What we know — and don’t know — about a $15 minimum wage ordinance for St. Paul

Supporters of a minimum wage increase
MinnPost photo by Peter Callaghan
Supporters of a minimum wage increase rallied outside St. Paul City Council chambers earlier this year.

St. Paul is closer to raising its minimum wage to $15 an hour. Here’s what we know and don’t know about the new ordinance, which city officials hope to pass before the end of this year:

How did we get here?

Right now, Minnesota’s hourly minimum wage is $9.65 for large employers and $7.87 for smaller ones (except in Minneapolis, which just started phasing in a $15-an-hour minimum after the City Council changed the law last summer). It’s become increasingly common for cities to make their own such rules, however, and almost everyone who voted in St. Paul’s mayoral election last fall went for candidates who supported a minimum-wage hike, Mayor Melvin Carter has noted, and he made increasing the city’s payscale a major part of his campaign.

Around that time, St. Paul officials assembled a team to study the pros and cons of a citywide hike as well as what other cities are doing to boost wages for their lowest-paid workers. Some of the researchers were from the Citizens League, a nonpartisan think-tank.

Those researchers solicited feedback from a committee — which included business owners, restaurant workers and union representatives — and documented its findings in a 446-page report, released last month. The report includes three different ways St. Paul officials could move forward raising the city’s minimum wage, and Citizens League representatives presented them to the St. Paul City Council for the first time this week.

What don’t we know about St. Paul’s minimum-wage proposal?

To be clear: A $15 hourly minimum wage is almost certain to pass, based on the Council and mayor’s position. But we don’t yet know the specifics or how fast it’s going to happen.

The most controversial, lingering question: Should tips count toward the new minimum wage? City council members have the option of writing the law so that employers can pay tipped workers less than the potential $15 minimum, under the rationale they’ll make up the difference in tips. Supporters say this “tip credit” is the best route for restaurants and other businesses that could face dramatic and potentially negative shifts to their businesses by paying every employee $15, and that the carveout would level the playing field between non-tipped and tipped workers. Opponents of the tip credit, meanwhile, say the provision defeats the purpose of a new minimum wage and puts too much weight on the reliability of tipped earnings. The new Minneapolis law does not consider tips as wages.

At the state level, Minnesota is one of a handful of states that don’t allow employers to pay tipped workers less than the statewide minimum wage. Under federal law, tipped workers in some places can make as little as $2.13 hourly.  In the Twin Cities area, the average hourly wage for “front-of-house” workers in restaurants or people who take orders, seat people and handout orders is already $12.77, according to federal labor statistics. That’s roughly 50 cents higher than the national average.

Other unanswered questions council members will address in coming weeks as they sit down to write the ordinance: What constitutes as a small business? How, or to what extent, should the wage hike impact them? Should the ordinance include exemptions for employment programs geared toward helping teens or people with disabilities? And under what timeline should the city phase in the increase?

What are people’s reactions?

At a meeting in St. Paul City Council chambers Thursday night, Citizens League representatives emphasized that the majority of people in their case study supported the city phasing in a $15 minimum wage, indexed to inflation, over five to seven years (depending on the size of a business) with certain exemptions, including youth training and disability employment programs. The majority did not support a tip credit.

At the meeting, about 50 people chimed in on those and other suggestions and other ways city officials could go about writing the law. B Kyle, president of the St. Paul Area Chamber of Commerce, took the podium to express concerns that the hike could disproportionately affect the city’s poorest workers, benefit outside communities whose residents commute to St. Paul for employment, and force some businesses to cut hours or jobs. She also said the increase would mean higher prices in some areas as employers find new ways to fund the raise for their lowest-paid workers.

Dozens of people in the audience wore red shirts representing $15 Now, a coalition of labor and social justice organizations that originally formed years ago in Seattle to put pressure on officials there to raise that city’s minimum wage. One of the local activists, Kip Hedges, told council members Thursday he lives in Minneapolis, works in St. Paul and joined the campaign after seeing his “co-workers crushed, day-in-day out,” by working multiple jobs to keep up financially with the region’s rising living costs.

“I’m tired of struggling,” said a 22-year-old McDonald’s worker, who said she makes $10 hourly and is worried about making ends meet for her infant son. “I want to get off these streets, you know, have my own house, my own car.”

Why not just copy Minneapolis’ law?

Minneapolis became Minnesota’s first city to adopt a local minimum wage higher than the state’s last year. The increases are coming in waves; companies with 100 or fewer employees raised their minimum wage to $10.25 an hour in July, while larger employers started paying at least $11.25. Big companies must pay their lowest-wage workers $15 by 2022 and smaller business have until 2024.

St. Paul City Council President Amy Brendmoen described the hesitation over simply copying the Minneapolis’ ordinance: “First, we wanted to be sure that we have buy in from St. Paul residents, businesses and stakeholders. And second, we are not Minneapolis. We have a different economy and tax base than our sister city. One size may not fit all.”

But the benefits of creating a similar policy are obvious, considering the entanglement of the two cities’ economies. Participants in the Citizens League study acknowledged early on that a minimum-wage increase in St. Paul that is similar to Minneapolis’ “would be a lot easier for workers and businesses to comply with, and it would be a lot easier for the city to enforce,” said Rick Varco, political director at SEIU Healthcare Minnesota. Many large companies in St. Paul are already complying with the $15 minimum wage.

Some people are applauding St. Paul for doing its own thing, though. Alicia Hinze, owner of The Buttered Tin in St. Paul’s Lowertown neighborhood, thanked council members for their approach. “Here, we have the opportunity to really educate the public as to why we need this change and educate employers, like myself, how we can implement this change.”

What happens next?

The researchers, city council members and mayor all want to talk to more people, and in different parts of the city, to get a better sense of what’s best for St. Paul. Council member Jane Prince, for instance, said she’s concerned views from small business owners, particularly those who are immigrants or people of color, are missing from conversations so far. Other people emphasized the need to hear from more people who are involved in youth or disability employment programs.

In a statement, Mayor Carter said he looks forward to the process moving forward and that he’s “committed to signing a $15 minimum wage into law before the end of this year.”

Comments (2)

  1. Submitted by James Hamilton on 09/14/2018 - 01:00 pm.

    Employees will come to regret relying on politicians to establish their wages. Their energy is better spent organizing and bargaining the best possible wages in their industries, particularly since this “$15” wage will come as much as 6 years in the future.

    • Submitted by Frank Phelan on 09/14/2018 - 03:22 pm.

      Yeah, sort of.

      When Taft-Hartley was passed in 1948, it took some of the best tools from the labor organizing tool box. People talk about Reagan and PATCO being the turning point for Labor in the US, but if you look at the organized portion of the private workforce, it peaked shortly after Taft-Hartley, and has been in decline since. The more recent GOP assault on Labor is merely an attempt to finish the job.

      So it’s easy to say people should organize, but it’s a lot like entering a one legged man in a butt kicking contest. He might win, but I wouldn’t bet my money on him.

      It’s not an either/or situation; I’m in favor of both raising the minimum wage as well as more organizing. Given four decades of wage stagnation (it didn’t start or end with Obama as some believe) we need every piece of leverage we can get to get a raise.

      A rising tide lifts all boats, or so they say.

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