New Minnesota law sets highest minimum wage in Midwest

At the start of this year, Minnesota was the only state in the Midwest that had a minimum wage lower than the federal requirement. Starting in August, it will have the region’s highest, as part of a gradual phase-in that will require the state’s larger employers (sales of more than $500,000 a year) to pay their workers at least $9.50 per hour by August 2016.
Proposals in that state (SB 68 and HB 3718) would increase the minimum hourly rate for Illinois workers from $8.25 to $10.65. Illinois is already one of four states in the Midwest with a law that requires a higher wage than the federal rate of $7.25 per hour.The recently enacted measure (HF 2091) is one of many proposals in the Midwest this year calling for hikes in the minimum wage. As of April, though, no other state legislature in the Midwest had enacted such a law, and Illinois appeared to be the only state where a bill had the potential of passing.

The federal law was last modified five years ago, and with little hope of congressional action, advocates of a higher minimum wage have been focusing more on state-level changes.

Later this year, South Dakotans will vote on whether to increase the state’s minimum wage to $8.50 per hour. This higher wage would then be adjusted annually to account for increases in the cost of living.

Eight years ago, Ohioans approved an increase in their state’s minimum wage. Under that 2006 measure, inflationary adjustments are made annually. This year, for example, Ohio’s wage requirement rose from $7.85 per hour to $7.95 to account for changes in the cost of living. Minnesota’s law also includes inflation indexing, which takes effect in 2018.

Legislators, too, established separate wage requirements for larger and smaller employers. Businesses with annual gross sales of $500,000 or less must pay their workers at least $7.75 starting in August 2016, compared to the large-employer wage of $9.50.

A different, and lower, wage requirement will also apply to Minnesota workers under the age of 18 ($7.75 per hour) and to 18- and 19-year-olds during their first 90 days on the job (this “training wage” will be $7.75 per hour in 2016; it has been $4.90).

In addition to having the Midwest’s highest minimum wage, Minnesota differs from other states in another important way: It doesn’t have a separate minimum wage for tipped employees. Instead, this group of employees is covered under the new, higher minimum wage.

In contrast, Indiana, Kansas, Nebraska and South Dakota set the minimum wage for tipped employees at $2.13 an hour (the federal requirement). Tipped employees are guaranteed $4.95 per hour in Illinois, $4.35 in Iowa, $2.65 in Michigan, $4.86 in North Dakota, $3.98 in Ohio, and $2.33 in Wisconsin.

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