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House, Senate agree on minimum wage increase

Senate Majority Leader Tom Bakk, along with negotiators of the minimum wage plan, announce they've come to agreement.

ST. PAUL — Small businesses that dot greater Minnesota would not be forced to pay employees as much as larger firms pay under a minimum wage increase agreement legislative leaders announced Monday.

“I think we have a pretty strong provision for small businesses,” said Senate Majority Leader Tom Bakk, D-Cook.

Businesses with gross sales less than $500,000 annually would pay a $7.75 minimum wage when the law is fully implemented in 2016 instead of a $9.50 wage for larger businesses. Higher wages would be phased in annually for the next three years in a bill expected to pass the House and Senate this week.

Also, the agreement sets large-business minimum wages at $7.75 for a 90-day training wage for 18- and 19-year-olds, for all 16- and 17-year-olds and for some employees from other countries working at places such as resorts.

Supporters say the higher minimum wage would give 357,000 Minnesotans higher pay.

Republicans and business leaders were not happy with the deal.

A representative of small businesses said jobs would be lost. Mike Hickey of the National Federation of Independent Businesses could not predict how many jobs would disappear, but said young workers would be especially affected.

“We are very concerned about the sticker shock,” Hickey said. “We are very concerned putting this on autopilot.”

Hickey and other opponents said they think that allowing the minimum wage to automatically rise to keep up with inflation will cost businesses.

The deal includes a provision that beginning in 2018, the minimum wage would increase each Jan. 1 to match inflation, but the state labor commissioner could suspend an increase if the economy is faltering.

The minimum wage could not increase more than 2.5 percent a year.

House leaders had wanted an automatic increase for inflation, but Senate leaders were concerned. Bakk said that allowing the labor commissioner to delay automatic increases was a good compromise.

The Senate leader also liked phasing in the new minimum wage over three years.

“This is manageable,” Bakk said.

Resorts in Bakk’s Northeastern Minnesota and around the Brainerd lakes region got help in the bill, the senator said. The measure allows them and other businesses to hire workers from other countries at lower wages than they would be forced to pay American workers. Bakk said the resorts cannot find enough young people to work summers.

Ben Gerber of the Minnesota Chamber of Commerce said no state has ever increased its minimum wage as much when compared to adjoining states. No state around Minnesota has a minimum wage higher than the federal $7.25 wage.

The controversial nature of the bill only intensified Monday when Sen. Jeff Hayden, D-Minneapolis, brought the bill in front of the Senate finance committee, which tacked it onto an unrelated bill and sent the minimum wage provision to the full Senate.

“I think I have the right to know what is in bills,” said Sen. Scott Newman, R-Hutchinson, adding that he just learned about the minimum wage provisions minutes before they came up in the committee meeting.

The most vocal legislative proponent of a minimum wage, Rep. Ryan Winkler, D-Golden Valley, said that despite an improving economy, many Minnesotans still struggle. He said they will have more money to spend, which will help businesses. He said studies show that raising the minimum wage does not hurt business.

Boosting the minimum wage will help reduce poverty and improve the well-being and life spans of Minnesotans, said state Health Commissioner Ed Ehlinger.

“This is the place where we’re going to have a huge impact on health because it’s going to impact people on the lower end of the economic status where you can have the biggest impact with a very limited investment of dollars,” Ehlinger said Monday at a National Public Health Week event in West St. Paul.

He called the minimum wage proposal the most important public health policy being debated in the Minnesota Legislature this year.

Minnesota’s current minimum wage is $6.15, but most businesses fall under the federal $7.25 figure.

President Barack Obama wants to raise the federal wage to $10.10, but Republicans who control the U.S. House do not plan to go along with him.

Minnesota Public Radio contributed to this report.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.