Minnesota moves closer to a tip credit

A change to the minimum wage that would lead to a pay cut for thousands of tip workers passed the Republican-led Minnesota House Wednesday by a vote of 73-56.

The minimum-wage measure, which sharply divided the two parties, was part of a sprawling jobs and energy bill approved by the House, but its ultimate fate is uncertain given opposition to many provisions by the DFL-controlled Senate and Gov. Mark Dayton.

The bill would create a two-tiered minimum wage, with a lower rate for employees who receive tips of at least $4 per hour, while also prohibiting cities or the Minneapolis-St. Paul International Airport from enacting a higher minimum wage than the state minimum.

Rep. Pat Garofalo, R-Farmington, chairman of the Job Growth and Energy Affordability Policy and Finance Committee and the bill’s chief author, said that without a change in the minimum-wage law, restaurants and taverns could be forced out of business by higher labor costs as the state’s minimum wage rises to $9.50 per hour by 2016 and then increases with inflation after that.

Rep. Tim Mahoney, DFL-St. Paul, called the minimum-wage provision an attack on the estimated 8,000 women older than 30 who are tip workers and have children.

“The message from this bill is that you’re making too much money,” he said. “It wants to keep people making $12 per hour rather than making $14 or $15 an hour. If you tried living on $30,000 per year in this state, you’d understand that a couple of thousand dollars per year makes a huge difference.”

According to a report from the state Department of Labor and Industry, there are about 39,000 minimum-wage workers in the food and beverage industry, which has actively lobbied for the two-tiered system. Not all of those workers are tip employees, however.

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