Increasing Minnesota's Minimum Wage

The Minnesota Budget Project supports increasing the minimum wage to improve the economic security of Minnesota's low-wage workers and strengthen the state's economy.

Issue Overview

One of our country's most deeply held values is that hard work should pay off and those who work hard should be able to support their families. But Minnesota's minimum wage was failing in that regard. Minimum wage workers did not earn enough to escape poverty, and the minimum wage had not kept up with the cost of living.

At the start of 2014, Minnesota was one of just four states with a minimum wage below the federal minimum wage of $7.25. If the minimum wage had the same buying power as in 1968, it would be at least $9.55 an hour. If it had kept up with the growth of worker productivity during that time, it would be $18.61.

An estimated 325,000 Minnesota workers will have higher wages as a result of the minimum wage increase. An increase in the minimum wage is particularly well targeted to those most often left behind in our economy, including women and people of color. Substantial research on past minimum wage increases finds there is little impact on employment from modest increases in the minimum wage.

Status

In April 2014, policymakers reached an agreement to raise Minnesota's minimum wage. The changes are in House File 2091, which Governor Dayton signed into law on April 14.

Starting on August 1, 2014, the minimum wage will increase over a three-year period, reaching $9.50 for large employers and $7.75 for small employers by August 2016. The minimum wage will be indexed, or adjusted for inflation, starting in 2018. The state has the option of suspending an annual increase if there is a substantial downturn in the state's economy.

This agreement builds on work started in 2013, when the Minnesota House and Senate each passed minimum wage bills, including House File 92 (author Representative Ryan Winkler) and Senate File 3 (author Senator Chris Eaton). Governor Dayton strongly supported a $9.50 minimum wage.

More Information

Staff contact: Clark Biegler, Policy Analyst, 651-757-3071

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