Audio A dollar for me, a dollar from you? (story audio) Photos Service industry Ambivalent Other workers will benefit More from MPR For one business owner, new minimum wage is the latest stress (05/08/2005) Senate compromises on minimum wage hike (05/03/2005) Resources Minnesota Department of Labor and Industry Tools E-mail this page Print this page Sponsor

A dollar for me, a dollar from you?
by Bianca Vazquez Toness, Minnesota Public Radio
July 31, 2005

The majority of Minnesota's minimum wage earners are adult women who live outstate and work in the service industry. (MPR Photo/Bianca Vazquez Toness)

Some Minnesotans will get a raise Monday. The state's minimum wage for most employers increases by $1, to $6.15 an hour. It's the first increase in Minnesota in seven years. About 2 percent of workers statewide earn the minimum wage. But the change will probably benefit even more people.

Faribault, Minn. — Rose Christensen waits tables at the Happy Chef restaurant in Faribault. It's the end of her shift and she's walking back to the employee break room. She's 21, and has already worked here for five years. In that time she's never gotten a raise.

"They've always said that waitresses don't get raises, because if they want a raise then they'll do a better job waiting on their tables and get more tips," says Christensen.

The minimum wage increase should add about $100 to Christensen's monthly take-home pay. Even so, Christensen is ambivalent, because she thinks most restaurants will pass the new costs on to their customers. At her restaurant, some items will go up by $1.

Christensen says she eats out just about every day. And she expects her new buying power to shrink quickly as businesses raise prices to pay for the new minimum wage.

"If minimum wage is going up, then they should leave everything as it is," says Christensen. "That's why it's going up, because people can't afford things as it is."

Christensen says even though higher prices at her restaurant will mean higher tabs, that won't mean bigger tips and more income. She says everyone tips $2 or $3, no matter what the bill.

Christensen is typical of the 50,000 or so minimum-wage workers across the state. The majority are adult women who live outstate and work in the service industry. But not all start earning $6.15 per hour on Monday.

Employers below a certain size only have to pay $5.25. Their workers won't get back the buying power lost to inflation since the last minimum wage hike. Workers at large employers will see the minimum jump $1, which just keeps up with inflation.

But it looks like the new increase won't just affect minimum wage workers.

Donna Edwards, 37, serves food at the Kernel restaurant in Owatonna. She was making $5.50 per hour, more than the old minimum, plus tips. With the minimum wage rising by $1, she won't settle for anything less than that.

"I expect to get my boost," she says.

Edwards says she'll look for a job elsewhere if she doesn't get an increase.

Restaurant owner Mark Michels says he expects everyone at his restaurant to want a raise, from dishwashers up to management. "I don't blame a cook who walks in here and says, 'I haven't had a raise in a year, and your servers are all getting $1 an hour more,'" Michels says. "No, they're all going to get a raise. I have to be competitive and I don't want to lose my good help."

Michels says he's a little worried about losing customers because he's raising his prices. But he doesn't plan on cutting servers' hours or laying anyone off.

Michels' response to the minimum wage hike is not uncommon, according to state labor market expert Steve Hine. He says raising the lowest wages will force many employers to boost pay rates even for workers who earn more than minimum wage, although it won't happen immediately.

Opponents have argued that raising the minimum wage kills jobs, but Hine says the experience in many states has been the opposite. "The view of many is that any link between minimum wage and unemployment is fairly weak, tenuous at best," says Hine.

Some economists say raising the wage floor is likely to increase sales at many businesses. The University of Minnesota's Anne Markusen, who advocated for the minimum wage increase, says businesses that cater to lower income customers are most likely to benefit because their customers will have more to spend.

"Most people at low income levels spend everything they make, and much of it they spend locally," says Markusen.

Markusen says raising the minimum wage is important for young people. If they make a higher hourly wage, they can spend more time studying.

But Rose Christensen in Faribault, who starts school this fall, says she'll need a much larger raise than $1 an hour to work less and still pay her bills.