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Wage hike starts today

With Minnesota’s minimum increase set for Aug. 1, the biggest impact will be felt at the smallest level.

“The small businesses are going to take the brunt of this one,” Red Wing Chamber of Commerce president Patty Brown said.

Initial reaction to the news of a wage increase was not positive, Brown said, and she heard a lot of feedback from those in opposition to the new law.

In recent months, however, talk of minimum wage has subsided and Brown said she thinks businesses have resigned themselves to the inevitable increase.

Wages will increase incrementally each year through August 2016 when they hit their peak. Beginning Jan. 1, 2018, inflation will factor into wage increases with a cap at 2.5 percent.

On Aug. 1, 2016, the large employer minimum wage rate will increase to $9.50 per hour, which, as it stands right now, would bring Minnesota even to the highest state wage in the country, tied with Washington D.C. The small employer rate will hit $7.75 per hour in 2016.

Brown said most larger employers in the area are already paying wages at or above minimum wage and the new law will have a minimal impact on their businesses.

One employer that will feel the squeeze of the increase, Brown said, is Treasure Island Resort and Casino. Employees hired at higher wages will force rates of current employees up as well, causing a domino effect, which could have a significant impact, Brown added.

Prior to enacting the new rate hikes, Minnesota was one of four states in the nation below the federal rate of $7.25 per hour, including Wyoming, Arkansas and Georgia.

In a state with two minimum wage rates the employee is entitled to the higher wage. Currently Alabama, Louisiana, Mississippi, South Carolina and Tennessee have no minimum wage law.

Minnesota last raised its minimum wage in 2005 to $6.15 per hour for large employers and $5.25 per hour for small employers, where it stood until the 2013 Legislature passed the new law.

The law also implements a new youth wage starting at $6.50 per hour Aug. 1, which didn’t previously exist. Another increase comes for the 90-day training wage for employees under 20 years old to $6.50, which was set at $4.90. Both youth and training wages mirror the small employer wage after Aug. 1.

Employer size

Large employer: Any enterprise with an annual gross dollar volume of sales made or business done of $500,000 or greater.

Small employer: Any enterprise with an annual gross volume of sales made or business done of fewer than $500,000.

The previous distinction between large and small employers was set at $625,000.

New wage rates

Large employer: Aug. 1: $8 per hour

Aug. 1, 2015: $9 per hour

Aug. 1, 2016: $9.50 per hour

Small employer, 90-day training wage, youth wage: Aug. 1: $6.50 per hour

Aug. 1, 2015: $7.25

Aug. 1, 2016: $7.75

J nonimmigrant visa: Aug. 1: $7.25 per hour

Aug. 1, 2015: $7.50 per hour

Aug. 1, 2016: $7.75 per hour

Inflation increase: Starting Jan. 1, 2018, the minimum wage increase by the national implicit deflator or 2.5 percent, whichever is lower. The minimum wage does not decrease in years of negative inflation.

John R. Russett

John Russett is a regional reporter for RiverTown Multimedia, covering a variety of issues facing RiverTown communities. Previously, he worked at the Red Wing Republican Eagle, where he reported on education as well as crime and courts. 

You can follow him on Twitter at @JohnRyanRussett


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