There has been much debate on this matter, but it appears all the dust has settled and a plan is in place to raised the minimum wage in Minnesota.

Thursday, the Minnesota House of Representatives passed legislation to incrementally increase the state’s minimum wage to $9.50 by 2016. It will be the first increase in the state’s minimum wage since 2005.

The minimum wage would also be indexed to inflation beginning in 2018 under the oversight of the Minnesota Department of Labor and Industry (DOLI), helping to ensure workers earning the minimum wage will not fall behind as the cost of living increases in the future.

Currently, Minnesota’s minimum wage is $6.15 for large employers and $5.25 for small employers.

Rep. Erik Simonson (DFL-Duluth) said passage of the legislation represents a victory for Minnesota’s workers.

“We haven’t raised the minimum wage in nine years,” Rep. Simonson said. “Many of the people earning it are their household’s primary breadwinner, meaning the family’s income is likely well below the poverty line. The cost of housing, health care, food, clothes, transportation – everything – has gone up, but wages have stayed the same. This bill will give these workers a little help keeping up with the cost of living.”

Rep. Thomas Huntley (DFL-Duluth) said raising the minimum wage is good for local businesses.

“Raising the minimum wage will help middle-class families boost local economies by having more money to spend in their communities on goods and services,” Rep. Huntley said. “We know that money is most often spent near where a person lives and works. By doing this, we’re investing in Main Street small businesses.”

Details of the legislation include:

· The minimum wage for businesses with gross sales over $500,000 a year would rise to $8 in August 2014, $9 in August 2015 and $9.50 in August 2016.

· The minimum wage for businesses under $500,000 a year in gross sales would rise to $6.50 in August 2014, $7.25 in August 2015 and $7.75 in August 2016.

· The $7.75 minimum wage rate would apply for large businesses in the following circumstances: as a 90-day training wage for 18- and 19-year-olds, all 16- and 17-year-olds and employees working under a J1 visa.

- Beginning in 2018, all wages would increase each year on January 1st by inflation measured by the implicit price deflator capped at 2.5 percent.

The indexed increase could be suspended for one year by the DOLI commissioner – a public hearing and public comment period – if leading economic indicators indicate the possibility of a substantial downturn in the economy. In better economic times, the suspended inflationary increase or a lesser amount could be added back into the minimum wage rate in a subsequent year.

The bill will now move to Gov. Dayton’s desk. He will sign it into law at the Minnesota State Capitol on Monday afternoon.

What are your thoughts on this tiered approach?