A server resets tables at a Minnesota restaurant earlier this year. (Photo by Ellen Schmidt/Minnesota Reformer)
Minnesota’s statewide minimum wage will increase 28 cents to $11.41 per hour on Jan. 1, a 2.5% increase based on the annual rate of inflation.
The minimum wage applies to virtually all employees since the Democratic-controlled Legislature eliminated a lower minimum wage for small businesses, workers younger than 18 and workers on J-1 visas in 2024. (As before, tips cannot be counted toward the minimum wage.)
Only workers under 20 years old in their first 90 days of training may receive a lower wage of $9.31 per hour starting in 2026.
Minneapolis and St. Paul each have higher minimum wages of $15.97 per hour, which will increase with inflation in 2026. Small and micro businesses in St. Paul may pay a lower minimum wage, but the city is phasing in a single minimum wage for all employees by 2028.
Minnesota’s minimum wage is higher than most of its neighbors’ (save South Dakota), but it isn’t enough to cover basic living expenses. The cost of living for a childless, working-age adult requires earning $17.68 per hour, according to the state Department of Employment and Economic Development. A household with two children requires two parents earning at least $24.25 per hour.
The federal minimum wage of $7.25 per hour has remained unchanged since 2009 and is the effective minimum wage in 20 states, including Wisconsin.
Minnesota’s minimum wage has been indexed to inflation since 2018 but was limited to annual adjustments of 2.5% until last year when lawmakers raised the threshold to 5% to ensure the lowest paid workers receive larger raises in periods of high inflation.
The increase will directly affect a relatively small number of workers. Fewer than 90,000 salaried and hourly jobs out of more than 3.3 million in Minnesota were paid at or below the minimum wage in 2023, according to the state’s latest minimum wage report. Still, a rising minimum wage puts upward pressure on jobs paying just above minimum wage, creating a ripple effect across a larger number of workers.
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