1 Final Vote before Minnesota Minimum Wage Hike

Updated: 04/10/2014 5:59 PM
Created: 04/09/2014 2:38 PM
By: Beth McDonough

The bill giving Minnesota one of the nation's highest minimum wages is one step from Gov. Mark Dayton.
Minnesota senators voted 35-31 Wednesday to push the minimum wage for most employers to $9.50 per hour by summer 2016. It's $6.15 now. 

The raise means everything to 350,000 people in the state, who get paid by the hour. For most, their base wage is the federal minimum of $7.25 an hour.  To some, that's not even considered a living wage.  It's why many people have more than one job, "I have three jobs," according to Crystal Paul. All three pay minimum wage. Which means Paul, a college student too, barely gets by.

The hourly rate increase of $2.25 from $7.25 to $9.50 may seem like a small sum, perhaps the cost of a cup of coffee to some, but it would be a big deal to Paul.  Because at a 40-hour work week, that $2.25 an hour raise equals a $4,680 pay raise a year, before taxes. "It would be an extra car payment, it would be living a little more freely instead of tightening up the budget."

A report from the Department of Labor and Industry in 2013, shows restaurant and bar employees make up about 47 percent of all hourly workers in the state. 30 of them work at Tom Reid's in St. Paul.  

Folks with Raise the Wage Coalition believe a minimum wage bump is good for business. "When people have more money in their pocket, they're going to spend more money," according to Peggy Flanagan.

Economist Dand Vang offers a reality check of the pay raise. "For very 10 percent increase in the minimum wage, it causes a potentially 1 percent drop in employment growth."

Paul realizes, "it's a bonus but also in the end it could be bad, because I'm the lowest person on the totem pole here if anybody's going to go it's going to be me first."

If the increase passes the House Thursday, it goes right to the governor's desk. He's indicated he'll sign it. 

The first pay bump to $8 an hour would come in August. Starting in 2018, annual raises will go into effect, they'll be linked to inflation.  If there's a severe economic downturn, the state could stop the automatic increase.  

Minnesota has one of the lowest wages now. When fully phased in, the new wage could be in the top five. Washington state currently leads at $9.32 per hour, but Connecticut and Maryland are on course to get to $10.10 within a few years.

Learn about the effort to raise the minimum wage in other states here. 


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