More than 325,000 of Minnesotans who receive the lowest wages got a raise Tuesday.
Gov. Mark Dayton signed a bill into law raising Minnesota’s minimum wage for the first time since 2005.
The bill, passed in both the House and the Senate, increases the minimum wage in three stages and is dependent upon whether a person works for a large or small employer and their age bracket.
In August, those receiving the $6.15/hour minimum wage required of large employers will see their wages increase to $8/hour.
Those working for a small employer receiving a minimum wage of $5.25 an hour, will see their wages increase to $6.50 per hour, Aug. 1.
A 90-day training wage for workers age 18-19, is now $4.90 per hour and will increase to $6.50 per hour Aug. 1, as will the minimum for young workers under the age of 18.
Increases take place in August 2015 and August 2016. Indexing the minimum wage to inflation begins Jan. 1, 2018.
“Minnesotans who work full-time should be able to earn enough money to lift their families out of poverty, and through hard work and additional training, achieve the middle-class American Dream,” said Dayton.
Before the bill was signed, Minnesota had one of the lowest minimum wages in the nation at $6.15 per hour, which is lower than neighboring Wisconsin, Iowa, North Dakota and South Dakota.
The state was also one of only four states in the country with a minimum wage below the national rate of $7.25 per hour.
Rep. Ron Kresha, R-Little Falls, said he had been in favor of raising the minimum wage to reach federal conformity, as well as “A higher working credit tax incentive to truly help individuals who are seeking to improve careers,” he said.
“I have heard from the local hardware stores, restaurants and local shops that this aggressive increase will create difficulties for them in an already tough business climate,” Kresha said.
Kresha said increasing the minimum wage isn’t the answer to unemployment or higher wages.
“I understand first hand the difficulties of working on minimum wage. But we also have employers like IWCO who have very competitive benefits and pay and job openings,” he said. “So a minimum wage increase, while sounding helpful, still does not solve the problem of increasing productivity and lowering the unemployment rate.”
He said, “People still need to improve their skills and become marketable to succeed — not just wait for the government to force increases to businesses.”
Sen. Paul Gazelka, R-Cass County, also supported an increase in the state’s minimum wage — what he called a “responsible” increase to conform with the federal level.
“Conforming to the federal level would benefit small businesses and their employees statewide,” he said. “However, increasing the minimum wage by 54 percent to $9.50 I believe will burden our hardworking business owners and could increase unemployment overall.”
When the increase takes effect Aug. 1, the definition of a large and small employer will change as well.
A large employer was formerly identified as an enterprise whose annual gross volume of sales made (not profit) or business done is not less than $625,000 and a small employer is one whose annual gross volume of sales made or business done is less than $625,000. Under the new law, the amount will be over or under $500,000 in annual gross sales (not profit).
“We believe that all Minnesotans deserve the dignity of supporting themselves and their families through hard work,” said Rep. Ryan Winkler, DFL-Golden Valley. Winkler authored the bill with Sen. Jeff Hayden, DFL-Minneapolis.
“Raising the minimum wage and indexing it to inflation is an important step to create a rising floor for all wages that will benefit hundreds of thousands of Minnesotans who work hard and deserve to get ahead,” said Winkler.