Minnesota minimum wage increase could pose risks for businesses

"Where we are in the pandemic I would think that any mandated increases probably aren't the best way to go."

MINNESOTA — As minimum wage increases take effect in Minnesota, businesses could face some tough challenges.

“Businesses are feeling the pressure obviously from COVID. Also, a really tight labor market, so the ability to attract, retain and develop employees has been challenging for business and so business of all sizes are having very different effects from the mandate,” Fargo Moorhead West Fargo Chamber of Commerce President Shannon Full said.

The minimum wage increase that took effect January first will raise the rate by eight cents an hour for large employers and six cents an hour for smaller businesses.

Even with the slight increase, there are a few concerns.

“Although the mandate is small, there is concern that if we continue to have it creep up at what point is it going to be disadvantageous to the company. There’s a fine balance between providing a livable wage and the ability still for the company to be profitable without having to shift and pass that cost burden on,” Full said.

That burden could mean customers will have to pay more out of their own pockets.

“From employers and employees it’s really one around caution. We need balance. For instance, a restaurant has to pass off the cost through their cost of food through their menu prices. That’s going to be a challenge as we go forward,” Full said.

A Moorhead business owner says the few cent increase won’t necessarily burn a hole in his pocket.

“I don’t know that a slight increase will affect us too badly. If there was more of an increase then that would be something to look at in terms of how many people we hire, how many people we have on staff,” Grand Junction Moorhead Owner Shane Lobsinger said.

Lobsinger says the increase might not be the best idea.

“Where we are in the pandemic I would think that any mandated increases probably aren’t the best way to go,” Lobsinger said.

He says there might be some changes coming if they continue to face challenges.

“We’re not in it to not pay employees. We want to see them do well. We’ve kind of held off on increasing prices on things for quite a while. I would think that wage increases would give us a second look at that,” Lobsinger said.

Minimum wage workers in Minneapolis and St. Paul will see their hourly rate increase in July.

Categories: Business, Minnesota News