Minimum wage hike goes into effect

On August 1, Minnesota’s minimum wage increased to $8.00 an hour in the first of three incremental increases that will culminate with a $9.50 minimum wage in 2016. Fox 21 News in Duluth-Superior has a good story on the law’s impact on one local employer, Grandma’s Restaurant Company, which employs 400-600 people in its restaurants. Grandma’s regional manager Tony Boen told Fox 21 that the company’s restaurants have already begun raising prices in response to the minimum wage hike and are also looking at automation as a possible cost-cutter: “Boen also believes the mandated increase may prevent them from giving raises to some of their staff members who are not minimum wage earners. He also tells FOX 21 the franchise is looking into alternative technology to help them cut down on server hours and the costs of labor.”

The St. Cloud Times also finds employers cutting hours and raising prices in response to the minimum wage hike. Restaurateur Nick Barth “says it will seriously affect his bar and restaurant businesses, forcing him to make hard choices. ‘It's going to be tough,’ Barth said. ‘We're going to cut some (employee hours); we're going to increase a little pricing. But the pricing will only go so far before we go out of the market range.’”

Non-profit employers are also feeling the pinch. According to the Albert Lea Tribune, the Austin YMCA is “considering increasing membership and program fees, which — if approved — could take effect in September with the start of the business’s new fiscal year.” And liberal blog Bluestem Prairie reports that at least one café found a novel way of offsetting the cost of a higher minimum wage: including a “minimum wage fee” on customers’ receipts.

Note that this law has been in effect for less than a week, and this is merely the first of three mandated wage hikes approved by the 2014 legislature and signed into law by Governor Mark Dayton. The state’s minimum wage will increase to $9 next year, and $9.50 in 2016, with automatic inflationary increases every year thereafter.

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