Minnesota’s Minimum Wage Will Increase in January

Minnesota’s Minimum Wage Will Increase in January

To keep pace with inflation, large employers’ minimum wage rate will increase to $10 an hour, while small employers’ rate will move to $8.15.

Minnesota’s minimum wage will be bumped up in 2020 for the sixth consecutive year, based on annual adjustment for inflation. Effective January 1, the rate for large employers will move to $10 an hour from $9.86, while the rate for small employers will move from $8.04 an hour to $8.15.

The state defines large employers as companies generating an annual gross revenue of $500,000 or more, and small employers as companies generating a revenue of under $500,000.

The increases stem from a wage law passed by the state legislature in 2014. That law called for incremental increases—the first increases in nearly a decade, MinnPost reported.

The state’s incremental hikes have unfolded at the same time that Minneapolis and St. Paul have enacted their own minimum wage increases that will eventually surpass the state rate.

Minneapolis launched its gradual hike plan at the start of 2018. The city ordinance calls for large businesses – those employing more than 100 people – to boost wages $1 every year and small employers to increase wages 75 cents every year. The goal is to get to $15 an hour across the board by 2024.

St. Paul followed in its sibling city’s footsteps with its own ordinance passed in November 2018. Increases will start in July 2020.

By July 2022, companies with more than 10,000 workers will need to pay $15 an hour, while businesses with more than 100 employees will need to pay the same wage by 2023. Businesses with 100 or fewer employees have until 2025 to reach the $15-an-hour mark.

Because Twin Cities rates are higher, they are exempt from the state law changes.

Minnesota Republican lawmakers have taken issue with the cities implementing their own policies outside the bounds of the state law, but the state hasn’t interfered. In fact, this past March, the Court of Appeals in Minnesota upheld Minneapolis’ wage ordinance.

Additionally, in the announcement last week of the upcoming state wage increase, Minnesota Department of Labor and Industry commissioner Nancy Leppink acknowledged that the inflation-adjusted increase isn’t entirely sufficient.

“This increase is a positive step for workers, yet more work needs to be done to ensure workers earn a living wage to support their families,” said Leppink. “Minnesota families of three or more will remain at or below the poverty level even though an adult family member is working full time at the minimum wage, forcing many families to seek assistance to make up the living-wage gap.”

The state expects 206,000 jobs out of 2,248,000 jobs will still be paying state minimum wage in 2020. According to state data, the living wage for a family with one full-time-working parent and one child, for example, is at minimum, $17.79. (That varies based on counties, with Stevens County being the lowest).