Minimum Wage Increases To $8 An Hour In Minnesota

Updated: 08/01/2014 6:51 PM
Created: 08/01/2014 7:13 AM
By: Hannah Tran

(ABC 6 News) -- For the first time in nearly a decade, Minnesota's minimum wage increased Friday.

Many local businesses have been changing their budget process to prepare for the implementation. A change in minimum wage means a change in the way businesses do business.

"Not only from a business perspective, but also for preparation in terms of budgeting," said Michael Henry, Manager and Director of Human Resources at Rochester’s local Kahler Grand Hotel.

Implementing the minimum wage bump proved to be a rocky road for some, but not so bad for others. It comes in phases by year, until 2016, when it’s expected to top off at $9.50.

"I do like that they've phased it in over three years," said Chris Holloway, manager and founder of Press Coffee and Tea Lounge in Downtown Rochester. Holloway is one of many small business owners who have had a harder time adjusting to the wage transition.

There’s a $500,000 dollar annual revenue threshold. Small businesses under that line will go from $5.25 an hour to $6.50 an hour. Large businesses over the threshold will jump from $6.50 an hour to $8 dollars an hour. Of course, this is only an incremental increase.

"But as a business owner, what you're also looking at is how we'll be able to make sure that it doesn't adversely impact the quality of the business that you're providing, or the service you're providing," said Henry.

The Kahler Hotel has more than 500 employees. They easily surpass the threshold. They had a variety of resources that made the transition a bit easier, which can be difficult for smaller business.

"Every business has a finite amount that they can spend on labor. I think the smaller you are there's just little flexibility," said Holloway, who’s coffee business falls under the threshold. Holloway is worried about cutting hours for employees.

Over at the Canadian Honker, a local restaurant, owner Nick Powers says their annual revenue is above the threshold.

"From our standpoint, we don't have many employees that even make minimum wage, other than the tipped employees, so it won't affect them dramatically," said Powers.

Although the law is in place today, an actual tweak to the paycheck is still down the road for all these businesses. It’s a process.

Experts also add that women and young people are likely to be the most affected by the law.

Starting in 2018, the wage will start indexing to inflation.