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Business owners, bracing for a minimum-wage hike, seek to ease financial impact

Grocers, restaurateurs, small-business owners and lobbyists are asking lawmakers to consider everything from training wages to some form of a tip credit.

Small-business owner Kristen CiCi: "I want to support paying workers a fair wage. But I can say that, as a small-business owner as well, this would have a huge impact on us."
MinnPost photo by Briana Bierschbach

Bracing themselves for a likely bump in Minnesota’s minimum wage, business owners have shifted their strategy at the Minnesota Legislature this year, now hoping to have some say in how the increase is implemented.

That approach was on display Thursday evening, as a minimum-wage conference committee met for the first time since the final day of the 2013 session.

DFL leaders who control state government say a minimum-wage increase will be a priority this year.

Grocers, restaurateurs, small-business owners and lobbyists lined up alongside minimum wage workers to ask lawmakers to consider everything from training wages to some form of a tip credit. Most said they supported an increase in the minimum wage, just not as high as $9.50 per hour.

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I’m not a Target executive. I don’t have millions of dollars that I’m making,” said Kristen CiCi, a longtime DFL activist who owns three small businesses in Minnesota. “Having been a Democrat and been heavily involved in campaigns for my entire life, I want to support paying workers a fair wage. But I can say that, as a small-business owner as well, this would have a huge impact on us.”

Minnesota’s current minimum wage is $6.15 an hour for large employers, but House Democrats would like to see that bumped to $9.50, briefly making Minnesota the highest minimum wage state in the nation. The Senate is pushing a bill that would raise the state’s minimum wage to $7.75 per hour, or 50 cents higher than the current federal minimum wage.

Jon Schmidt, owner of Mocha Monkey in Waconia, said he just opened a second coffee shop and doubled their number of employees from about 16 to 30 people. More than half of those workers are in high school.

“They have other jobs. They are doing this job for fun,” said Schmidt, who calculated a minimum-wage increase to $9.50 per hour would cost him between $15,000 and $17,000 annually. He asked lawmakers to considered adding a youth- or training-wage provision in the bill. “We do have a lot of high-schoolers. That is a big part of our business.”

The situation is similar for many grocery stores across the state, where a majority of their workers are between ages 16 to 19. “We would definitely have to look at layoffs and reducing our workforce,” said Steve Summers of Jerry’s Foods. “Labor is our highest expense in the business, and this would be devastating to us.”

Sam Leon, who owns a handful of Mexican restaurants in the metro area, asked legislators to keep the overall rate “reasonable” and phased in over three or four years. “Let’s not do this all in one punch,” he said. He also opposed indexing the wage to inflation. “Something this important should not be on autopilot,” he said. 

Many restaurant owners lined up to testify to support some kind of a tip credit in the minimum-wage bill.

Last year, restaurant groups pushed a so-called “tipped-employee tier” of the minimum wage, which would put the wage floor at $7.25 an hour as long as an employee’s earnings and tips average $12 an hour for a pay period. If an employee makes less than that, their base rate would increase to the current state-mandated minimum. All of Minnesota’s surrounding states in the Midwest impose a tip credit. 

“The tip credit makes it easier for restaurants to give raises to the lowest-paid, non-tipped workers in the hospitality industry. It keeps restaurant prices low,” said Kenn Rockler, lobbyist for the Tavern League of Minnesota.

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“I do not oppose a raise in the minimum wage,” Rockler added. “I’m not sure how somebody can live on $10 an hour. I’m sure I’ll get some hate calls from some of my fellow lobbyists up there.”