Minimum wage increase gets mixed welcome

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.

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.

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.

Joy Anderson has seen her share of minimum-wage increases since she started waitressing in the 1970s. What she hasn't seen is an employer who laid off staff as a result.

"It's a dollar an hour, that's something," she said. "It just gives you a little bit more comfort. You just don't feel quite as on the edge. You feel like you can fill up your tank and go to the grocery store and not be quite as concerned."

Minimum wage jobs aren't the most glamorous jobs, she said, but they are necessary jobs. "Whether it's making beds, serving food, washing dishes, they need people to do those jobs and they shouldn't be poverty jobs," she said.

A July survey by the U.S. Department of Labor found that the 13 states that raised their state minimum wage this year added jobs at a faster rate than those that did not. State Sen. Ryan Winkler, who sponsored the bill that raised the wage, sees a higher wage as the easiest way to put money in workers' wallets, who in turn will pump that extra income back into the state's economy.

"There's just no evidence — despite these fears — that the minimum wage has any negative effect on the economy," said Winkler, DFL-Golden Valley. "Change is hard for some people … but $8 an hour is not an extravagant wage."

"It's a good start," agreed Bree Halverson, state director of the Working America coalition that lobbied for the higher wage. "It just makes our economy better, when people have the disposable income to eat at the same restaurants where they work."

State Rep. Marion O'Neill, R-Buffalo, says she has heard from businesses ranging from beauty parlors to nursing homes to dairy farms, all worried that a higher minimum wage will make it more difficult for them to make payroll. Many businesses are aggravated, she said, that no matter how small their workforce might be — say, a salon with a dozen hairdressers — they would be considered a large employer, required to pay the full state minimum wage, if their business brings in more than $500,000 a year.

"Here in my community these owners are not sitting on a boatload of cash, not sharing with their employees," she said. "If they do have cash, they're looking at maybe bringing on another employee or expanding their business."

At Huikko's Bowling & Entertainment Center in Buffalo, Les Huikko went over his books and calculated just how much prices might have to go up at the center's banquet facility, and whether he'd have to hire more teenage workers, who can be paid a lower youth wage of $6.50 an hour.

"It's really going to take a hit out of us little guys," said Huikko. When a server who makes $200 a week in salary also collects $500 in tips, he said, he has to pay employer Social Security taxes on both figures. "It's a tough situation out here right now."

While businesses brace for the change, workers are looking forward to payday.

Every little bit helps, but even the full $9.50 an hour wouldn't be enough to help her afford to rent a home with enough bedrooms for the entire family. She's sleeping in the living room of her two-bedroom home so her 13-year-old daughter can have a room to herself, while her 9-year-old son and 6-year-old daughter share the other bedroom. "What I really want," she said, "is for my kids not to have to struggle the way I've had to struggle."

Jennifer Brooks • 612-673-4008