Minnesota minimum wage goes up Jan. 1, but minimally

Minimum-wage earners in Minnesota will get a small raise Jan. 1, as will their counterparts in 22 other states and Washington, D.C.

The inflation adjustment in Minnesota means that workers at businesses with more than $500,000 in annual revenue will see a 26-cent boost in hourly pay to $10.59.

The increase, about the cost of a banana, is far below the 84 cents average increase nationwide. It's also just a tad better than Michigan, which had the lowest minimum-wage hike in the country at 23 cents, to make minimum pay $10.10 an hour.

"All too many Minnesotans struggle every day to survive on poverty wages, having to make impossible decisions between paying rent and buying enough food for their families," said Merle Payne, co-director of the community group CTUL, noting the snow-buried homeless encampments she's seen this month across the Twin Cities.

"When the state minimum wage increases to $10.59 on Jan. 1, it will still be less than half the pay that the state estimates it costs the average Minnesotan family to meet their basic needs," she said.

The minimum wage also is higher in some cities.

St. Paul boosted its minimum wage from $12.50 to $15 an hour effective July 1, 2022. That rate rises to $15.19 an hour starting Sunday.

Minneapolis' minimum wage jumped from $13.50 to $15 in July and is also poised to reach $15.19 on Jan. 1.

About 8.4 million Americans make the minimum wage.

Employers say they have been forced to increase wages to stay competitive and stay ahead of a severe worker shortage and baby boomer retirements that have plagued most industries.

Across all states, Nebraska will have the largest bump in minimum wages. There, the minimum will increase from $9 to $10.50 an hour Jan. 1, and to $15 an hour in 2026.

The state of Washington, however, can claim bragging rights when its minimum wage will becomes the highest on Sunday, jumping to $15.74 an hour.

An analysis by the Economic Policy Institute (EPI) in Washington, D.C., found that many of those who will benefit from inflation-adjusted or state-mandated minimum-wage increases were women, Latino, Black or American Indian. Among those older than 25, 55% work at minimum-wage jobs, and among the minimum-wage workers, 44.8% work full-time.

EPI researchers Sebastian Martinez Hickey and David Cooper also found that more than 1 million minimum-wage earners are single parents, and that 5.7 million children are supported by minimum-wage households.

"These needed raises don't stay in workers' pockets," said Holly Sklar, CEO of Business for a Fair Minimum Wage. "They energize communities, as workers and their families have more to spend at local businesses. Minimum wage raises also pay off in lower employee turnover, increased productivity and better customer service, which strengthens small business competitiveness."

Sklar noted that state minimum wage hikes are critical since the federal minimum wage is just $7.25 an hour.

Steven Dyme, co-founder and chief executive of Chicago-based Flowers for Dreams, opened a Minneapolis and Roseville location in July and boosted his wages at his Michigan, Wisconsin and Illinois locations from $15 to $16 a year ago to help his 60 U.S. workers achieve more economic independence.

As for changes going into effect in the new year, "Any progress is good progress, but I would love to see more statewide [hikes]," he said. "It will do all the things you'd [expect]. It will boost consumer spending in the state, strengthen the local and state economy for sure and make it a more competitive labor market."

Melinda Christensen, who manages the Flowers For Dreams' Minneapolis shop, said at least one of her four workers was able to quit a second job because her hourly income broke past $15 an hour.

"She was able to quit that other job, work just one job and focus on her school work and not feel so stressed out," she said. "That was so prominent."

Kevin Brown, owner of the five-employee graphic design and digital printing business Smart Set Inc., said he found that paying more than minimum wage helped him retain employees, which saved him money — it costs him $1,500 each time he has to train a new worker.

He fully supports the state increasing minimum wage, but said it needs to be higher.

"Good luck trying to hire somebody for just $10 an hour. My daughter works in food service and even she makes $16 an hour," he said.