Minnesota’s Hourly Minimum Wages Expected to Rise in 2021

Minnesota’s hourly minimum wage is expected to rise in 2021 to $10.06 from $10 for large employers and to $8.20 from $8.15 for small employers, according to Bloomberg Tax calculations.

The calculations were based on data and guidance provided by the Commerce Department’s Bureau of Economic Analysis and Minnesota statute (177.24).

The state’s hourly minimum wage has been adjusted annually for inflation since 2018, using the implicit price deflator, which was used for the Bloomberg Tax calculations. Minnesota is the first state to use the implicit price deflator for personal consumption expenses to index its minimum wage.

The minimum wage is to be raised Jan. 1 by the lesser of 2.5% or the annually adjusted amount, and rounded to the nearest cent. Minnesota law requires the state’s Department of Labor and Industry to announce no later than Aug. 31 each year any minimum-wage adjustment that is to take effect the next year.

On July 1, 2020, the Minneapolis minimum wage rose for large employers with more than 100 workers to $13.25 from $12.25 and for small employers with no more than 100 workers to $11.75 from $11.

The St. Paul minimum wage became $12.50 for employers with more than 10,000 workers, $11.50 for large employers with more than 100 workers, $10 for employers with 6 to 100 workers, and $9.25 for employers with no more than five employees.

Higher minimum wages in effect in Minneapolis and St. Paul are adjusted annually on July 1.