Debate on citywide minimum wage continues in listening sessions

City-led events draw business owners, workers, nonprofit leaders and activists

As Mayor Betsy Hodges looked on, Katie Gjertson of the Minnesota Nurses Association expressed her support for a citywide minimum wage ordinance at a Feb. 15 listening session on the North Side. Photo by Dylan Thomas

Both supporters and skeptics of a higher citywide minimum wage — and many who found themselves somewhere in between — showed up to listen and give their feedback at two mid-February listening sessions, part of a series of 10 city-led gatherings that began in January and run through March 3.

“There’s so many people that care who are taking the position that this maybe is not the route to go,” said Jerry Anderson, one of about 40 people who crammed into an undersized conference room inside the Minneapolis Downtown Council’s offices for a Feb. 14 listening session.

A city-commissioned study found the benefits of a $12 or $15 minimum wage would flow primarily to black and Latino workers, who are overrepresented in low-wage jobs. But Anderson, a U.S. Bank vice president who said he was speaking for himself, not his company, wondered about the potential impacts on small businesses — including employers who are themselves people of color — and suggested the city might instead pursue career training programs to “elevate the skill level of the people on the lower end of the economic ladder.”

That prompted a response from Celeste Robinson of 15 Now Minnesota, who said no matter how well trained the workforce, some workers will always earn the minimum. Sharing the message of a nation-wide campaign for higher wages, Robinson argued there would always be a need for janitors and fast-food workers, and they, too, need to support themselves and their families.

A similar debate played out the very next afternoon at a smaller gathering on the North Side, where again the questions were raised: Is a higher minimum wage the best way to lift people in Minneapolis out of poverty? And at what cost to business?

The listening sessions have drawn other, less-obvious questions about the minimum wage into the open, including concerns about how raising wages might eat up the resources of nonprofits or discourage employers from hiring younger workers and paid interns.

Danielle Grant, president and CEO of AchieveMpls, said raising the minimum wage would likely cut the number of young people who get jobs through Step-Up Achieve, a youth internship program the nonprofit runs with the City of Minneapolis. AchieveMpls already requires Step-Up employers to pay student interns $10 an hour, but Grant predicted those employers would cut internship positions by 50 percent if the city enacted a $15 minimum wage.

“Anything that decreases the number of internships for them doesn’t help them be prepared for college and career in the future,” said Grant, who suggested policymakers consider including a lower youth or training wage rate in any minimum wage ordinance.

The varied opinions shared at listening sessions will be taken into consideration by the city staff drafting a proposed minimum wage policy. That recommendation is expected to go to the City Council in May, and councilmembers have stated their intent to hold a vote on a minimum wage ordinance by late spring or early summer.

How high the wage will be set, how quickly it will go into effect, whether it will apply to all workers and, if not, which groups might be exempted are just some of the questions that remain open. But the debate has been shaped by last year’s unsuccessful campaign to place a minimum wage question on the November ballot. That proposal suggested a $15 minimum wage phased in over several years and at different rates for small and large employers.

Since then, Mayor Betsy Hodges and a majority of the candidates seeking Council seats in the 2017 city elections have expressed their support for a $15 minimum wage.

But McDonald’s franchisee Tim Baylor predicted raising wages that high would be “chaotic.” Baylor, who owns six restaurants, including one in Minneapolis, said he would no longer hire youth workers at that rate, adding he’d likely staff his city restaurant with more experienced employees from suburban stores.

Baylor said a significant increase in the minimum wage would lead to wage “compression,” and that experienced workers and managers would soon want to see raises in line with what newer, less-experienced employees received.

Several people who attended the same downtown listening session as Baylor, including a man who identified himself as a Minneapolis teacher, said they supported the wage hike as a way to directly address the city’s wide socio-economic disparities in income and opportunity. But Baylor, who is black, said the best way to reduce racial disparities was to “build business,” adding that a city-imposed minimum wage hike would “hinder that.”

Although the city staff members running the listening sessions were careful to remind attendees no policy decisions have been made, Peter Killen, CEO of a company that operates four Irish pubs in Minneapolis, insisted passage of a minimum wage ordinance was a foregone conclusion. Killen argued for a “common-sense approach” that raised wages at a slow but steady rate, and said a jump from $9.50 to $15 an hour would “put the lights out” for many local small businesses.

“Let’s ease into this thing here and not put a lot of people out of business,” he said.

Killen said uncertainty over the Council’s plans for a minimum wage were already affecting his plans to open a fifth pub in the city.

Whether bar and restaurant waitstaff and other workers who earn tips will also earn the higher minimum wage has been a main point of contention in the debate. Mayor Hodges said she supported a minimum wage ordinance only if it applied to tipped workers, but some business owners contend it would be disastrous for the restaurant industry.

Tim Balfanz, general manager of The Saloon, said with a $15 minimum wage the bar’s “payroll costs would increase 25 percent over the course of a year,” adding hundreds of thousands of dollars to the business’ bottom line. Bouncers and other staff who don’t earn tips would “suffer,” Balfanz said.

“We really need to look at (tipped employees) total taxable income as a way to level out the playing field,” he said.

There’s also a question of unintended consequences, one that came up at both the downtown and North Side listening sessions.

Tim Marx, president and CEO of Catholic Charities of St. Paul and Minneapolis, said city policymakers must keep in mind what he termed “the cliff effect.” Marx said low-wage workers who qualify for childcare subsidies could lose access to those benefits after a wage hike and end up “worse off” if the higher pay doesn’t cover all of their childcare costs.