Minnesota workers earning the minimum wage will see yearly raises under a bill given final approval Thursday that pushes the hourly rate to $9.50 by 2016 and enables automatic increases in the future.
The bill gives Minnesota one of the nation's most generous pay floors after years of being among the states with the lowest minimum wage. The bill passed with only Democratic votes after Republicans said it would cause hardship on businesses and narrow opportunities for those the legislation is designed to help.
The state House passed the bill a day after the Senate, both of which are controlled by Democrats. Gov. Mark Dayton announced plans to sign the bill Monday afternoon.
"Thousands and thousands of families will have a better life because of what we do today," said Rep. Tim Mahoney, DFL-St. Paul.
Supportive lawmakers shared personal stories of flipping burgers or doing other entry-level jobs for little pay. "Many of the low-wage workers are the hardest working people I know," said Rep. Joe Radinovich, DFL-Crosby.
The floor wage required of most employers will climb from $6.15 per hour to $8 per hour in August. It goes to $9 next year and $9.50 the year after. In future years, the rate could rise by 2.5 percent through an inflationary mechanism. Those future hikes could be suspended if the economy stumbles, but officials could authorize catch-up increases once times improve.
Minnesota last raised its minimum wage in 2005.
Democratic backers hailed the bill as an overdue raise for more than 350,000 people making the least now. They said people in that situation tend to spend what they make quickly, helping cycle money into the local economy.
Republican lawmakers relayed concerns from business groups that the wage is rising too much too fast. They warned it would be a crushing blow on grocery stores and restaurants, causing them to raise prices or pare back employee rolls.
"I'm sure Minnesota will survive after this happens but a lot of people won't get that first line on their resume," said Republican Rep. Bob Gunther, a retired grocer from Fairmont. "It's going to be fair for some people. It's going to be devastating for others."
The GOP argued the hike will make Minnesota a geographic outlier. All of the state's neighbors match the federal minimum wage of $7.25 per hour.
"We can live in a fantasy land that maybe people are going to want to pay higher prices," said Rep. Steve Drazkowski, R-Mazeppa. "But the economy does not work that way."
Minnesota is one of four states currently beneath the federal minimum wage, though many workers automatically receive the federal rate. Anyone involved in interstate commerce, such as a retail clerk swiping a credit card, are entitled to the higher of the two wages. Some workers such as baby-sitters, taxi drivers, nonprofit volunteers and others are exempt from the minimum wage.
"It's an embarrassment we have one of the lowest minimum wages in the country," said Rep. David Bly, DFL-Northfield.
All employers won't be bound by the same wage rules. The bill preserves a tiered structure the state currently has. Businesses with gross sales beneath $500,000 will see the wage top out at $7.75 in 2016. Workers younger than 20 would be subject to a lower temporary training wage and companies could continue paying 16 and 17 year olds less.
Minnesota's measure isn't as ambitious as Connecticut or Maryland, which recently passed laws to gradually boost their minimum wage to $10.10 per hour. California's wage hits $10 by January 2016. Washington state has the highest rate currently at $9.32, but it rises annually by the rate of inflation.
Democratic Rep. Ryan Winkler of Golden Valley, the bill's sponsor, said he was glad to see his state reverse course.
"We can choose to go the low-cost, low-tax, low-wage route. Some states are following it, and it is not going very well," Winkler said. "We do not have to accept a race to the bottom."