is causing concern among small businesses. Asphalt Preservation Co. is likely to be responsible for the road chips and crushed rocks that are found in Northwest Central Minnesota.
Detroit Lakes’ company employs a dozen full-time workers and another 30 people who are available to work during the busy season, which runs from April through October. Averre marquis is the president of the company and pays around $20 an hour to those students who have schedules that fit during busy times.
Marquis, however, is worried about a proposed bill that would convert the rate of premium pay to the new state minimum wage.
He said, “It used be, that when we were in this range, people would always look behind us, just like McDonald’s.” They are now chasing me around the price range.
The cost will be incurred.
Marquis explained that small business owners, in particular, cannot absorb the cost of significant increases in labor. If his costs rise, then so too will the price he charges on road projects. His clients tend to be government agencies, so those costs are passed on to the taxpayer.
He said, “It’s just bad economics.” McDonald’s won’t make any less money. “They are going to increase the price of a hamburger.”
Marquis said that when he has to raise wages at the lower end of the scale, then he has to give increases to everyone else. Those already earning $20 would be bumped up to $25 and so forth.
Zaynab Mohamed (DFL, Minneapolis) proposed the bill to raise the minimum wage up to a living wage. The bill would raise the minimum wage in Minnesota to $15 an hour starting August 1st and increasing it every year until 2028.
This bill also eliminates a 2,5% inflation cap, which supporters claim prevented minimum wages from keeping pace with inflation over the past few years.
Mohamed told a Senate Labor Committee last month that she worked in high school for her family. She earned more when she was 11The th She is a better grader than the mother who works in an industrial factory.
Mohamed stated that it was important to acknowledge this. The business community tells me that they don’t need any new mandates. But our employees say we aren’t paid enough. It’s important to strike a balance between what Minnesota means for people to live there and the business community.
Marquis has sympathy for people who are struggling, but says that these jobs were not designed to support a family. He said that in many instances, such as truck stops or grocery stores, where there are less tellers and more automatic checkout lines, these jobs will disappear.
He said, “There used to always be someone bagging my groceries when I went to the local supermarket.” Now, self-bagging and self-checkout are the norm. “So, at some point those jobs will also disappear.”
Unintended consequences
The opponents of the bill point to a Federal Reserve Bank of Minneapolis study that shows previous increases in the minimum wage in Minneapolis and St. Paul resulted in fewer available jobs in both cities.
John Reynolds, Minnesota’s director of the National Federation of Independent Businesses, said: “The latest iteration that I am aware of, which was released last year, found a significant decrease in the numbers of jobs, hours, and actual earnings of workers in full-service and limited-service restaurant.” Our point is that small business owners can’t comply with government orders to perform tasks they cannot afford. You have to choose between raising prices, reducing staff, or closing your business.
Reynolds is also sympathetic with those struggling to make ends meet, yet he says that there will always people at the bottom end of the pay scale who struggle. He said that it is important to address the issue, but in a different way.
Lauryn Schlothorst is the director of Workplace Management and Workforce Development Policy for the Minnesota Chamber of Commerce.
She added, “And the minimum wage in our state already increases every year.” The removal of the small-business rate will cause it to spike, without any warning.
Pending disaster for restaurants?
Daniel Fanning is the vice-president of strategy and policies at the Duluth Chamber of Commerce. He reserved his judgment, hoping that there was still time to negotiate the details of the bill.
He said, “It is definitely something that we are keeping an eye out for.” We’d like to ensure that it does not have unintended effects and/or place additional burdens on local small business owners, who are many already struggling with financial workforce issues.
![Grandma's Saloon & Grill, Duluth's most expensive restaurant is labor.](https://i0.wp.com/www.minnpost.com/wp-content/uploads/2023/12/GrandmasDuluthInterior740-1.png?resize=740%2C493&ssl=1)
Tony Bronson of the Duluth Chamber, however, has left no doubt as to what will occur if this wage bill is passed in its current form.
The director of Grandma’s Restaurant Company, Duluth’s flagship Grandma’s and other restaurants said that it would be a disaster.
Grandma’s is most expensive in terms of labor. Bronson added that during the pandemic, many workers left the industry forcing the restaurants to raise wages in order to retain talent. The industry faces significant challenges due to the tight margins, the absence of tip credits that allow Minnesota restaurateurs to include tips in their minimum wage and other factors.
Bronson explained that if wages continue to rise in this highly labor intensive industry, it will force price hikes or closures.
We love and value our servers’ efforts. Bronson is also president of Duluth Local Restaurant Association. He said that a good server makes a big difference to enhancing gastronomic experiences. There’s only so much you can charge per hamburger. The small operators will be the first to go.