Minnesota’s lowest-wage workers are about to get a big pay raise


Minnesota Gov. Mark Dayton (D), right, backs a minimum wage hike (Jim Mone/ AP)

Minnesota Democrats have resolved part of a dispute that could lead to a big raise for workers making the minimum wage, although legislators say there is work yet to be done.

On Monday, House and Senate negotiators agreed to raise the state’s minimum wage from $6.15 an hour to $9.50 an hour. The House and Gov. Mark Dayton (D) had pushed for the higher wage, while Senate negotiators had wanted a smaller increase, to $7.75 an hour.

The bill would effectively give most of Minnesota’s lowest-wage workers a pay raise of $2.25 an hour. Currently, Minnesota’s minimum wage stands at $5.25 for employees of companies that gross less than $625,000 in sales annually, and at $6.15 for employees at larger companies.

Most workers in Minnesota earn the higher federal minimum wage of $7.25 an hour. About 60,000 Minnesota workers make the minimum wage, according to data compiled by the Bureau of Labor Statistics.

The House on Monday rejected a Senate proposal that would have raised the minimum wage for employees at big businesses, saying they didn’t want to take a piecemeal approach. But the two chambers still need to resolve disputes over whether the minimum wage should be tied to inflation and the number of years the new rate would take to phase in.

Despite its progressive reputation, Minnesota has long had one of the lower minimum wages in the nation. In 1968, the lowest-paid workers earned just 70 cents an hour, a lower rate than any state other than Kentucky, according to the U.S. Department of Labor. The last time the legislature raised the minimum wage, in 2005, the lowest-paid workers went from earning $4.90 an hour to the current $5.25 rate.

Part of the reason for the lower-than-average wage is that Minnesota is one of just seven states that do not include a so-called tip credit, Eric Ostermeier, a political scientist at the University of Minnesota, said in September. A tip credit allows employers to pay a lower wage if employees make up the difference in gratuities, like waitstaff at restaurants might earn. All six of the other states without tip credits are Western states.

Minnesota would become the latest state to hike its minimum wage. In just the past year, blue states like California and New Jersey have voted to increase the wage floor. President Obama made a pay increase one of his priorities in the new year, although Republican control of the House of Representatives could block that initiative.

Reid Wilson covers state politics and policy for the Washington Post's GovBeat blog. He's a former editor in chief of The Hotline, the premier tip sheet on campaigns and elections, and he's a complete political junkie.
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