ST. PAUL, Minn. (WCCO) -- Minnesota lawmakers have reached an agreement on raising the state's minimum wage from one of America's lowest to one of the highest.
It means a pay hike for 350,000 Minnesotans, as early as this summer.
Democrats who support the wage hike say it's difficult to raise a family on the minimum wage.
"No Minnesotan should work a 40-hour work week and have to continue to live in poverty," said the Minnesota Democratic House Speaker, Rep. Paul Thissen.
For large businesses with gross sales over $500,000, the minimum wage would rise to $8 in 2014, $8.50 in 2015 and $9.50 by 2016.
For small businesses with gross sales below $500,000, the minimum wage would rise to $6.50 in 2014, $7.25 in 2015 and $7.75 by 2016.
Starting in 2018, the wage would go up with inflation, capped at 2.5 percent.
Business owners say they might be forced to lay off workers. Minnesota restarants employ 47 percent of minimum wage workers, many who also earn tips.
They predict a cutback in full-service eateries, with servers replaced by iPads or menu kiosks.
"People don't want to have their birthday party at a fast, casual restaurant where grandma has to carry her drink back from the counter," said Dan McElroy, who represents Hospitality Minnesota. "Full-service restaurants are a part of our culture. We shouldn't endanger them with an idea like this."
Supporters of the minimum wage say it's an economic boost for the state.
Even at $9.50 an hour, a full-time worker will make less than $20,000 a year before taxes.
But they say all of it gets spent in the economy.
"It basically means that they are already living at the margins and they need every single dollar," said Rep. Ryan Winkler, D-Golden Valley, the author of the minimum wage hike. "It doesn't go to savings, it doesn't go to something else. It goes to be spent right away in the economy."
A big sticking point had been the automatic minimum wage hike every year.
It will now be tied to an inflation index, with a 2.5 percent cap. But any governor would be able to stop the inflation hike, if the economy is in recession.
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