If a driver is in Northwest-Central Minnesota tooling around on roads covered in chips and crushed rock, they were likely spread by Asphalt Preservation Co.
The Detroit Lakes-based company has a half-dozen full-time employees and about 30 who work throughout the corporate’s busy season from April to October. Averre Marquis, the corporate’s president, typically pays about $20 per hour, often to students whose schedules fit well in the course of the busy time.
But Marquis is worried a few bill working its way through the Legislature would turn that rate from premium pay into the state’s latest minimum wage.
“It was that being in that range, we at all times had people within the rear-view mirror, just like the McDonald’s of the world,” he said. “Anymore, they’re chasing me right around with pricing.”
Costs will follow
One problem, Marquis said, is businesses – especially small businesses – cannot afford to eat the prices related to significant labor increases. So, if his labor costs increase, so will the costs he charges for road projects. Since his clients are typically governmental, those costs will then be passed along to taxpayers.
“It’s just poor economics,” he said. “McDonald’s isn’t going to make less money. They’ll charge more for a hamburger.”
One other issue is when Marquis has to extend wages for those on the low end of the pay scale, he said he then has to offer increases for everybody on the upper end. So, those already making $20 will get bumped to $25, and so forth.
The bill, intended to extend the minimum wage to a livable wage, was proposed by Sen. Zaynab Mohamed, DFL-Minneapolis. It could increase the statewide minimum wage to $15 per hour on Aug. 1 and increase it annually until it reaches $20 per hour by Aug. 1, 2028.
The bill would also remove a 2.5% inflator cap that supporters say prevented the minimum wage from maintaining with inflation lately.
Mohamed spoke during a Senate Labor Committee meeting last month about working in highschool to assist her family. She made more as an 11th grader than her mother, who works in a factory.
“It’s really essential for us to acknowledge that,” Mohamed said. “What I hear from the business community is we don’t want any more mandates, but what I hear from our staff is we’re not getting paid enough. We’ve got to seek out a balance for what it means to make Minnesota a spot where people can live.”
Marquis is empathetic to those struggling to make ends meet but he adds that those jobs typically aren’t intended for those trying to lift a family. In lots of cases, he said, citing truck stops and grocery stores where there are fewer tellers and more automated checkout lines, those jobs are going away.
“When I am going to my local food market, there at all times was people there bagging your groceries,” he said. “Now, you self-bag, you self-checkout. So, there’s a degree where those jobs are only going to go away too.”
Unintended consequences
Opponents of the bill cite a study conducted by the Federal Reserve Bank of Minneapolis indicating previous minimum wage increases in Minneapolis and St. Paul led to fewer jobs available in each city.
“Essentially the most recent iteration I’m aware of that got here out last 12 months found a considerable decrease within the variety of jobs, the quantity of hours and the actual earnings for staff in retail, full-service restaurants and limited-service restaurants,” said John Reynolds, the Minnesota director for the National Federation of Independent Businesses. “Our point is just that when the federal government tells small businesses to do something they will’t afford to do, they only can’t do it. And, so, you might have selections to make, that are either raise prices, get by with fewer staff or close your doors.”
Reynolds, too, is sympathetic to those that are combating low wages, but adds there’ll at all times be people struggling at the underside of the wage scale. It must be addressed, but in another way, he said.
Especially when Minnesota is already competitive in wages, said Lauryn Schothorst, director of Workplace Management and Workforce Development Policy on the Minnesota Chamber of Commerce.
“And our state’s minimum wage already mechanically increases annually,” she added. “More so, removing the designated small business rate would make it spike without notice for these job creators.”
Pending disaster for restaurants?
Daniel Fanning, vice chairman of strategy and policy for the Duluth Chamber of Commerce reserved judgment in hopes that there remains to be a possibility to barter on details surrounding the bill.
“It’s definitely something we’re maintaining a tally of,” he said. “We’d wish to ensure that it doesn’t have unintended consequences and/or put additional burdens on the backs of local small businesses, lots of whom are already facing financial workforce challenges.”
But one Duluth Chamber member, Tony Bronson, left absolute confidence what he thinks will occur if the wage bill passes because it stands without delay.
“It could be devastating,” said the director of business development at Grandma’s Restaurant Company in Duluth, which owns the flagship Grandma’s location and five other eateries.
Labor is the very best cost at Grandma’s. And, Bronson said in the course of the pandemic many employees left the industry, forcing restaurants to pay higher wages to draw talent. Add to that already tight margins and the dearth of a tip credit that might allow Minnesota restaurant owners to count suggestions toward minimum wage, and the industry is already facing significant challenges.
So, Bronson said, further increasing wages on this labor-intensive industry would force price increases or shutdowns.
“We love our servers and appreciate their efforts on a regular basis. A superb server could make all of the difference in a dining experience,” said Bronson, also the president of the Duluth Local Restaurant Association. “There’s a limit to what you’ll be able to charge for a hamburger. What’s going to occur is the small operators are going to be those that go away first.”
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