Minneapolis Suburb Raises Minimum Wage To $19 Per Hour For Businesses Getting Subsidies

In Shakopee, Minnesota, home of the new Amazon.com distribution center, officials are demanding that employers who want some advantageous tax breaks must pay their employees a minimum wage of $19 per hour.

While this seems like a rather steep requirement in a country where $15 per hour seems impossible, this city, just 20 minutes south of Minneapolis, boasts a current average pay rate of $25.78 per hour.

Just last month, the Shakopee City Council voted to increase the minimum wage to $19 per hour. This applies to any large new businesses receiving the generous local economic incentives. This significant vote was made just after a public hearing on large business subsidies. Shakopee has experienced a great deal of job growth due to many top employers such as Shutterfly and now Amazon.com locating to this charming community and offering thousands of good paying jobs.

Although the new Amazon.com distribution center has over 1,000 Shakopee jobs, it is not included in this new requirement. The Shakopee city council hopes to attract such businesses as a medical device company that would offer these sorts of good wages that would keep workers above the livable wage rate. City economic development coordinator Sam DiMaggio thought it was time to increase the previous minimum wage of $14.50 an hour.

“The City Council has asked that [the minimum-wage requirement] be updated because they don’t think families can live off $14.50 an hour. They want to see higher wage jobs.”

Current companies such as Shutterfly or San Mar are not required to pay this new minimum wage, because they did not receive the special tax-increment financing incentives that go along with the higher wage. Currently, Shutterfly pays out an estimated $700,000 in taxes each year and, in turn, is able to take advantage of about $100,000 in incentives offered by the Shakopee city council initiatives. This year, Shutterfly has only employed 180 people, although their goal was to employ 258 people by May. As the company did not reach their goal, they will not receive any additional incentives for the rest of this year.

So, how big of a deal is this new $19 per hour minimum wage? This pay rate is twice the new Minnesota $9.50 per hour minimum for these same sort of large companies. Shakopee also has some goals for the city regarding the amount of new jobs they create and how they will improve the quality of the city for the businesses and the employees working and living in this community.

Just four years ago, the Shakopee city council decided to reduce their minimum-wage requirements because of the recession. Although the economy was showing signs of recovery, they still decided to lower the minimum wage to $14.50 an hour from the $19.94 for companies that wanted to take advantage of these tax incentives. The new $19 per hour is a great improvement, but it is still not up to the minimum wage of 2012.

Each city can determine what sorts of tax breaks and business incentives they can offer depending on the quality of jobs offered, housing, land availability, as well as other bigger picture criteria for each individual community. Some communities may not even have specific criteria and may be more open to any sort of options that a corporation or large business may put on the table. Business development director Stacy Crakes explained that cities will look at their community’s own needs when making such a historic decision.

“Each city takes a look at what makes sense at the time when they instate those policies and I guess that’s what the city decided made the most sense.”

The Shakopee community is quite happy with all of the tax money that they are bringing in. They are leading the pack by voting in excellent wages, along with offering tax breaks to companies. County Commissioner Joe Wagner could not not be happier.

“We’re becoming worldwide. We compete globally now.”

What do you think of the new $19 per hour minimum wage? Do you think your community could offer these same sort of wages?

[Minneapolis Suburb Raises Minimum Wage to $19 Per Hour For Businesses Getting Subsidies|Photo by Doug Pensinger/Getty Images]