MN Hospitality Advocate

Minnesota Minimum Wage is Complex

Posted in Uncategorized by hospitalityminnesota on August 3, 2015

The minimum wage for many workers went up to $9.00 an hour on August 1, 2015.  The news isn’t that simple, however.  The adult wage for large employers is the figure that has gotten most of the attention but there are four other provisions in the law.

A youth wage of $7.25 an hour applies to workers that are under 18 years of age.  This provision was included in the 2014 law at the request of many employers and advocates so that young people could better compete for their first job.  The unemployment rate has been much higher for teens than for adults in most parts of the state.

A training wage of $7.25 an hour applies to workers under 20 during their first 90 days of employment.  We have had a training wage for a long time but at a much lower level.  The Federal law also includes a training wage.  This provision recognizes that workers take some time on the job to become productive.

Small employers with annual revenues of $500,000 (not including the sales tax) may pay their employees $7.25 an hour.  There is also a special wage, $7.50 an hour, for international student workers on a J visa who also receive lodging or meals as part of their employment and work at a hotel or a resort.

The one provision that we wish was in the law but isn’t, is recognition that tips are also important and should be considered.  The hospitality industry advocated for a tipped wage of $8.00 an hour for those making $12 an hour or more with tips or wages.  The provision passed in the Minnesota House in 2015 but was blocked by the State Senate.

An example of what may happen with a high minimum wage that doesn’t recognize tips as income is what has happened in Washington and in Oregon.  The average number of employees per restaurant has fallen from about 19 to just over 14.  If Washington and Oregon had the same number of employees per location today that they had a few years ago, there would be 50,000 more restaurant jobs in those two states.  Minnesota has about 19 jobs per restaurant, which is also about the national average.  As the Pioneer Press wrote in an editorial, wages have consequences.

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