler said the Senate was willing to go into a special session to get what it wanted and had a stronger negotiating position than the House because senators serve four-year terms. The House will be up for re-election next year.

And Bakk’s push for the Capitol repairs was serious enough, the sources say, to shut down the minimum-wage negotiations for the year.

Derailing that bill is a big plus for Republicans, who had philosophically criticized the minimum-wage legislation all session long.

“I want people to get paid more, just like they do,” Daudt said of the DFL legislators. “The problem is their approach is backwards. By increasing the minimum wage, you’re just saying, ‘Pay more,’ ” he said. “When the economy is booming and everybody’s doing well, there are actually employers competing for employees.”

Hann, too, agreed that raising the wage “would have been more harmful than helpful to the people at the entry level trying to find a way to get into the job market.”

Winkler continuing wage push

Winkler, however, noted polling that shows the majority of Minnesotans support a $9.50 minimum wage.

He also promised to continue pushing the issue in next year’s session.

“I will be making an effort between now and then to raise public awareness of the issue, to build a campaign for it,” Winkler said. “I know that there’ll be a lot of people in the state, a big coalition of people working to raise the minimum wage, so I expect it to be one of the two major issues in the next session.”

Bakk said at the post-session press conference that the Senate members of the minimum-wage conference committee — which remains open and active until next year — would use the interim to engage the business and labor communities to find a “balance” where the wage should go.

Eaton plans to research the districts where she lacked support to see if she can use the information to gain hesitant senators’ votes for the proposal.

Thissen said in an interview this week that he thought it would be better to hold out for a “meaningful increase” than to pass the more modest hike the Senate pushed for. Otherwise, he said, “We’ll be back again in another few years to fight the same battle over again.”

But Winkler sees the issue differently.

“To give up a wage increase for hundreds of thousands of Minnesotans for the next year just in order to restore the state Capitol, I think it s a real shame,” Winkler said.

“I think that’s the opposite of why people send us to St. Paul. We’re supposed to serve them, not ourselves.”

Comments (17)

  1. Submitted by Steve Titterud on 06/03/2013 - 11:54 am.

    The DFL gives us a shiny capitol building at the expense of…

    …the lowest paid workers in the state, HUNDREDS OF THOUSANDS of them ??

    I used to support the DFL, but its priorities are seriously out of whack, as shown in this choice – and when added to their insane ramming through of the stadium bill – I no longer respect this party. While it’s true the GOP cannot be entrusted with state government, the DFL has shown that it cannot be trusted either.

    Maybe split power is the best available defense from these posers.

  2. Submitted by Connie Sullivan on 06/03/2013 - 12:56 pm.

    Here’s the bottom line: raising the minimum wage (from a ludicrously low $6.15 per hour–minus Social Security and Medicare taxes and 15% income tax) was simply not a priority for the so-called Democratic-Farmer-Labor party leadership at the Legislature.

    That’s the take-home fact. No matter what the leadership says now.

    • Submitted by Dan Landherr on 06/04/2013 - 12:11 pm.

      Not the top priority at least

      The top priorities were increasing and stabilizing revenue, the health exchange, property tax relief and early education. Next on the list are the bonding bill and raising the minimum wage. There’s a reason they call their list a “two-year” priority list.

  3. Submitted by Tim Milner on 06/03/2013 - 01:24 pm.

    Gee

    “Winkler, however, noted polling that shows the majority of Minnesotans support a $9.50 minimum wage”

    It’s so easy to support things that you don’t have to pay for. I wonder how many business owners, you know, the people that actual have to figure out how to pay the wages, favor this dramatic hike?

    Changes like this don’t just effect people making minimum wages. While my business has a number of what many would label as “entry level” or “unskilled labor”, we have, and always will, pay higher rate entry level wages than what is dictated by minimum wage. Why? Because, frankly, we want a better employee – one with a higher commitment to the job, employees that show up for work on time, employees who are engaged in their jobs, employees with basic reading and writing skills, etc. So, we pay more because we want more. And the people who have good work habits are rewarded with a higher initial/starting wage by choosing to work for us.

    The minimum wage rate proposed would nearly wipe out the gap I’ve created between my lowest wage and the House minimum wage. So I either keep it as is (and risk a lower quality of applicant) or I would likely need to raise my entry level wage to maintain the gap. (and hopefully a higher quality pool of candidates)

    But this is entry level work! Will these employees start out any more productive at $9.50/hr than they do at $7.25/hr? (I use the Federal Rate because that is the one that I have to meet based on inter state commerce). In almost every case, the answer is NO. They will need to be trained (which we do) before they become as productive as I need them to be. And, in almost every case, once they are trained, they will get a wage increase!!

    So the net effect is that my wage costs for hiring entry level labor goes up but my productivity does not change. More labor dollars for same output. How does that make my company more competitive? Am I expected to just swallow that difference (which ultimately effects my ability to buy new equipment, invest in training, etc)? Or should I just pass that cost along to the end consumer? (This is what restaurants will do, but, due to the global nature of manufacturing, I probably can’t)

    Our legislative branches really need some basic economic education to understand that all these ideas look great on paper but have real world ramifications for those same constituents they are so ardently trying to provide for.

    • Submitted by Paul Udstrand on 06/04/2013 - 09:04 am.

      We are paying for it, that’s the point

      We’re subsidizing over a hundred thousand poverty wage employees with food, housing, and medical assistance. Most people believe employers should pay their employees wages, not the the taxpayers. If you can’t afford to pay living wages, you don’t have a successful business model, and you should get subsidies from the taxpayer. If you can afford to pay living wages, you should do so without public subsidies.

  4. Submitted by Steve Titterud on 06/03/2013 - 03:07 pm.

    “…things you don’t have to pay for.” – but we DO pay for…

    …too low a minimum wage.

    You make a convincing argument that a higher minimum wage will create some challenges for your company. With all due respect, however, these are nothing like the challenges of a low minimum wage faced by the lowest paid workers – AND the taxpayers !!

    In a recent study of the impact on public assistance of Walmart’s low wages in Wisconsin,

    “Walmart had more workers enrolled in the state’s public health care program in the last quarter of last year than any other employer, with 3,216 people enrolled. When the dependents of those workers were factored in, the number of enrollees came to 9,207.

    “When low wages leave Walmart workers unable to afford the necessities of life, taxpayers pick up the tab,” the report says.”

    (see http://www.huffingtonpost.com/2013/05/31/walmart-taxpayers-house-report_n_3365814.html.)

    So from a public policy standpoint, you can see that those who favor a high minimum wage are not blithering idiots who know nothing about business.

    They know this much: the taxpayer subsidizes the employment earnings of low-paid workers through public assistance programs. We are supplementing Walmart’s payroll BECAUSE the minimum wage is unreasonably low.

    This is one aspect of a low minimum wage that its proponents never address.

    • Submitted by Tom Anderson on 06/03/2013 - 10:23 pm.

      Of course

      Walmart probably has more employees period. Once other companies start eliminating their own insurance coverage and push their employees into the ACA exchanges or state public health plans, Walmart won’t stand out so much in one quarter of one year.

  5. Submitted by Jim Halonen on 06/03/2013 - 04:26 pm.

    Rumor has it

    that some union contracts have hooks into the minimum wage. Minimum wage goes up, some union pay rates go up automatically. Is this truth or fiction?

    • Submitted by Paul Udstrand on 06/04/2013 - 09:07 am.

      Fiction

      How stupid to you think unions are? Pin your raises to a wage that almost never goes up and never goes up significantly? The raises unions negotiate are independent of any other metric, and vary from contract to contract.

  6. Submitted by Tim Milner on 06/03/2013 - 09:01 pm.

    Re”…things you don’t have to pay for.” – but we DO pay for…”

    Steve,

    My business IS A TAX PAYER. A rather substantial tax payer – by the time you add up Employer Payroll Taxes, Property Tax, Sales/Use Tax, and now the higher Income Tax (as a Sub Chapter S corp, my company income is taxed as if were my personal income.) my company pays hundreds of thousands of dollars each and every year in taxes.

    So I think I face the challenge too – and pay for it too.

    But the fact remains. Businesses need output and wages to have some balance. You can’t artificially raise wages while leaving output the same. Businesses in this day and age, can’t afford it.

    Another thought for you. In every capital purchase, I weigh the cost of the purchasing the equipment against what I can reasonably expect revenue to increase and/or operating costs to decrease. The better the revenue/cost savings, the more justification to make the purchase.

    So if the cost of labor increases by ~25% (based on Federal minimum verses Proposed House), the greater the costs savings that can be achieved through automation. Which leads to less need for labor – and less need for employees.

    Is that helpful? Not in my book. I’d personally rather have people than machines. But if the cost savings becomes so favorable, I have to do it. After all, my competition (more correctly, many of my customer’s competition) is global. I have to maintain a competitive cost structure verse the China’s, India’s, Malaysia’s, etc or else my business will not exist. Leading to 60+ people losing their jobs.

    And if my company does not exist, neither will those hundreds of thousands of dollars in current tax payments either. Again, not a very helpful event should it happen, in the grand scheme of things.

    This is a complicated issue – one that I see very little discussion on. Much easier to say “raise the minimum wage” with out really thinking about how that effects our economy.

    • Submitted by Steve Titterud on 06/04/2013 - 07:41 am.

      The wages you pay are not the problem

      Thank you for your thoughtful discussion here. You are to be congratulated on your personal success as well as recognized for supporting the jobs you describe. No one wants you to fail or those jobs to disappear.

      However, by your own words, the wages you pay are not, strictly speaking, the problem here, unless I completely misunderstand your statement, “The minimum wage rate proposed would nearly wipe out the gap I’ve created between my lowest wage and the House minimum wage.” You never gave an exact figure, but we get the picture – you pay more to get a better employee.

      While a person working 40 hours at the current MN minimum wage would qualify for food stamps, your 40 hour workers make more, and so the taxpayer is not supplementing their earnings to compensate for an impossibly low income.

      Likewise, your employees would not qualify for the Earned Income Credit, whose tables show that the Adjusted Gross Income for an individual must be less than $ 13,980 – which would correspond to an hourly wage rate of $ 6.72.

      Since you already pay more, your challenge would not appear to be about loss of jobs.

      So your business, as a taxpayer, is subsidizing the lowest wage rates paid by other businesses. Maybe you’ve never looked at it this way, but it’s as true for your business as for any taxpayer. The amounts of money here are huge.

      I’m not sure what the minimum wage should be, but if it were enough to DISQUALIFY a person for the Earned Income Credit, for Food Assistance, and for Medicaid, it would offer drastic reductions in public subsidy of low-wage employers, AND it would be of immediate benefit to hundreds of thousands of the “working poor” in MN. It seems the $9.50 minimum wage level proposed would do this.

      Implementing automation is related to employee expense, but in the long run, the economic force behind automation is inexorable. It will continue to wipe out manufacturing jobs no matter what anyone does about the minimum wage. It is really another subject matter.

      • Submitted by Tim Milner on 06/04/2013 - 01:45 pm.

        You understand correctly

        Steve, I do pay more than the federal minimum wages for my enter level employees, and most earn receive a couple buck raise after just a year or so on the job. (Once training is finished and we know their work habits)

        So you are correct, I don’t expect any job loss by the change. But the change will effect how I recruit entry level workers. Can I still offer my current entry level wage and still get higher quality employees if minimum wage goes to $9.50? It’s doubtful – there would be very little difference to entice a worker to interview at my company verses another. So, I would likely need to increase my initial wage rate.

        Then what happens after the first year? Could I afford to give another couple buck raise to reward the employee starting at the higher entry level rate? If I do, (and frankly, I would most likely want to do so), that becomes a long term multiplier effect that does not relate to any change in output produced. That is a tough position to be in.

    • Submitted by Paul Udstrand on 06/04/2013 - 09:17 am.

      Put another way…

      To simplify Steve’s comment, you’re currently subsidizing your competitions low wages and profits as a taxpayer. You pay more for quality employees, they pay minimum to maximize profit. Furthermore, it turns out that businesses based on low-wage business models are the ones that can most easily afford a minimum wage hike, everyone else is already paying the equivalent of $9.00 or more.

      And finally, you have to realize that we’re not all here simply to make you money. We have right to earn money as well, and get paid a living a wage. A company that cannot pay employees a living wage simply sucks capital out of the economy and fails to contribute to the community. The whole point of having an economy in a democracy is not simply to make a few wealthy at the expense of everyone else.

      • Submitted by Tom Anderson on 06/04/2013 - 09:49 pm.

        When did we decide that all jobs must support a family?

        We’re going to give grocery baggers $30,000 grand a year? All the entry-level employers contribute to the community by providing a means for unskilled and perhaps uneducated people to get their first job and income. Most of the teenagers getting their first job want to be able to buy some new clothes, shoes, an I-phone or get gas money to borrow dad’s car. All of those new clothes, shoes, phones, and gas are hardly sucking the life out of the economy. Why on earth would we decide that the jobs that offer this opportunity need to provide a family of four with a roof over their heads, food on the table, free healthcare, etc.?

        • Submitted by Steve Titterud on 06/05/2013 - 11:10 am.

          Arithmetic

          A full-time (2080 hours) minimum wage of $9.50 per hour produces an annual gross income of $19,760, – quite a ways south of the $30,000 you suppose. Your $30k is 50% higher than the proposal which the DFL scuttled.

          The lowest wage employers are subsidized by the taxpayers. Or to put it another way, because that $19K is NOT enough to support the family you suppose, the public welfare system kicks in to supplement the low wages paid by the employer – so the family CAN HAVE a roof over their head, food on the table, medical care, etc.

          The lowest wage employers DO contribute to the community – but their businesses are subsidized by the taxpayer to a very significant degree. The public welfare system becomes rather like a profit center for the lowest wage employers, as in, “Why should I pay $9.50 an hour? My employees can get food stamps, housing assistance, Medicaid. So I’m going to consider the difference as a profit center.”

          Now many of us are OK with this compensation in the basic necessities for those less fortunate, whether temporarily or permanently. It’s a basic function of a decent society.

          But what gets us riled up is when those same low wage business owners – who are VERY SIGNIFICANT BENEFICIARIES of the public welfare system – come whining about their own taxes & propose that we cut, cut, cut the funding of the public welfare system in order to reduce the taxes they pay. You’d think a little gratitude for that public welfare system would be in order, seeing as how it benefits them in so significant a degree.

          • Submitted by Tom Anderson on 06/09/2013 - 09:26 pm.

            And those companies are…

            It shouldn’t be hard to list at least ten, and demonstrate the number of lobbyists or op-eds where the whining has occurred.

            Perhaps employers say “Why should I pay $9.50 an hour for young ladies to text their friends and chat about their boyfriends and their classes while my customers’ food gets cold?” instead of assuming that their employees will get public assistance to help pay for food so that their wages can be used for scratch-off tickets.

            The best part of a starting wage, it usually isn’t permanent even though many of us assume that it is.

  7. Submitted by Tom Anderson on 06/03/2013 - 10:25 pm.

    Ran out of time?

    In a session that started in February? Please come up with something better than that.

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