Minnesota Minimum Wage Deal Includes Lower Small Business Pay

Winkler, press and spectators

By Don Davis

Small businesses that dot greater Minnesota would not be forced to pay employees as much as larger firms pay under a minimum wage increase proposal legislative leaders announced Monday.

“I think we have a pretty strong provision for small businesses,” Senate Majority Leader Tom Bakk, D-Cook, said.

Businesses with gross sales less than $500,000 annually would pay a $7.75 minimum wage when the law is fully implemented in 2016 instead of a $9.50 wage for larger businesses. Higher wages would be phased in annually for the next three years in a bill expected to pass the House and Senate this week.

Also, the agreement sets large business minimum wages at $7.75 for a 90-day training wage for 18- and 19-year-olds, for all 16- and 17-year olds and for some employees from other countries working at places such as resorts.

Supporters say the higher minimum wage would give 357,000 Minnesotans higher pay.

Republicans and business leaders were not happy with the deal.

A representative of small businesses said jobs would be lost. Mike Hickey of the National Federation of Independent Businesses could not predict how many jobs would disappear, but said young workers would be especially affected.

“We are very concerned about the sticker shock,” Hickey said. “We are very concerned putting this on autopilot.”

Hickey and other opponents said they think that allowing the minimum wage to automatically rise to keep up with inflation will cost businesses.

The deal includes a provision that beginning in 2018, the minimum wage would increase each Jan. 1 to match inflation, but the state labor commissioner could suspend an increase if the economy is faltering.

The minimum wage could not increase more than 2.5 percent a year.

House leaders had wanted an automatic increase for inflation, but Senate leaders were concerned. Bakk said that allowing the labor commissioner to delay automatic increases was a good compromise.

The Senate leader also liked phasing in the new minimum wage over three years.

“This is manageable,” Bakk said.

Resorts in Bakk’s northeastern Minnesota and around the Brainerd lakes region got help in the bill, the senator said. The measure allows them and other businesses to hire workers from other countries at lower wages than they would be forced to pay American workers. Bakk said the resorts cannot find enough young people to work summers.

Dan McElroy of Hospitality Minnesota said his members are especially concerned about raising wages while other states are not.

“We are afraid of walking away from neighboring states,” McElroy said, with higher wages than they require.

Ben Gerber of the Minnesota Chamber of Commerce said no state has ever increased its minimum wage as much when compared to adjoining states. No state around Minnesota has a minimum wage higher than the federal $7.25 wage.

The controversial nature of the bill only intensified Monday when Sen. Jeff Hayden, D-Minneapolis, brought the bill in front of the Senate finance committee, which tacked it onto an unrelated bill and sent the minimum wage provision to the full Senate.

“I think I have the right to know what is in bills,” Sen. Scott Newman, R-Hutchinson, said, adding that he just learned about the minimum wage provisions minutes before they came up in the committee meeting.

The most vocal legislative proponent of a minimum wage, Rep. Ryan Winkler, D-Golden Valley, said that despite an improving economy, many Minnesotans still struggle. He said they will have more money to spend, which will help businesses. He said studies show that raising the minimum wage does not hurt business.

Minnesota’s current minimum wage is $6.15, but most businesses fall under the federal $7.25 figure.

President Barack Obama wants to raise the federal wage to $10.10, but Republicans who control the U.S. House do not plan to go along with him.

If the Minnesota minimum wage is approved this week, the House and Senate will have passed all but one of their major bills for the year. Only a public works funding bill would remain without a vote when lawmakers return from their Easter-Passover break on April 22.

When the break ends, negotiators would need to work out differences between House and Senate versions of budget, taxes and other bills.