State Minimum Wage vs. Federal Minimum Wage in Minnesota

1. What is the current minimum wage in Minnesota, and how does it compare to the federal minimum wage?


As of January 2021, the current minimum wage in Minnesota is $10.08 per hour for large employers (those with annual gross revenue of $500,000 or more) and $8.21 per hour for small employers (those with annual gross revenue of less than $500,000). This rate applies to most employees, but there are some exceptions such as employees under the age of 18 and trainees.

The federal minimum wage is currently $7.25 per hour, which is lower than the minimum wage in Minnesota. However, if a state has a higher minimum wage than the federal rate, then employers in that state must pay their employees the higher state rate. This means that in Minnesota, employers must pay their employees at least the state minimum wage of $10.08 per hour instead of the federal rate of $7.25 per hour.

2. Which states have a higher minimum wage than the federal level, and how much higher is it?


As of 2021, the following states have minimum wages higher than the federal level of $7.25 per hour:

– California: $14 per hour for employers with 26 or more employees; $13 per hour for employers with 25 or fewer employees
– Washington: $13.69 per hour
– Massachusetts: $12.75 per hour
– Oregon: $12.00 per hour
– Colorado: $12.32 per hour
– Arizona: $12.15 per hour
– Maine: $12.15 per hour
– Vermont: $11.75 per hour
– New Mexico: $10.50 per hour
– Nevada: $9.75 per hour for employers who offer health benefits; $11 for those who do not

Note that these are the current minimum wage levels as of January 2021, but some states have legislation in place to gradually increase their minimum wage over the next few years.

Additionally, the District of Columbia has a minimum wage of $15 per hour, and some cities and counties within these states may also have higher minimum wages than the state level.

3. How often does Minnesota reassess and potentially raise its state-level minimum wage?


The Minnesota minimum wage is adjusted annually, as of January 1st of each year, based on the rate of inflation. However, if the minimum wage is already higher than the federal minimum wage, it will not change.

4. What factors influence the decision to set a state-specific minimum wage rather than relying on the federal level?


There are several factors that can influence the decision to set a state-specific minimum wage:

1. Cost of Living: The cost of living can vary significantly from state to state. In areas with high costs of living, such as major cities or states with high housing prices, setting a higher minimum wage may be necessary to ensure workers can afford the basic necessities.

2. Economic Conditions: State economies differ in terms of growth, unemployment rates, and overall prosperity. States with stronger economies may be more inclined to set a higher minimum wage as businesses may have more resources to accommodate the increase without significant negative impacts.

3. Political Ideology: Some states have a history of progressive policies and favoring social welfare programs, which could lead them to set a higher minimum wage. Other states may have more conservative ideologies and may not see raising the minimum wage as a priority.

4. Industry Composition: Some states may have specific industries that dominate their economy, such as agriculture or tourism. These industries may have different labor needs and wages than others, leading states to set a specialized minimum wage that reflects the needs of those industries.

5. Regional Competition: States that share borders with each other often compete for businesses and workers. To attract workers and stay competitive, some states may choose to set a higher minimum wage than neighboring states.

6. State Laws and Regulations: Some states have laws or regulations in place that require them to have a state-specific minimum wage instead of relying on the federal level. This could be due to historical reasons or legal challenges within the state.

7. Public Opinion: State governments must consider public opinion when making decisions about policies like the minimum wage. If there is strong support from voters for an increase in the minimum wage, it may influence legislators’ decisions on setting a state-specific rate.

8. Legislative Process: The process for passing legislation varies from state to state. In some states, it may be easier or quicker to pass a state-specific minimum wage than to wait for action at the federal level.

5. Are there any exemptions or exceptions to Minnesota’s minimum wage law, such as for certain industries or types of workers?


Yes, there are several exemptions and exceptions to Minnesota’s minimum wage law. These include:

1. Tipped employees: Employers may pay a lower minimum wage to employees who regularly earn tips, as long as their total earnings (wages plus tips) equal or exceed the minimum wage rate. The current minimum wage for tipped employees is $8.21 per hour.

2. Agricultural workers: Employees who perform agricultural work are exempt from Minnesota’s minimum wage law.

3. Seasonal workers: Employees who work in seasonal amusement or recreational establishments, such as fairs or carnivals, are exempt from Minnesota’s minimum wage law.

4. Trainees and learners: Employers may pay a training wage of no less than 85% of the state minimum wage rate to certain employees for the first 90 days of employment.

5. Youth workers: Workers under the age of 18 may be paid a lower minimum wage rate of $7.25 per hour during their first 90 consecutive days of employment.

6. Disabled workers: Employers may obtain special permits from the Department of Labor and Industry to pay wages that are less than the state minimum to employees with disabilities.

7. Small businesses: Small businesses with annual gross revenues of less than $500,000 may pay a lower minimum wage rate to their employees ($7.87 per hour as of January 2020).

8. Executive, administrative, and professional employees: Certain categories of salaried employees who meet specific duties criteria are exempt from Minnesota’s minimum wage law.

It is important for both employers and employees to fully understand these exemptions and exceptions in order to ensure compliance with the law.

6. How does Minnesota’s cost of living factor into establishing a state-level minimum wage?

Minnesota’s cost of living is an important factor in establishing a state-level minimum wage. The cost of living refers to the average expenses for necessities like housing, food, transportation, and healthcare in a particular area.

If the minimum wage in a state is not high enough to cover these basic costs, it becomes difficult for workers to make ends meet and provide for themselves and their families. This can lead to financial instability, poverty, and other negative impacts on individuals and communities.

When determining the state-level minimum wage in Minnesota, policymakers must consider the cost of living in the state. This means assessing factors such as housing prices, grocery expenses, and healthcare costs to ensure that the minimum wage is high enough for workers to afford basic necessities.

By taking into account the cost of living, policymakers can set a minimum wage that reflects the economic realities of the state and helps workers maintain a decent standard of living. Additionally, a higher minimum wage should also lead to increased consumer spending, which can boost the local economy.

Ultimately, considering Minnesota’s cost of living when establishing a state-level minimum wage helps promote fairness and economic stability for workers while also supporting local businesses and communities.

7. Have there been recent movements or proposed legislation to increase Minnesota’s minimum wage beyond the federal level?


Yes, there have been recent movements and proposed legislation to increase Minnesota’s minimum wage beyond the federal level. In 2014, the state legislature passed a law that gradually increases Minnesota’s minimum wage to $9.50 per hour by 2016 for large employers and $7.75 per hour for small employers. After that, the minimum wage is indexed to inflation so it will continue to increase year by year.

In 2019, Governor Tim Walz signed into law a bill that will raise Minnesota’s minimum wage to $15 per hour by 2022 for large employers (those with annual gross revenue of at least $500,000) and by 2024 for small employers (those with annual gross revenue of less than $500,000). This increase will be gradual, with raises every year until the target wages are reached.

In addition, there have been advocacy efforts and proposed bills in the state legislature to raise the minimum wage even higher than $15 per hour. For example, in 2021, Governor Walz proposed a plan to further increase the minimum wage to $15.75 per hour by 2025.

Overall, there is active discussion and support for increasing Minnesota’s minimum wage beyond the federal level in order to provide workers with a livable wage and address income inequality in the state.

8. Does Minnesota’s minimum wage apply to all workers, or are there different rates for tipped employees, minors, or other groups?


Minnesota’s minimum wage applies to all workers, regardless of their profession or age. There are no separate rates for tipped employees or minors. However, there are some limited exceptions for certain occupations, such as agricultural workers and trainees in government-administered training programs.

9. Is Minnesota currently facing any challenges or controversies regarding its state minimum wage law?


Yes, Minnesota is facing several challenges and controversies regarding its state minimum wage law.

1. Implementation of a new minimum wage: In 2014, Minnesota passed a law to gradually increase the state’s minimum wage to $15 per hour by 2022. This sparked controversy as some argued that it would lead to job losses and higher prices for consumers, while others argued that it would help lift thousands of low-wage workers out of poverty.

2. Debate over exemptions and exceptions: There has been ongoing debate over exemptions and exceptions in the state’s minimum wage law, such as spousal exemptions for small businesses and training wage exemptions for teenage workers. Critics argue that these exemptions create loopholes that allow employers to pay workers less than the minimum wage.

3. Enforcement issues: Some critics have raised concerns about the enforcement of the state’s minimum wage law, arguing that there is not enough oversight or penalties in place for employers who violate the law.

4. Push for a living wage: Despite the recent increases in the minimum wage, there have been ongoing calls from advocacy groups to establish a “living wage” in Minnesota, which would reflect the actual cost of living in different regions of the state.

5. Impact on small businesses: Small business owners have expressed concerns about how they will afford to pay their employees higher wages without going out of business or cutting jobs.

6. Preemption laws: In response to cities like Minneapolis and St. Paul enacting their own higher minimum wages, there have been efforts at the state level to pass “preemption” laws that prevent local governments from setting their own minimum wages above the state level.

7. Tipped worker wages: Tipped workers are subject to a lower minimum wage rate under federal and state laws. There has been ongoing debate over whether this practice should be abolished or if tipped workers should also receive an increase in their wages.

8. Tip credit elimination proposal: In 2021, a proposal was introduced to eliminate the tip credit for restaurant and hospitality workers in Minnesota, which would require employers to pay them the full minimum wage instead of relying on tips. This has sparked debate among business owners and employees about its potential impact on the industry.

9. COVID-19 pandemic impact: The COVID-19 pandemic has also brought attention to the state’s minimum wage law as many low-wage workers were deemed essential and put at risk while earning low wages. It has also highlighted existing disparities in pay across different industries and job sectors.

10. What impact does raising the state-level minimum wage have on businesses and the overall economy in Minnesota?


The impact of raising the state-level minimum wage on businesses and the overall economy in Minnesota can vary depending on the specific circumstances and factors at play. Some potential impacts could include:

1. Increased labor costs for businesses: One of the most direct impacts of raising the minimum wage is that businesses will have to pay their employees more, resulting in higher labor costs. This can be a burden for small businesses or those operating on tight profit margins.

2. Potential for job cuts or reduced hours: In order to offset the increased labor costs, some businesses may choose to cut jobs or reduce employee hours. This could potentially lead to higher unemployment rates and reduced economic activity.

3. More disposable income for low-wage workers: Raising the minimum wage can also have positive impacts on low-wage workers, as it allows them to earn more money and have more disposable income. This can lead to increased consumer spending and stimulate economic growth.

4. Reduced turnover and training costs: An increase in wages can also lead to improved retention rates for employees, as they are less likely to leave for higher-paying jobs. This can save businesses money on recruitment and training costs.

5. Improved productivity and quality of work: Higher wages can also motivate employees to work harder and produce higher-quality work, which can benefit businesses in terms of increased efficiency and customer satisfaction.

6. Short-term inflationary effects: In some cases, businesses may pass on the higher labor costs to consumers through price increases, leading to short-term inflationary effects.

7. Potentially decreased competitiveness: In industries with high competition, a significant increase in the minimum wage in one state (such as Minnesota) could potentially make it less competitive with neighboring states that have lower minimum wages.

Overall, while there are potential challenges for businesses in adapting to a higher state-level minimum wage, it is also believed that increasing wages can ultimately benefit both individuals and the overall economy by reducing poverty levels, boosting consumer spending, and improving worker productivity.

11. Does Minnesota’s low unemployment rate influence discussions about potential increases to the state minimum wage?


Yes, Minnesota’s low unemployment rate does influence discussions about potential increases to the state minimum wage. A low unemployment rate indicates a tight job market where employers may have difficulty finding and retaining employees, and this can lead to pressure for higher wages in order to attract and retain workers. This is especially true for workers in lower-paying jobs, who may be more likely to leave for a better-paying job if one is available. As such, proponents of raising the minimum wage argue that it will help keep wages in line with the strong job market and prevent employers from taking advantage of workers by paying them less than they are worth. On the other hand, opponents of raising the minimum wage argue that it could lead to job losses or higher prices as businesses try to offset the increased costs of labor. Ultimately, Minnesota’s low unemployment rate is an important factor in discussions about raising the minimum wage as it provides context for how much leverage workers have in negotiating for higher wages.

12. How do neighboring states’ minimum wages compare to that of Minnesota and affect local competition and worker migration?


The minimum wage in neighboring states varies greatly, with some states having a lower minimum wage than Minnesota and others having a higher minimum wage. For example, Wisconsin has a minimum wage of $7.25, Iowa has a minimum wage of $7.25 (although some cities have higher local minimum wages), and North Dakota has a minimum wage of $7.50. On the other hand, Illinois has a minimum wage of $10.00 and South Dakota has a minimum wage of $9.45.

These variations in minimum wages can affect local competition and worker migration in several ways:

1. Attracting workers: Employees may be more likely to move to states with higher minimum wages, as it offers them the opportunity to earn more money for similar jobs.

2. Retaining workers: If neighboring states have higher minimum wages, workers may leave Minnesota for better paying opportunities elsewhere.

3. Competition: Businesses in Minnesota may struggle to attract and retain workers if they are competing with businesses in neighboring states that offer higher wages.

4. Fostering economic growth: Higher wages can stimulate consumer spending, leading to increased economic activity and potentially attracting more businesses to the state.

5. Cost of living differences: Minimum wage laws should also take into account the cost of living in different regions. Even if neighboring states have lower or higher minimum wages than Minnesota, their cost of living may also differ greatly.

Overall, comparing the minimum wage among neighboring states can give policymakers an idea of how competitive their state is when it comes to attracting and retaining workers, as well as the potential impact on overall economic growth.

13. Has Minnesota’s state-level minimum wage kept pace with inflation over time?


Overall, Minnesota’s state-level minimum wage has kept pace with inflation over time. Since its inception in 1974, the minimum wage in Minnesota has increased several times to account for inflation and ensure that workers are paid a fair wage. However, there have been periods where the state minimum wage has fallen behind inflation, such as in the late 1990s and early 2000s.

Currently, Minnesota’s state minimum wage is $10 per hour for large employers and $8.15 for small employers, which is higher than the federal minimum wage of $7.25 per hour. The state minimum wage increases every year based on inflation rates, so it should continue to keep pace with inflation over time.

According to data from the Bureau of Labor Statistics (BLS), Minnesota’s minimum wage has generally surpassed the rate of inflation since 1974. For example, in 1977, the minimum wage was raised from $2 per hour to $2.30 per hour, a 15% increase that accounted for an inflation rate of around 6%. In contrast, in 2007, when the federal minimum wage was last raised to $7.25 per hour, this only accounted for a 9% increase in comparison to an estimated inflation rate of around 22%.

However, there have been instances where the state minimum wage did not keep up with rising costs of living. In the late 1990s and early 2000s, while the federal minimum wage remained at $5.15 per hour from 1997-2007, Minnesota’s went unchanged at $3.35 per hour from 1986 until it was raised to $4.75 in 1998.

In summary overall, while there have been periods where Minnesota’s state minimum wage fell behind inflation rates,
the policy has generally kept pace with rising costs of living since its establishment in 1974.

14. Do unions play a role in advocating for increases to the state’s minimum-wage law in Minnesota?

Yes, unions often play a role in advocating for increases to the state’s minimum-wage law in Minnesota. They frequently join forces with community and grassroots organizations to advocate for higher wages and better working conditions for all workers. Unions also negotiate contracts with employers that include wage increases above the minimum wage. Additionally, unions may lobby legislators and participate in public campaigns to raise awareness about the need for a living wage and rally support for legislative action.

15. How does increasing the state-level minimum wage potentially impact income inequality within Minnesota?


Increasing the state-level minimum wage in Minnesota has the potential to reduce income inequality by increasing the wages of lower-income workers. This can help to narrow the wage gap between higher-earning and lower-earning individuals, reducing income inequality within the state.

By increasing the minimum wage, low-wage workers will have more disposable income to spend on goods and services, which can contribute to economic growth. This, in turn, can lead to job creation and higher wages for other workers.

Additionally, increasing the minimum wage may also incentivize employers to invest in training and development programs for their employees. This can lead to upward mobility for low-wage workers and help them secure higher-paying jobs, further reducing income inequality.

However, it is important to note that there could also be potential negative effects from increasing the minimum wage. Small businesses may struggle with increased labor costs and may be forced to cut jobs or increase prices, potentially affecting overall economic growth. Additionally, some argue that raising the minimum wage could result in inflation and could ultimately harm those it is intended to help.

Overall, whether or not increasing the state-level minimum wage effectively impacts income inequality within Minnesota will depend on various factors such as how much it is being increased by and how well businesses are able to adapt to these changes.

16. Do different counties or regions within Minnesota have different local rates for their respective county/city compared to the overall state level?


Yes, different counties or regions within Minnesota may have different local rates for their respective county/city compared to the overall state level. This is because local sales tax rates are determined by individual counties and cities, and can vary depending on factors such as the cost of living and local government funding needs. For example, Hennepin County has a sales tax rate of 7.525%, while St. Louis County has a rate of 7.875%. Additionally, certain cities within these counties may have an additional sales tax rate on top of the county rate.

17. Are there efforts being made to align both federal and state laws regarding their respective national/state-wide minimum wages in Minnesota?


There have been some efforts to align federal and state minimum wage laws in Minnesota, particularly in recent years. In 2017, there was a proposal put forth by some lawmakers to increase the state minimum wage to $15 per hour by 2022, which would then be indexed to inflation. This effort ultimately did not pass, but it reflects a push for alignment with federal minimum wage laws.

Additionally, in March 2019, a bill known as the “New Wage Act” was introduced in the Minnesota legislature. This bill aimed to gradually increase the state’s minimum wage from its current level of $9.86 per hour to $15 per hour by 2024. While this bill did not pass, it again highlights efforts towards aligning state and federal minimum wage laws.

Ultimately, whether or not Minnesota chooses to align with federal minimum wage laws depends on political decisions and considerations unique to the state.

18. How do small businesses in Minnesota navigate and adjust to changes in state-level minimum wage laws?


1. Stay informed: The first step for small businesses is to stay up-to-date on any changes in state-level minimum wage laws. This can be done by regularly checking the website of the Minnesota Department of Labor and Industry or subscribing to their email updates.

2. Review current pay practices: Small businesses should review their current pay practices and ensure that they comply with the current minimum wage requirements in Minnesota.

3. Determine the impact: Businesses should also assess how a change in minimum wage will affect their bottom line, including any potential increases in labor costs.

4. Adjust employee wages: If the business currently pays below the new minimum wage, it will need to increase employee wages accordingly. This may require adjusting payroll processes and communicating the changes to employees.

5. Consider other cost-saving measures: Small businesses can also consider implementing cost-saving measures such as reducing work hours or increasing productivity to offset the impact of higher wages.

6. Consult with HR experts: It is important for small business owners to consult with HR experts or legal counsel to ensure compliance with state wage laws and avoid potential penalties.

7. Explore tax credits and incentives: Some state and federal tax credits are available for small businesses that may help offset increased labor costs due to a higher minimum wage.

8. Communicate with employees: Clear communication with employees is crucial during these changes in order to foster transparency, trust, and retain valuable employees.

9. Prepare for future increases: Most states have a gradual phase-in schedule for increased minimum wages, so businesses should prepare for future adjustments and plan accordingly.

10. Seek financial assistance if necessary: Small businesses can also explore financial assistance programs offered by state government agencies or local organizations to help cover any additional labor costs due to a higher minimum wage.

11. Evaluate pricing strategies: Higher labor costs may lead to an increase in product or service prices, so small businesses should carefully evaluate their pricing strategies before making any changes.

12. Consider hiring incentives or training programs: To attract and retain employees amidst higher minimum wage requirements, small businesses can offer hiring incentives or invest in employee training programs to enhance skills and productivity.

13. Research industry standards: Small businesses should research industry-specific labor costs and benchmark against competitors to remain competitive while complying with minimum wage laws.

14. Monitor labor budget: It is important for small businesses to monitor their labor budget regularly and make adjustments as needed to ensure compliance with minimum wage laws.

15. Automate processes: Investing in technology and automation can help reduce labor costs in the long term, making it easier for businesses to adjust to changes in minimum wage laws.

16. Consider alternative staffing models: Some small businesses may consider using alternative staffing models such as freelancers, contractors, or part-time workers to reduce labor costs.

17. Seek customer feedback: Small businesses can also seek customer feedback on potential price increases due to a higher minimum wage, so they can make informed decisions that are acceptable to their customers.

18. Monitor ongoing changes: Minimum wage laws may continue to change over time, so it is important for small businesses to monitor any ongoing changes and be prepared to adapt accordingly.

19. Has the state level minimum wage always been higher than the federal level in Minnesota?


The state level minimum wage has not always been higher than the federal level in Minnesota. Prior to 2014, the federal minimum wage was higher than the state minimum wage. It wasn’t until 2014 that Minnesota’s state minimum wage surpassed the federal level.

20. In recent years, have there been any studies or reports on the impact of Minnesota’s state minimum wage law on workers, businesses, or the economy?


There have been several studies and reports in recent years that have examined the impact of Minnesota’s state minimum wage law. Some examples include:

1. In 2018, the University of Minnesota’s Roy Wilkins Center for Human Relations and Social Justice published a report titled “The Effects of Raising the Minimum Wage on Employment and Economic Growth in Minnesota.” The report found that raising the state minimum wage to $15 per hour by 2024 would benefit over 670,000 workers and result in minimal job loss.

2. A 2019 study by the Center for Economic and Policy Research examined the impact of raising the minimum wage to $15 per hour in Minneapolis. The study found that while there was a small decrease in employment among lower-wage workers, there was also an increase in wages and overall economic growth.

3. The Minnesota Department of Employment and Economic Development publishes an annual Minimum Wage Report, which includes information on changes to the state’s minimum wage and its impact on businesses, employment, and income levels.

4. In 2019, the non-profit organization GiveMN conducted a survey of small businesses in Minneapolis affected by the city’s $15 minimum wage ordinance. The survey found that while some businesses reported challenges such as increased labor costs, most were able to adjust their operations without significant negative impacts.

Overall, these studies suggest that raising the state minimum wage can benefit low-wage workers without causing significant harm to businesses or overall employment levels. However, further research is still needed to fully understand the long-term effects of these policies.