- Associated Press - Monday, April 7, 2014

ST. PAUL, Minn. (AP) - Minnesota’s minimum wage would rise to $9.50 per hour within a few years and continue going up unless a governor’s administration applied the brakes, according to terms of an agreement announced Monday.

The outline described by leaders of the House and Senate resolves one of the biggest remaining standoffs in a session on course for an early adjournment. The wage legislation could move through both Democratic-led chambers this week; it was scheduled for a Senate vote on Wednesday. Gov. Mark Dayton said he would sign the bill.

Legislators and Dayton are also pressing to complete a budget plan that gives extra dollars to schools extra, pothole repair money to local transportation departments and raises to caregivers for the disabled and elderly. A second tax relief package could also come together soon. A public works construction package still remains and will take center stage after Easter.

“This session is really starting to come together,” said Senate Majority Leader Tom Bakk, DFL-Cook. The session must conclude by May 19 but there is a serious push to finish sooner in this election year.

A bill to boost the minimum wage was considered a must-do item after an agreement eluded lawmakers a year ago. It would affect some 350,000 workers at or near the bottom of the pay scale.

Minnesota’s current minimum is $6.15 for large employers, though most workers qualify for a higher federal minimum. Minnesota’s base rate hasn’t gone up since 2005. If the bill passes, Minnesota would go from having one of the nation’s lowest minimum wages to one of the highest.

“No Minnesotan should have to work a 40-hour week and continue to live in poverty,” House Speaker Paul Thissen, DFL-Minneapolis, said.

Even at $9.50 per hour, a full-time worker earning the minimum wage would earn just shy of $20,000 before taxes.

Business groups, especially those in the restaurant sector, warned that employers would respond by raising prices or scaling back hours.

“We’re concerned about our wage walking away from other states,” said Dan McElroy, president of Hospitality Minnesota. All of Minnesota’s neighbors have a minimum wage that matches the federal government’s $7.25.

The wage would be indexed for inflation starting in 2018, with an annual cap of 2.5 percent. If the maximum were awarded that year, the first increase would be just shy of a quarter.

A decision on whether or not to block an automatic increase would rest with the Department of Labor and Industry. One-year suspensions would have to be based on data reflecting an economic downturn and only after public hearings. Once conditions improve, the wage could rise faster than inflation to catch up.

Two GOP candidates for governor - state Sen. Dave Thompson and Rep. Kurt Zellers - said they would attempt to suspend the inflationary increases if they couldn’t persuade lawmakers to repeal the escalator clause.

“When you raise the price of something you get less demand for it,” Thompson said. “Wages are the price of labor and it’s going to have a ripple effect throughout the economy.”

The compromise bill retains Minnesota’s lower minimum wage for small companies - defined as those with annual gross sales below $500,000 - that tops out at $7.75 in 2016. There is also a 90-day training wage of $7.75 for workers under 20. All of those wage classes would be subject to inflationary increases as well.

Lawmakers had generally agreed weeks ago to hit the $9.50 mark in a series of steps beginning this summer. But House leaders had insisted on raises tied to inflation starting in 2017. Top senators said they couldn’t muster support for purely automatic increases.

As recently as late March, Bakk said an inflation-linked wage bill would be difficult to pass. He suggested a constitutional amendment letting voters decide if the wage should keep increasing, but that idea landed with a thud.

The wage deal came together within days of the House approving a controversial Senate office building project, which fanned accusations that the building that Bakk sorely wants was connected to deliberations over the minimum wage. The Senate leader denied it and the House speaker backed him up. “It just happened to work out this way,” Thissen said.

Republicans weren’t buying the proximity between the agreements as pure coincidence.

“It’s the ugly side of politics,” Zellers said.

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