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Would minimum wage hike boost consumer spending or lead to job loss?

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Supporters of a push to raise Minnesota's minimum wage argued at the Capitol Monday that the move would generate economic growth through more consumer spending. But critics see the change leading to job cuts by small businesses.

Two House committees listened to testimony in a joint hearing, as they consider a bill that would raise the minimum wage in three stages from its current $6.15 an hour to $10.55 by the summer of 2015.

Minnesota is one of four states with a minimum wage lower than the federal level of $7.25 an hour. In addition to raising the wage the House bill would tie it to inflation, making future increases automatic.

Finance & Commerce reports one economist who testified Monday said if the wage had been tied to inflation 45 years ago, it would be at $10.52 today. But Republican Rep. Pat Garofalo says raising it by 40 percent now would have a devastating effect on small businesses.

The author of the House bill, DFLer Joe Mullery of Minneapolis, recently touted it in an interview with Minnesota House Public Information Services.

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