What Is the Minnesota Minimum Wage for Small Businesses?

What Is the Minnesota Minimum Wage?

minnesota-minimum-wage

While the minimum wage debate continues in Washington, the Minnesota minimum wage is set to increase by about 55% over the next couple years. Governor Mark Dayton stated, “I thank the Legislature for recognizing the need to make work pay in Minnesota.”

New! Minnesota Minimum Wage

Affecting more than 315,000 workers, the first increase will be in August 2014 (to $8.00/hour). In August 2015, Minnesota’s minimum wage will go up to $9.00, followed by the August 2016 increase to $9.50/hour.

Minnesota’s last minimum wage raise was in 2005 when it rose to $6.15/hour ($5.25/hour for small businesses). This ranked Minnesota among only four states with minimum wage amounts below the federal minimum of $7.25/hour.

Governor Dayton’s press release states that a raise in minimum wage will give a boost to the economy. In an effort to keep that momentum going, the bill also allows for an automatic annual bump for the minimum wage. (It is starting in 2018, is linked to inflation, and has a cap of 2.5%.)

The Minnesota Department of Labor and Industry explains the state’s current tiered wage structure which will not be changed. For example, businesses with gross sales less that $500,000 will top out at only $7.75/hour (rather than $9.50), and workers under age 20 may receive lower wages.

Debate

President Obama has unsuccessfully convinced Congress to raise the national minimum wage to $10.10. In Minnesota, congressmen opposed to the raise point to the hardship for businesses if minimum wage is raised so quickly. They fear the raise could mean higher prices for consumers and cuts in employee hours.

Trends

According to the US Department of Labor, Minnesota, Georgia, Wyoming, and Arkansas are the four states below the federal minimum wage of $7.25/hour. Once its increase goes into effect in August 2014, Minnesota’s minimum wage will exceed all of its neighbors’ minimums who currently match the federal rate.

States that currently exceed (or soon will exceed) the federal minimum wage include Connecticut, Maryland, California, Delaware, and D.C.

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