Proposed Minimum Wage Hike Concerns Small Businesses

A new state minimum wage could be on the horizon. Legislation moving through the Capitol could bump the hourly rate from $6.15 to $10.55 within three years.

About 6 percent of the hourly workers in Minnesota make the federal minimum wage of $7.25 or less. In 2011 that amounted to about 93,000 people. 45 percent work in food preparation and serving occupations.

Some small business owners worry the change could force cuts on their end.

"Small term it could mean just people losing their jobs or cutting back on hours, long term, who knows. Anything is possible," said Patrick Conroy, owner of Bullpen Sports Saloon in St. Paul.

According to a survey from the Minnesota Restaurant Association, if the minimum wage goes up, 90 percent of members would raise menu prices. More than 75 percent would cut staff hours.

Others say based on inflation, it is time for a change. Minnesota is one of only four states with a rate lower than the federal minimum.

"One of the problems we have right now is our minimum wage is too complicated. We get something around 2,500 to 3,000 inquiries a year from both employees and employers trying to determine, trying to ascertain what the appropriate minimum wage for that firm is" said Ken Peterson, Minnesota Department of Labor & Industry Commissioner.

When a state's minimum wage differs from the federal rate, employees are generally entitled to the higher wage. There are some exemptions. In Minnesota, it is based on an employers annual gross income and some very small businesses are exempt. Certain jobs are also exempt, like farm workers and seasonal workers.

On Tuesday afternoon, a House Commerce Committee will discuss legislation to change the minimum wage. A bill authored by Rep. Ryan Winkler suggests increasing the minimum wage to $10.55 by August of 2015.

Governor Mark Dayton has said raising the minimum wage to $9 or $9.50 an hour is a "good target."

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