“When the cost of employing workers goes up, opportunities for workers go down...”
SAINT PAUL (March 18, 2024) – The National Federation of Independent Business (NFIB), which represents more than 10,000 small business owners in Minnesota, is raising alarm over a proposal for a $20 per hour state minimum wage. The proposal (SF 4019) will be heard tomorrow in the Senate Labor Committee at 12:30pm.
Under the proposal, the minimum wage would jump to $15 per hour on August 1, 2024, resulting in a nearly 40 percent cost increase to employers. Increases of $1.25 per hour would take effect annually thereafter until the state minimum wage reaches $20 per hour in 2028.
“A $20 per hour statewide minimum wage is untenable for small employers,” said John Reynolds, NFIB Minnesota State Director. “Labor costs are already a top problem for small businesses. When the cost of employing workers goes up, opportunities for workers go down and small businesses may go with them.”
Rising labor costs are a major burden for small businesses, with more than one in ten reporting as their single biggest problem according to the most recent monthly NFIB Jobs Report.
“We’ve seen the negative effects the Minneapolis and St. Paul minimum wage hikes have had on small businesses, and we don’t want to take that statewide,” added Reynolds. “The effects will be worse in areas that have even less ability to absorb higher prices.”
Last year, the Minneapolis Federal Reserve analyzed the impact of significant minimum wage increases in Minneapolis and St. Paul from 2017 through 2021. Among their findings:
Retail
- Minneapolis: -29% jobs, -21% hours worked, -14% average earnings
- St. Paul: -23% jobs, -42% hours worked; -25% average earnings
Full-Service Restaurants
- Minneapolis: -41% jobs; -39% hours worked, -39% average earnings
- St. Paul: -30% jobs, -24% hours worked, -23% average earnings
Limited-Service Restaurants
- Minneapolis: -30% jobs, -24% hours worked, -23% average earnings
- St. Paul: -45% jobs, -53% hours worked, -59% average earnings
The $20 per hour minimum wage would come on top of costly employer mandates passed last year, including Earned Sick and Safe Time and Paid Family and Medical Leave.
