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Minnesota's Minimum-Wage Workers Get 75-Cent Increase

By Matt Sepic | MPR
Friday, August 1, 2014

Copyright 2018 MPR News. To see more, visit MPR News.

Workers and advocacy groups praise the hard-fought change, from $7.25 to $8, but opponents warn it will wreak havoc on business balance sheets.

Transcript

RENEE MONTAGNE, HOST:

Despite attempts by President Obama and congressional Democrats to raise the federal minimum wage, it's stayed at $7 and 25 cents an hour since 2009. Even with modest inflation in recent years, workers at the bottom of the pay scale are losing purchasing power. That's prompted some states to step in. Today, Minnesota becomes the latest to raise its minimum wage. As Matt Sepic of Minnesota Public Radio reports, workers there are getting a 75 cent an hour boost in pay with more to come.

MATT SEPIC, BYLINE: Go to any major airport, and you'll see hundreds of people like Abera Siyoum zipping around in electric carts. The 35-year-old Ethiopian immigrant works full-time at Minneapolis-St. Paul International Airport helping elderly and disabled travelers navigate the miles of carpeted concourses. Until yesterday, Siyoum earned the federal minimum of $7.25 an hour. Today, he's getting $8. Siyoum says the extra cash will help him support his wife and two children.

ABERA SIYOUM: It's a good start. It's not a lot of money, but still it helps us out, you know, for groceries.

SEPIC: Siyoum hopes to finish an accounting degree he started in Ethiopia. But if he's still making minimum wage next year, his pay will rise to $9 an hour, then $9.50 in 2016. Labor groups began pushing for a higher minimum wage when Democrats took control of the Minnesota Legislature last year. But it took until this year to pass a bill because of disagreements over how much to boost the wage floor. Susie Brown with the Minnesota Council of Nonprofits says the raise is long overdue.

SUSIE BROWN: We think that it's going to be helpful to individuals and their families. And we think that that makes Minnesota a place where people are more able to thrive and have opportunities and attain success.

SEPIC: Polls show broad support for the move, but opponents warn it'll wreak havoc on business balance sheets. Some restaurant owners have been especially vocal because Minnesota is one of seven states where even workers who get tips must still be paid the full minimum wage.

At the Smilin' Moose, the newest of his three eateries, Tom Tomaro says he supports the minimum wage in principle, but he wants legislators to include a so-called tip credit. He says with tips, his servers already earn at least $12.50 an hour and often much more. Tomaro says having to raise their pay leaves less for his non-tipped employees.

TOM TOMARO: As that wage continues to increase, it makes it very hard for us to compensate our back-of-house employees which is the kitchen staff or our managers because, you know, in fairness, we run out of money across the board when that wage continues to creep up.

SEPIC: Anticipating Minnesota's minimum wage increase, Tomaro opened the Smilin' Moose just across the river in Wisconsin, where he can pay his tipped workers less. Tomaro says he'll probably sell his Minnesota restaurants.

While other business owners could follow, economist Louis Johnston of St. John's University doesn't expect a mass exodus. He says moving a business is expensive, and contrary to some fears, he says data from other states with even higher minimum wages indicate there will be little change to Minnesota's overall economy.

LOUIS JOHNSTON: What it will do is it'll affect the people right there who are both paying the wage and who are receiving the increased wage. That's where things are going to get adjusted.

SEPIC: So far this year, nine other states have passed minimum wage increases. Most go into effect next January. For NPR News, I'm Matt Sepic in Minneapolis. Transcript provided by NPR, Copyright NPR.

View this story on npr.org

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