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Some Minnesota businesses feel pinch as minimum-wage increases take effect Friday

Joe Thibert, 16, restocks shelves while working at Tony's SuperValu in Hawley, Minn., on Thursday, July 31, 2014. Thibert is in his first month of working at the grocery store. Nick Wagner / The Forum

HAWLEY, Minn. – Tony’s SuperValu owner Tony Laddusaw said the minimum wage hike that takes effect Friday in Minnesota will have a big effect on his business here.

Laddusaw said the profit margins of a grocery store are slim, especially for smaller stores like his.

“It really hurts a small business,” he said. “The big guys, they can absorb it. They’ve got the volume to cover it where we don’t.”

Minnesota’s minimum-wage rate increases today from $6.15 to $8 per hour in the state’s first wage increase in nearly a decade.

In the coming two years, the new law will push wage rates higher in August 2015 and again in August 2016 when the top rate goes to $9.50 an hour. In January 2018, the rate will be indexed to inflation-based or economic conditions.

Laddusaw said not only will he have to hire new part-time employees at a higher wage, but existing employees also expect a raise to maintain a differential for their experience.

He expects to be forced to raise prices to offset the added labor cost.

Matt Maslowski, economic development director for the city of Moorhead, does not expect the wage increase to have much of an effect here. He said the wage hike should have “a minimal impact to the majority of businesses in Moorhead.”

Maslowski reasoned that most Moorhead businesses were already paying well above $8 an hour in order to stay competitive with Fargo and the oil boom of western North Dakota.

That is true for Sunset Lanes bowling alley. Its accountant, Ralph Hennebry, said the business employed only three very part-time workers who made less than $8 an hour. The remaining employees were being paid well above the new minimum.

Cathy Lindquist, executive director of the West Central Minnesota Small Business Development Center located in the Offutt School of Business at Concordia College, said the organization plans to sponsor classes soon to help business owners determine how to incorporate higher wages in their budget.

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Large-employer wage: Minimum wage was $6.15/hour. It becomes $8/hour today, and will become $9/hour Aug. 1, 2015, and $9.50/hour Aug. 1, 2016.

Small-employer* wage: Minimum wage was $5.25/hour. It becomes $6.50/hour today, and will become $7.25/hour Aug. 1, 2015, and $7.75/hour Aug. 1, 2016.

* An employer categorized as small has gross sales less than $500,000/year.