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Minnesota Customers Fine with Paying Workers Higher Minimum Wage

Temporarily out of press releases from his GOP overlords, Pat Powers squawks in confused triumph over a Minnesota café that is adding a 35-cent "minimum wage fee" to every customer's bill.

Minnesota just increased its minimum wage last Friday. Minnesota was one of only four states with a minimum wage below the federal $7.25 an hour. Legislation passed this spring raises the minimum wage for small businesses from $5.25 to $6.15 an hour and for big businesses from $6.15 an hour to $8.00 an hour. (MinnPost explains the details well.)

South Dakotans can't count on their Legislature to act in the best interest of workers, so we had to put forward a ballot initiative to raise our minimum wage from $7.25 to $8.50. Powers seems to think one café's minimum-wage fee supports his opposition to raising the minimum wage:

And it highlights an excellent point – when people say they’re in support of an increased minimum wage – who do people think are going to be paying it? Ultimately, they will in increased costs.

Because the alternative will be to fire people, or to pay to automate things when it’s more affordable to do so [Pat Powers, "Minnesota Employer Charging Customers a Minimum Wage Fee to Offset Mandate," Dakota War College, 2014.08.06].

Powers doesn't seem to notice that the Minneapolis news report he cites doesn't highlight any such thing. It highlights the fact that customers think the café owner is grandstanding but are willing to support better wages for workers by paying for it.

It also ignores the fact that the 35-cent fee supports the arguments minimum-wage proponents make. The Oasis Café appears to have seventeen employees, with seven on the floor at peak hours. Let's assume the café qualifies as a large business and that every one of those employees is at minimum wage. If I sit down for lunch during a busy hour, I'm taking advantage of the service of seven employees, each making $1.85 more per hour. Multiply—that's $12.95 in increased operating cost per hour. 37 customers paying the 35-cent minimum-wage fee in one hour will make up that difference. (Never mind that the minimum-wage fee isn't really tied to the minimum wage, since it doesn't take into account whether I'm waited on by a rookie waitress or a seasoned server who's gotten a raise, or the actual amount of labor that I demand based on the size and complexity of my order and the time I spend in the café.)

For a quarter and a dime, customers enjoy the benefits of more purchasing power for the workers most likely to stimulate the economy with spending, faster job growth, and more people lifted out of poverty and off government assistance. Oasis Café customers are showing they are willing to pay such a pittance for the pleasure of grilled cheese and labor policy that is both moral and effective. South Dakota voters, let's show the same moral and economic spirit and vote Yes on Initiated Measure 18.


  1. charlie5150 2014.08.06

    It is not uncommon in business for costs to increase and the final price will reflect that, yet you never seem to see "additional cost of electricity fee", "garbage rate increase fee", "tomatoes are expensive fee", etc. What message does that send to their employees? Seems rather petty, and you can bet there will be customers who will protest by subtracting that 35 cents or more from the tip, transferring the raise to the owner anyway.

  2. Joan Brown 2014.08.06

    I think this restaurant owner is just plain tacky. Raise the price of everything on the menu by a couple cents and you will look like more a considerate human being. Heck the prices are raising all the time anyway, a couple more cents won't hurt.

  3. MJL 2014.08.06

    Charlie- The owner wants that. The owner said this would all go away if they could offset the wage with tips. This is what is done in this state. At a restaurant, a sever's minimum wage is at around $2.13 (I think). If they earn at least $5.12 in tips during an hour, then the employer doesn't have to make up the difference.

  4. caheidelberger Post author | 2014.08.06

    MJL is right; the Blue Stem Prairie blog link from which I get the info about the size of the owner's operation says he participated in a video lobbying against the increase on behalf of the industry, which was lobbying for the tip offset. I say nuts to that. You hire workers, you pay them a steady wage. if they excel and earn tips above that, awesome.

    Charlie, I agree it's petty. Joan, I agree it's tacky. If the owner is going to publicize that fee as a separate cost, I'd at least like to see his financial analysis that demonstrates how he calculated that number and that it accurately reflects the increased labor cost rather than just serving as profit padding.

  5. mike from iowa 2014.08.07

    This story just ran on HLN with my morning sunshine's leggy hostess,Robin Meade and her spectacular gams and effervescent smiles. :)

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