Minimum wage increase gets mixed welcome

  • Article by: JENNIFER BROOKS , Star Tribune
  • Updated: July 31, 2014 - 11:10 PM

Jacquita Berens works three jobs. One for each of her kids.

Those jobs add up to a 70-hour workweek, spread across six or seven days, not counting the odd jobs she picks up as a house cleaner. Combined, they bring in less than $30,000 a year.

“Am I struggling? Absolutely I’m struggling,” said Berens, a 31-year-old personal care assistant who’s also squeezing college classes into the spaces between children and work. She’s one of an estimated 114,000 Minnesotans who work for minimum wage or less.

Jacquita Berens just got a raise.

Minnesota’s minimum wage is increasing for the first time in a decade. Starting Aug. 1, the minimum wage at most businesses in the state rose to $8 an hour — a 75-cent raise over the federal minimum wage and a big increase from the previous state minimum of $6.15 an hour.

It’s the first step in Minnesota’s three-year shift from a state with one of the lowest minimum wages in the nation to one of the highest.

The minimum wage will increase by another dollar next year, and step up one more time in 2016, when it hits $9.50 an hour. The wage will be indexed to inflation starting in 2018, allowing it to continue rising as the cost of living increases.

The Minnesota Department of Labor estimates that 4.4 percent of the state’s workforce hold jobs that pay minimum wage or less.

Raising the state minimum wage to $9.50 an hour could mean better wages for 300,000 workers, or 14 percent of the workforce, according to an analysis by the Jobs Now Coalition.

“Minnesotans who work full time should be able to earn enough money to lift their families out of poverty and achieve the American dream,” Gov. Mark Dayton said in a statement. “Raising the minimum wage will improve the lives of more than 325,000 hardworking Minnesotans. I thank the Legislature for recognizing the need to make work pay in Minnesota.”

But while some supporters say $9.50 an hour still isn’t enough to provide workers with a living wage, opponents say $9.50 an hour is more than enough to eat away at a small business’ slender profit margin.

“Ultimately, I think it’s going to be a job killer,” said Bill Kozlak, owner of Jax Cafe in Minneapolis. In fact, he said, “we already started.”

Struggling with higher prices for commodities such as beef and produce, he decided to close his restaurant on Mondays. Once payroll costs start rising, he said, restaurants around the state may have to cut their wait staff, or do away with them and shift to a casual dining format where guests pay at the cash register up front.

Kozlak has more than 30 waiters and waitresses working the tables at the restaurant his family founded three generations ago. Like other restaurant owners, he pushed unsuccessfully for the state to allow businesses to pay tipped employees a lower base salary — a move the Legislature rebuffed. “I don’t oppose minimum wage at all,” he said. “I strongly oppose that there’s not a provision for the highest earners, which are tipped employees making minimum wage. … A lot of my full-time servers make more than my full-time managers.”

A higher minimum wage will mean slightly higher prices for customers at the Parasole chain of restaurants, said Donna Fahs, chief operating officer for the company whose holdings range from Manny’s Steakhouse in Minneapolis to Burger Jones in Burnsville. About half of the company’s 1,500 employees are tipped workers, putting in a combined 600,000 hours each year. Now each of those hours costs the company more.

“The margins are very slim in restaurants. For most operators, it’s maybe 5 percent of your revenue,” said Fahs, who estimates that every dollar increase in the minimum wage will push meal prices up 1 percent or more. “When wages are increased like that, it’s a real cost, and we as operators have to pass that cost on to the guest.”

Parasole plans to cover the first 75-cent wage increase with higher menu prices, but next year, when the minimum wage is a dollar more, higher prices might be combined with staff cuts or even by replacing servers with cash registers up front.

“At some of our stores, we are considering — not to say it’s going to happen — but we are considering maybe fast-casual,” Fahs said.

  • related content

  • Jacquita Berens is one of an estimated 114,000 Minnesotans who will be getting a raise today. “Am I struggling? Absolutely I’m struggling,” Berens said.

  • Jacquita Berens worked the grounds of her apartment complex this week in Robbinsdale — one of her three part-time jobs.

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