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Minnesota raises minimum wage for third time in 2 years

The third phase of Minnesota's minimum wage increase went into effect Monday, which state leaders said raised pay for more than 287,000 workers. But the change also raises concerns from some that it increases labor costs and prices. "It definitel...

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The third phase of Minnesota's minimum wage increase went into effect Monday, which state leaders said raised pay for more than 287,000 workers.

But the change also raises concerns from some that it increases labor costs and prices.

"It definitely increases the cost of labor, so in turn to counter that you have to raise prices on your food and beverage," said Pat Boppre, an owner of the Blue Moose Bar and Grill in East Grand Forks. While price increases have been minimal over the past couple of years, "customers do notice," he added.

As of Monday, employers with annual gross revenue of $500,000 or more must pay at least $9.50 an hour, while those with revenue below the $500,000 threshold must pay at least $7.75 an hour, according to the Minnesota Department of Labor and Industry.

The state's minimum wage for workers under the age of 18 years old who are not covered by federal law increased slightly to $7.75 an hour.

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Minnesota Gov. Mark Dayton, a Democrat, signed the minimum wage increase into law in April 2014. The first large employer raise took effect in August of that year, bumping the minimum wage from $6.15 an hour to $8, and then to $9 an hour a year ago.

Starting in 2018, the minimum wage will adjust with inflation in an effort to keep pay in line with the cost of living. U.S. average hourly earnings were about the same level in 2015 as they were in the 1970s after adjusting for inflation, according to a state labor department report.

"All Minnesotans who work full time should earn enough to lift their families out of poverty and lead full lives," Dayton said in a statement.

Barry Wilfahrt, president and CEO of the Chamber of Grand Forks and East Grand Forks, said the wage increase isn't going to have a "huge impact" on East Grand Forks. He said a tight labor market has meant employers have already offered competitive wages.

"I think most Minnesota businesses were anticipating this and have been planning on this," he said.

Still, Wilfahrt said raising the minimum wage could have unintended consequences, including higher prices for goods and services.

"At the end of the day, the water seeks its own level," he said. "The government can set these things artificially, but then it's going to have a cause and effect."

Chad Thomas, owner of Mamma Maria's Italian Restaurant, said he doesn't plan on raising prices because of the minimum wage hike.

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"What we will end up doing is probably a cutback on staffing," he said, adding that it would be minimal.

But Thomas added higher wages mean they get "the cream of the crop" for applicants.

North Dakota's minimum wage is consistent with the federal level of $7.25 an hour, according to the National Conference of State Legislatures.

A previous headline on this story misstated how many years have passed since the first wage increase.

Related Topics: BARRY WILFAHRT
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