Governor Mark Dayton signed legislation into law on Monday that will raise Minnesota’s minimum wage incrementally from $6.15 per hour to $9.50 by 2016. Starting in 2018, the wage will be tied to inflation, potentially increasing by up to 2.5 percent. The wage increases will affect employers with an income stream above $500,000, and smaller business employees will see a wage increase reaching up to $7.75 by 2016.

The higher minimum wage will affect more than 325,000 Minnesotans. The first increase will occur this August, with hourly pay reaching $8. August 2015 will mark the second phase, increasing the minimum wage to $9.00 before reaching $9.50 in 2016.

Prior to Monday’s raise, Minnesota was one of just four states with a minimum wage below the national wage of $7.25. Now it will have one of the highest, joining Connecticut, California and Maryland at the forefront of the rush to increase the minimum wage.

The agreement marks the end of a long struggle between state Democrats and Republicans, who have spent months working on the issue. Republicans have fought the increase, claiming that a higher wage will negatively affect employment and force business owners to lay off workers. A split within the DFL, which controls both the Minnesota House and Senate, further complicated the struggle.

According to the Star Tribune, Dayton stressed the importance of raising the minimum wage on improving the quality of life for low-wage workers.

“Minnesotans who work full time should be able to earn enough money to lift their families out of poverty, and through hard work and additional training, achieve the middle-class American dream,” Dayton said.