Minnesota’s new labor board votes for nearly $23.50 an hour minimum wage for nursing home workers

Minnesota’s new workforce standards board took its first significant vote on Monday, agreeing to raise the pay floor to $23.49 per hour on average in 2027 for nursing home workers, while guaranteeing 11 paid holidays.

The worker and government representatives on the board approved the minimum wages without the support of the board’s nursing home industry representatives, who abstained.

“We know there is a crisis facing the nursing home industry … there simply aren’t enough people willing to do this work for the wages that are being paid,” said Jamie Gulley, chair of the standards board and president of SEIU Healthcare Minnesota & Iowa, a union representing thousands of nursing home workers.

The Democratic-controlled Minnesota Legislature voted last year to create the Nursing Home Workforce Standards Board, one of the first like it in the country empowered to set minimum pay and benefits for workers across an entire industry.

The nine-member panel — comprising three worker representatives, three state government officials and three industry leaders — approved four minimum wages for nursing home staff. By Jan. 1, 2027, certified nursing assistants in nursing homes will earn at least $24 per hour, trained medication aides will earn at least $25 per hour and licensed practical nurses will earn at least $28.50. All other workers, including subcontractors, will earn at least $20.50 per hour in 2027.

All told, nearly half of nursing home workers will see their wages rise with the first pay bump scheduled for Jan. 1, 2026, when the average minimum wage will rise to $22 per hour, according to an analysis by the state Department of Labor and Industry. Under the law, the board must adopt standards that match or raise wages for a majority of workers within various geographic regions and occupations.

The minimum wage rule must still be drafted into its final form, submitted for public comment and then reapproved by the board.

Workers and labor advocates say the raises will improve care for the state’s elderly and disabled by helping attract and retain more quality workers, but nursing home leaders say the wage mandates could tip their balance sheets into financial insolvency.

The higher labor costs come as the Biden administration plans to phase in minimum staffing requirements for nursing homes, mandating a registered nurse be on site 24 hours a day and for residents to each receive around three-and-a-half hours of nursing care per day.

“That’s going to be a perfect storm,” said Paula Rocheleau, a member of the state workforce board and CEO of Partners Senior Living Options. “We don’t have enough nurses in the state of Minnesota to meet that mandate right now … I think it could close nursing homes.”

The higher wages will mostly be covered by the government, since about 80% of nursing homes’ revenue comes from Minnesota’s Medicaid program called Medical Assistance. The price the government pays is based on nursing facilities’ past costs, so as nursing facilities’ labor costs rise, so does their revenue.

The challenge for nursing homes is that government payment rates take at least 15 months to catch up with nursing home costs. And in Minnesota, nursing homes are not allowed to charge private patients more than what the government pays.

In essence, that means nursing homes will have to raise wages months before they’re able to raise their prices.

A state cost analysis forecasts the state will need to pay an additional $6.9 million in fiscal year 2029, the first full budget year when the higher wages are factored into reimbursement rates. The federal government will also need to pay up a similar amount per year. The wage increases will lead to a 0.8% price increase, according to an analysis by SEIU.

Last year, the Minnesota Legislature directed $300 million in grants to nursing homes to shore up their finances and increase worker retention. More may be needed when the Legislature takes up its two-year budget next year in order to compensate nursing homes for higher labor costs until reimbursement rates catch up.

“[My job] brings me great joy, but it doesn’t feel great being overworked and underpaid,” said Nessa Higgins, a nursing assistant at the Estates of Chateau, at a news conference on Monday. “It is hard every day going to work and knowing that the higher ups are getting these big bonuses and it don’t ever trickle down to us … But thanks to the Minnesota standards board … all that is going to change.”