Local business owners, workers react to minimum wage hike
Although she works full time at a Wadena gas station, Ciera Crain’s paycheck doesn’t cover the bills.
The 19-year-old saves money where she can, walking to work instead of driving, averse to shelling out precious dough for the product she sells eight hours at a time and wary of squandering even a buck to cure a candy craving during a long shift.
At more than a dollar below the federal standard, Minnesota’s current minimum wage of $6.15 an hour is one of the lowest in the nation. Under a law DFL Gov. Mark Dayton signed last week, the state is moving toward having one of the highest, gradually boosting the incomes of hundreds of thousands of low-wage hourly workers like Crain.
“Give me that raise!,” Crain said in the middle of a shift last week. “I’m all for it. We work just as hard as anyone else.”
The law, which passed the legislature with no Republican support, will bump minimum wage to $9.50 an hour for large businesses by 2016. It will increase in phases, to $8 this August, $8.50 in 2015 and $9.50 in 2016.
The minimum wage for businesses with gross sales under $500,000 will increase in phases to $7.75 by 2016. That lower wage will also apply for 16-and 17- year-old employees of larger companies, for 18- and- 19 year-olds as a 90-day training wage and for those working under a visa granted to temporary foreign workers.
Starting in 2018, the minimum wage will be indexed to inflation, set to increase each Jan. 1. Annual increases are capped at 2.5 percent and a state commissioner will have the authority to suspend hikes during economic downturns.
About five percent of Minnesota’s hourly workforce - about 83,000 people - made the federal minimum wage ($7.25 an hour) or less in the fiscal year ending July 2013, according to the Department of Labor and Industry.
Although Crain has no qualms about her pending state-mandated wage increase, her co-worker Alisha Maruna said she thinks businesses will pass on increased payroll costs on to consumers.
“It’s not that I don’t support it,” Maruna said. “I just think it’s sort of pointless. Everything else is going to cost more.”
The law will also lead businesses to cut hours or lay off employees, said Gillette Kempf, owner of An Open Book, which is small enough to pay the $7.75 hourly rate - still $2.50 an hour more than the current state minimum wage for small employers.
The higher wage, she said, will force her to be more reliant on volunteers and “way pickier about who I employ.”
The minimum wage, Kempf said, is meant to be a non-skilled training rate for young employees, not a long-term source of income. “Your goal shouldn’t be to support yourself or your family with a job at a fast food restaurant.”
As she worked behind the counter at Larry’s Pizza, Sebeka sophomore M’Cayla McQuiston said she definitely plans to go to college and get a job that pays more. Right now, with few bills - she pays for a cell phone and splits gas with her parents - her low wage provides enough money for her to buy the things she wants.
“I feel like it’d be pretty cool,” McQuiston said of the minimum wage increase. But she, too, worries about prices going up.
While Cozy Theatre owner Dave Quincer said he’s doesn’t think raising the minimum wage is a bad idea, he’s conscious of the impact it will have on some businesses. He already pays his employees more than the minimum wage and typically employs high schoolers that will be subject to the lower rate, so the increase, he said, “won’t hit me quite as hard. But there’s no question it’s going to cost more for everybody. Most (businesses) are going to pass it on.”
Cindy McCullough, owner of Ben Franklin Crafts in Wadena and Detroit Lakes, also pays her workers more than the minimum, though it’s not as much as the $9.50 an hour the new law will require for her business.
“While it needs to go up, it’s going to put a strain on customer service,” she said.
Economists are divided over how minimum wage increases affect the economy. While some studies show they cause the economy to shed jobs, others show they leads to job growth, due to higher retention rates and increased productivity.
Rep. Mark Anderson, R-Lake Shore, said wages should be left to the free market.
The exemptions for teenage and foreign workers serve to complicate rather than mitigate, he said. “It’s just going to be another accounting nightmare.”
Republicans in the legislature would have agreed to raising the state minimum wage to the federal level, said Sen. Paul Gazelka, R-Nisswa. He said the 54 percent increase hike the DFL passed goes too far.
“That is way too much for our local business, our smaller businesses, to bear,” Gazeka said.
Indexing future minimum wage increases to inflation, he said, is poor policy. “It’s never wise to put something on autopilot.”
A large increase was warranted because the minimum wage hadn’t been raised in nearly a decade, said Sen. Rod Skoe, DFL-Clearbrook, whose district includes the northern fifth of Wadena County.
“This is just an effort to have Minnesotans who are working full time have a better chance of having a livable wage,” he said.
The bill isn’t perfect, Skoe said, “but I’m never one to let perfect stand in the way of the doable … Hopefully, we were thoughtful and there won’t be negatives for Minnesota businesses.”