Nonprofit, nonpartisan journalism. Supported by readers.

Donate
Topics

Who works for minimum wage or less in Minnesota?

A decade ago, Minnesota’s lowest-paid workers earned as much as minimum-wage earners elsewhere. Today, it’s one of nine states where some workers won’t even earn the federal minimum of $7.25 an hour.

Federal law allows employers to count tips toward the minimum wage, but Minnesota is one of seven states that prohibit this "tip credit."
REUTERS/Brian Snyder
Federal law allows employers to count tips toward the minimum wage, but Minnesota is one of seven states that prohibit this “tip credit.”

A decade ago, Minnesota’s lowest-paid workers earned as much as minimum-wage earners elsewhere. Today, it’s one of nine states where some workers won’t even earn the federal minimum of $7.25 an hour.

By contrast, on New Year’s Day 1 million people in eight states where the minimum wage is pegged to inflation, workers got raises ranging from $0.28 an hour in Colorado to $0.37 in Washington.

That may not sound like much, but to a family eking by on such modest means, the extra $300-$500 a year translates to a month’s groceries.

Under Minnesota law, certain employers can pay just $5.25 an hour, or even $4.90 for youth in training. Never mind that state statistics peg the hourly wage a single, childless adult needs to eke out a living to slightly less than $12. And two adults working to support two kids must each earn $14 an hour.

Yet according to a recent report by the state Department of Labor and Industry, in 2010, the most recent year for which statistics are available, nearly 100,000 of Minnesota’s 1.5 million hourly wage earners earned the federal minimum wage or less.

If the federal minimum wage had kept pace with inflation since the late 1960s, it would be $10.03 today. According to the St. Paul-based JOBS NOW Coalition, 19 percent of Minnesota jobs pay less.

Translation: We’re falling behind faster and faster. In 2010 dollars, Minnesota’s minimum has fallen from $8.07 in 1974, when it was created, to $6.15. The U.S. minimum, meanwhile, fell from $8.97 to $7.25.

Basic needs
According to JOBS NOW, 39 percent of Minnesota jobs pay less than needed to support a family. At the current minimum wage of $7.25 per hour, a couple with two children would have to work 155 hours a week to meet basic needs.

Overall wages have fared better. In 2010 dollars, U.S. average hourly earnings fell from a high point of more than $19 in the ’70s to a low point of about $16.50 in the mid-’90s, returning to $18.98 in 2010.

The first federal minimum wage of $0.25 was enacted in 1938. It’s been raised two dozen times since then, with each hike hotly debated. In 1974, Minnesota created its own minimum wage, which roughly paralleled the federal one for almost a quarter of a century.

In 1997, both minimums stalled at $5.15. In 2005, Minnesota raised its minimum to $6.15. Most workers are entitled to the highest rate available, their state’s or the federal one. And so for two years, wages were higher here than they were in many places.

In 2007, however, the federal minimum began creeping up, reaching its current level in July 2009. The increase rendered Minnesota’s minimum wage law irrelevant for all but the most poorly paid segment, those who are not covered by the federal rate.

Georgia, Arkansas, Wyoming and Puerto Rico also have state minimums that are lower than the federal level.

Minnesota exempts salaried workers, traveling salespeople, camp counselors and some agricultural workers, among others, from the minimum wage. The largest category is workers whose employers have annual revenues less than $500,000 and are not involved in interstate commerce.

Mom-and-pop business
A good example of what that interstate commerce clause means: Employees at a fast-food chain with outposts in several states must be paid the federal rate regardless of the store’s sales, but employees of a mom-and-pop café or bar that transacts all of its business in the state and brings in less don’t.

In 2009, the state estimated that 48,000 Minnesotans made less than when the federal minimum wage at the time, $6.55 an hour. The more recent Labor Department report [PDF] did not break out the number of Minnesota workers who don’t earn the federal minimum, just those who earn the minimum or less.

It does provide an interesting snapshot of the state’s hourly wage workforce, however.

As one would expect, as the federal minimum rose in recent years, so did the number of Minnesotans making the minimum or less.

Workers with some college education made up 60 percent of the hourly workforce and 43 percent of hourly workers at or below the minimum. Those without a high-school degree made up 10 percent of the hourly workforce and 32 percent of workers at or below the minimum.

Two-thirds are 24 years old or younger, and a similar percentage is women, who comprise more of the hourly wage workforce in general. Those earning the minimum or less are more likely to be single, live below the poverty line and live outside the metro area.

Not surprisingly, about 43 percent of those paid the minimum or less worked in eating and drinking places. The next highest percentages were in personal care (13 percent), farming, fishing and forestry (12 percent) and sales and related occupations (11 percent).

Federal law allows employers to count tips toward the minimum wage, but Minnesota is one of seven states that prohibit this “tip credit.”

Political issue
In the summer of 2010, Republican gubernatorial candidate Tom Emmer caused an uproar among food service workers when he asserted that tips helped three servers at a St. Paul restaurant make more than $100,000 a year.

The restaurant’s owner said the candidate misspoke, but not before Emmer’s political rival, DFLer and Speaker of the state House of Representatives Margaret Anderson Kelliher, sought to capitalize on the gaffe by proposing a $1.50-an-hour increase that would bring the minimum to $7.65 for most employers and $6.75 for the smaller employers exempt from the federal rate.

The Minnesota Hospitality Association, which represents restaurants, resorts, hotels and campgrounds, favors a tip credit that would apply going forward instead of lowering the current minimum.

Many conservatives would prefer to abolish the minimum wage altogether, arguing alternately that it is bad for job creation and that government should stay out of the employer-employee compact. Others, including JOBS NOW, have assembled research [PDF] suggesting that the economy as a whole would benefits from the ripple effect of any increase.

No more increases to the federal rate are scheduled, so any action would have to occur at the state Legislature.

As a U.S. senator, Mark Dayton voted for the most recent federal rate increase. As a gubernatorial candidate, he supported Anderson Kelliher’s proposed $1.50 hike. It remains to be seen, however, whether he or anyone else has the political traction to convince the Legislature to increase the state minimum.