Minnesota Minimum Wage Jumps Ahead of South Dakota’s by Fifty Cents on Saturday

Friday I noted that South Dakota has the 11th-highest minimum wage in the nation, at $8.50 an hour.

Come Saturday, Minnesota will bump us back to 12th:

Minnesota will vault past Illinois, Michigan and South Dakota this week to gain the highest minimum wage in the Midwestern region at $9 an hour, which also will rank among the most-generous state wage floors in the country.

The dollar-per-hour bump taking effect Saturday for some 288,000 of Minnesota’s lowest-paid workers is the second of a three-stage increase adopted in 2014, when the state had one of the lowest minimum wages in the region. Next August, the wage will rise again to $9.50 and it will go up automatically with inflation in following years [Brian Bakst, “With Buck Bump to $9 Per Hour, Minnesota Ushers in Top State Minimum Wage in Middle America,” AP via Minneapolis Star-Tribune, 2015.07.28].

Factor in regional price parities, and South Dakota’s $8.50 still goes 5% farther than Minnesota’s $9.00. But Minnesota’s RPP-adjusted $9.23 jumps it from fourth to second in our septa-state region and from 21st to third nationwide. And a day’s work at minimum wage in Minnesota will buy more groceries than a day’s work at minimum wage in South Dakota, because the South Dakota worker will lose $3.85 of the $68 she spends on Sioux Falls groceries to state and local sales tax, while her Minnesota counterpart can buy food in Luverne tax free.

But why should Minnesota or South Dakota be mandating such handouts to workers?

Minnesota Gov. Mark Dayton, a Democrat who signed the new wage law last year, said Monday the higher wage is about “allowing people to earn a better living through their work. We’re not talking about handouts here. We’re talking about rewarding people who work with a better income, which makes them better citizens.”

…”People aren’t flying out to New York to spend this money. They’re spending it in their local economy,” Dayton said in an interview with The Associated Press. “That’s what drives our economy forward. It’s not trickle-down economics. It’s consumer spending” [Bakst, 2015.07.28].

Minnesota restaurant and hotel lobby leader Dan McElroy says Minnesota’s minimum-wage increase “has had challenges, and they’re frustrating but they’re not dire.”

Not dire, fellas. As in, not requiring Legislative meddling.


3 Responses to Minnesota Minimum Wage Jumps Ahead of South Dakota’s by Fifty Cents on Saturday

  1. Of course you do need to also disclose that MN has the following:

    Small employer rate (under $500K in business) = $7.25; Training rate for fist 90 days for those under 20 = $7.25; Youth rate for those under 18 and not covered by federal law = $7.25; and a couple others (small employer engaged in interstate commerce $7.25 and J-1 Visa in certain businesses $7.50).

    Anyway, their youth and small employer rate is lower than SD’s one rate of $8.50 or the proposed youth rate of $7.50.

    It’s instructive to know all the facts.

  2. Also useful to know that South Dakota can avail itself of the federal training wage of $4.25 an hour for all workers under 20 for the first 90 calendar days of their employment… thus suggesting that Referred Law 20, the youth minimum wage, is unnecessary and should be voted down in November 2016.

  3. Deb Geelsdottir

    Yay Minnesota! It’s a wonderful feeling living in a state that openly and actively cares for its citizens.

    Note that MN also cares for its businesses on all levels. That’s true from small businesses to the 19 Fortune 500 companies located here.

    Caring for private citizens and caring for businesses are not mutually exclusive, as SD’s Republican/Koch government seems to think. In fact, caring for both raises both. It’s a Win/Win! Woo-hoo!