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The rise of Minnesota's minimum-wage rates for 2023 will significantly lag annual inflation due to a state law capping the increases at 2.5%. 

The Minnesota Department of Labor and Industry announced the adjusted rates, which will take effect Jan. 1, on Tuesday. 

Minnesota's largest employers with annual gross revenue of at least $500,000 will see a minimum wage hike from $10.33 to $10.59 an hour.

Other state minimum wages, including the small-employer, youth and training wages, as well as the summer work travel exchange visitor program wage, will increase from $8.42 to $8.63. 

Inflation is soaring in the United States with the U.S. Bureau of Labor Statistics reporting a Consumer Price Index increase of 8.5% in the 12-month period ending in July. 

Minnesota law, however, refers to the Personal Consumption Expenditure Price Index (PCE) to calculate annual inflationary increases on minimum wage — such increases are capped, by state law, at 2.5%. 

For the 12-month period ending in June, the PCE rose by 6.8%. 

State minimum wage laws can be superseded by municipal rules. Minneapolis and St. Paul have their own citywide minimum wages. Minneapolis' hit $15-an-hour for large employers as of July 1.

Minnesota's minimum wage remains significantly higher than the federal $7.25 minimum wage, which hasn't risen since July 2009.

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