DFL leaders in the Minnesota House and Senate on Monday announced a deal to raise the state's minimum wage.

Under the agreement, the wage for large employers would go up to $9.50 an hour by 2016.

The rate would be tied to inflation beginning in 2018, but the commissioner of the state Department of Labor and Industry would be able to prevent automatic inflationary increases if economic conditions warrant.

The deal also includes a 90 day training wage of $7.75 an hour for teen workers. The House and Senate are likely to pass the compromise bill later this week. Gov. Mark Dayton said he'll sign the bill into law.

Democrats who control the House and Senate had been stuck for weeks on the issue of inflationary increases. The House wanted them as part of a bill but the Senate was reluctant.

The inflation provision became the main sticking point in negotiations to resolve the two competing bills passed last session.

But Senate Majority Leader Tom Bakk, DFL-Cook, said other provisions, including the lower training wage and the possibility of suspending inflationary increases in bad economic times, helped address the Senate's concerns.

"I think it's a pretty good compromise that the House and Senate have reached," Bakk said. It's certainly going to help hundreds of thousands of low-wage workers and entry level workers across the state. I'm very, very pleased that we're able to get it done, frankly, in as timely a way as we can."

Republicans opposed the minimum wage increase last session, and their position hasn't changed this year. The increase, they say, is too big and will come too fast.

They also contend it will result in fewer jobs, even though supporters insist there is no evidence that will occur.

House Minority Leader Kurt Daudt, R-Crown, said Democrats have been pursuing the wrong approach, and he fears the increase will result in fewer jobs.

"Republicans agree that we want Minnesotans at lower and middle income levels to be making more money. But we feel the real answer is to provide more and better job opportunities for those people," Daudt said. "Unfortunately, the policies that Democrats are putting in place really are taking Minnesota's economy in the wrong direction, not in the right direction."

Dan McElroy of Hospitality Minnesota, a group that represents restaurants, hotels and resorts, said his organization's members don't oppose a minimum wage increase, but that $9.50 was higher than they hoped for.

The lack of an accommodation for tipped employees could put some of the better-paid serving jobs at risk, added.

McElroy, though, said he thinks restaurants will adjust to the changes.

"We don't expect a huge loss of jobs. We expect some slowing of growth," he said.

"We expect fewer hours very honestly," he added. "Who pays for it is higher paid employees through wage compression, some of our employees through fewer hours and then guests through higher prices."

Minnesota has raised its minimum wage several times since the early 1990s, and the federal minimum wage has increased over that period of time as well.

Currently, Minnesota workers can earn anywhere between $4.90 an hour, the training minimum wage, and $7.25 an hour, the federal minimum wage, depending on where they work and the size of the business.

Boosting the minimum wage will help reduce poverty and improve the well-being and life spans of Minnesotans, state Health Commissioner Ed Ehlinger said.

"This is the place where we're going to have a huge impact on health because it's going to impact people on the lower end of the economic status where you can have the biggest impact with a very limited investment of dollars," Ehlinger said Monday at a National Public Health Week event in West St. Paul.

He called the minimum wage proposal the most important public health policy being debated in the Minnesota Legislature this year.

MPR News reporters Lorna Benson and Catharine Richert contributed to this story.