Tens of thousands of low-wage Minneapolis workers will see a pay bump next year as the city begins the phase-in of a $15 minimum wage.
The City Council on Friday morning voted 11–1 to adopt a municipal minimum wage ordinance that will raise the minimum wage to $15 in five years for large businesses and seven years for small businesses, defined as those with 100 or fewer employees. An amendment adopted before the vote puts franchises with at least 10 locations are on the faster track even if they employ 100 or fewer people in the city.
Advocates cheered the vote as a moment of promise, particularly for the estimated 71,000 Minneapolis workers currently earning less than $15 an hour. Representing more than one-fifth of the city’s workforce, they are disproportionately black and Latino.
Others saw peril in raising the cost of starting a small business and making Minneapolis an island of higher wages in the region. Even supporters acknowledged that Minneapolis is taking a risk with its go-it-alone approach on wages, a response to pressure from workers and inaction at the state and federal levels of government.
Mayor Betsy Hodges, who previously opposed the move on those grounds before changing her mind late last year, said passage of the municipal minimum wage ordinance was “also a beginning of a push to increase the minimum wage region-wide, statewide and nationwide.”
During a celebratory press conference inside City Hall, advocates said they would next take their fight to St. Paul, the suburbs and Minnesota’s regional economic hubs, like Duluth. Guillermo Lindsay, who joined the minimum wage movement while working at a local McDonalds, marveled at how they had disproved the skeptics.
“A lot of people called this nuts, bizarre, dreaming, even crazy,” Lindsay said. “But look at us today.”
“This is going to bring up wages for 71,000 underpaid people in the City of Minneapolis,” said Veronica Mendez Moore, co-director of CTUL, a local nonprofit that organizes workers to advocate for better wages and working conditions. “These are families that are 42 percent black, 54 percent Latino, 29 percent single moms. (They) are going to see significant increases in their wages so they can pay their bills.”
Minneapolis joins dozens of cities and counties that have set their wage floors higher than what is called for at the state or federal level, including a smaller subset that are phasing-in a minimum of $15 or higher. Once the minimum reaches that point in Minneapolis, the ordinance calls for annual wage hikes indexed to inflation.
Even then, Minneapolis will be playing catch-up with the actual cost of living. The Minnesota Department of Employment and Economic Development has determined $15.25 is the current “living wage” for a single person in Hennepin County.
Disappointment amid the cheers
Supporters of what is alternately known as a tip credit or a tip penalty were far less visible at Friday’s City Council meeting, even though they turned out in large numbers eight days earlier for a public hearing on the municipal minimum wage ordinance.
They sought an exception in the ordinance for tipped workers that would allow tips to be counted toward their wages, but they lacked allies on the City Council. The tip credit was never included in draft versions of the ordinance, and it didn’t come up as City Council members debated a series of amendments over the course of two meetings.
In a statement released after the vote, Red Rabbit bartender Jennifer Schellenberg echoed the concerns expressed for months by many in the service industry who warned that a high labor costs would force restaurants to close or move out of the city. They predicted some restaurants would do away with tipping altogether to soften the impact of higher menu prices on their customers.
“Instead of listening to our concerns, the council moved forward with a proposal that will put our income and our jobs in jeopardy,” Schellenberg wrote in the statement, released by Pathway to $15, a group representing dozens of local restaurant owners. “We won’t give up the fight but we remain disillusioned about how our concerns were dismissed for the sake of campaign politics.”
City Council Member Blong Yang, who cast the lone “no” vote against the ordinance, acknowledged that his stance could put his re-election campaign in jeopardy. But Yang said he thought the ordinance was bad policy that “could hurt the North Side and Northsiders” — his constituents in Ward 5 — by making it even harder for people of color to start their own businesses.
Yang warned that forcing employers to pay a higher wages would “stymie small business creation” and move Minneapolis in the direction of San Francisco and Seattle — two other cities progressing toward a $15 minimum — which he described as “playgrounds for upwardly mobile, white yuppies.”
Ward 2 City Council Member Cam Gordon said elected officials must keep in mind the business community’s “serious fears and concerns” as they watch the minimum wage ordinance play out over the coming years. Gordon said he planned to spend more money at small and local businesses to help them adjust.
“It’s up to us to show ourselves how we can make it work,” he said.
City Council members also pledged to help small businesses adjust to operating in a higher-cost environment. When it passed the ordinance, the council also approved a series of staff directions, including one that calls on the city to create a matching grant program to help restaurants and small businesses pay for sewer access charges and facilities improvements needed to comply with the Americans with Disabilities Act.
A last-minute amendment offered Friday by Ward 3 City Council Member Jacob Frey proved controversial, with Ward 10 City Council Member Lisa Bender describing it as “a carve-out … for a relatively small number of businesses.”
Approved 8–4, the amendment allows the multiple locations of a full-service restaurant to be counted individually, as long as the restaurant has fewer than 10 locations nationally. Gordon said it seemed to specifically benefit some of the city’s larger local restaurant groups, which might employ over 100 people in Minneapolis but no more than that at any single location.
The vast majority of Minneapolis restaurants already fall into the small-business category, which means the minimum wage won’t reach $15 for their workers until 2024, as opposed to 2022 at large businesses. About 88 percent of Minneapolis restaurants and 90 percent of all Minneapolis businesses have 100 or fewer employees, according to a city report.
The council on Friday backtracked on another amendment that would have put non-hospital residential health care facilities on the small-business track no matter the number of employees, which Council President Barbara Johnson (Ward 4) introduced at Wednesday’s Committee of the Whole meeting out of concern that their reliance on state and federal reimbursements would make it difficult to adjust to rising wages. The amendment was pulled from the final ordinance and instead city staff was directed to study the issue and report back in August.
The council is also expecting a report on how the ordinance affects youth training programs, a response to concerns that fewer jobs and paid internships would be offered after wages rise. That is in addition to a larger study on the wider effects of the Minneapolis minimum wage ordinance; the council plans to issue a request for proposal to study the wage hike this summer.