Minimum wage increase

This bill died -- at least for the 2007 session -- when it did not get a third reading in the House. The original House bill would increase the state’s minimum wage for large employers to $6.75 on Aug. 1 2007 and $7.75 one year later. For smaller employers, the rates would be $5.75 and $6.75. The current minimum wage was increased to $6.15 per hour for large employers Aug. 1, 2005; $5.25 per hour for smaller ones. Future increases would be indexed to the Consumer Price Index as of Nov. 1 each year and increased the following Jan. 1, based on the percentage index change.

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Senate approval
April 18, 2007 (SF875)

The bill raises the minimum wage from $5.15 an hour to $6.25 per hour for large employers, defined as businesses with gross revenues of $675,000 per year. It would rise to $7.75 per hour in August 2008. For small employers,the minimum wage would rise from $5.25 to $5.75 per hour. It would rise to $6.75 per hour in August 2008. The bill passed on a 40-to-23 roll call vote. The specifics of the roll call vote will be available later.

Result: Passed

Business, Industry and Jobs Committee
April 11, 2007 (SF875)

(From Senate Daily)

Sen. Ellen Anderson (DFL-St. Paul) sponsored a bill, S.F. 875, raising the minimum wage and indexing it for inflation. The bill increases the minimum wage large employers must pay from $6.15 to $6.75 on Aug. 1, 2007, and to $7.75 on Aug. 1, 2008. Under the bill, the minimum wage for employees of small employers increases from $4.90 to $5.75 this year and to $6.75 next year. The bill also repeals a lower minimum wage for employees under age 20; under current law, young employees may be paid no less than $4.90 per hour for the first 90 days of employment. Beginning Jan. 1, 2009, the minimum wage is automatically increased annually by the previous year's inflation, under the bill.

If the original minimum wage had kept up with inflation, Anderson said, it would now be around $9.27 per hour. We have over 400,000 jobs in Minnesota that pay less than that, she said. Anderson said a survey conducted after the most recent minimum wage increase, in 2005, showed about 70 percent of Minnesotans believe the minimum wage is too low. Twenty-five states have minimum wages higher than Minnesota's, including Arkansas, Illinois, Iowa, and Wisconsin, she said. Anderson also urged members not to accept a proposal to create a lower minimum wage for tipped employees. Ten states have an automatic inflation adjustment for their minimum wage, said Carrie Thomas of the Jobs Now Coalition. There is a lot of economic research discrediting the theory that a higher minimum wage reduces the supply of jobs, she said. Thomas said removing the "training wage" for young employees is appropriate because there is no reason to value people's work based on their ages. The value of the state minimum wage has declined relative to the poverty line and the median wage, corroding our social structure, said Brian Rusche, Joint Religious Legislative Coalition.

Representatives of the business community spoke against the measure. An increase in the minimum wage will be harmful to the supply of jobs and adversely affect the prices of goods and services, said Dave Dederichs, Minnesota Chamber of Commerce. Minnesota should be consistent with federal law, he said. Minnesota is one of only seven states not to recognize tips as wages, said Kevin Matzek, representing the Minnesota Restaurant Association. The bill will make the wage for servers $5 more than in Wisconsin, putting Minnesota at a significant competitive disadvantage, he said. Without an offset for servers' tips, Matzek said, only the highest compensated employees in restaurants will be getting raises. Last year, full-service restaurants lost jobs for the first time in over 17 years, he said. Matzek said tipped jobs are highly desired because they offer good compensation and flexible schedules. Members also reviewed a written statement from Mike Hickey, National Federation of Independent Business, opposing the bill.

Sen. Geoff Michel (R-Edina) said people on both sides of the issue want good jobs to come to Minnesota and seek to ensure a good future and economy for coming generations. "We're not Santa Claus," he said, "we can't give raises." This bill is harmful for jobs, he said. Sen. Joe Gimse (R-Willmar) said he was most concerned about the effect of the increase on small businesses. Anderson said there was no evidence that jobs have fled the state in the last two years, since the minimum wage was last increased. There is some evidence that very small price increases of perhaps one percent are passed on to consumers, but that the benefit is significant for low-income earners, she said. We are out of the mainstream, Anderson said, with a below-average minimum wage.

The bill was forwarded to the full Senate.

Result: Passed

House Labor and Consumer Protection Division approval
March 16, 2007 (HF456)

Approved on a divisive voice vote by the House Labor and Consumer Protection Division, the bill next goes to the House Commerce and Labor Committee. A companion bill, SF875, sponsored by Sen. Ellen Anderson (DFL-St. Paul), awaits action by the Senate Business, Industry and Jobs Committee.

Result: Passed