With tweaks (but no tip credit), $15 minimum wage for Minneapolis set for final passage

MinnPost photo by Peter Callaghan
Sheila Delaney, a Pathway to $15 supporter, holds signs from both sides in the tip credit debate.

In the end — or at least the near end — the once controversial idea of having a $15 minimum wage in Minneapolis wasn’t especially controversial.

A Minneapolis City Council that just two years ago lacked the votes to pass a city-only wage — and whose members were still skittish about the proposal a year ago — overwhelmingly approved an ordinance that will phase-in a $15 wage over the next five-to-seven years.

While the formal vote will come Friday, and while there could still be a few tweaks, the substance of the ordinance was adopted at Wednesday’s Committee of the Whole meeting. The committee voted 11-1 to send the ordinance to the full council. But since all 13 members are on the committee, the council essentially recommended the ordinance to themselves.

So, it’s gonna pass Friday. And that’s when the speeches and congratulations will come. But Wednesday’s action means Minneapolis will become the first city in the state to adopt minimum wages higher than the statewide level (currently $9.50 an hour for large employers), joining three dozen or more cities in the U.S. who have approved a move toward a $15 wage. 

Not much debate

As expected, there was no attempt to amend the draft ordinance’s omission of a tip credit, rejecting pleas from restaurant owners and servers who fear the lack of such a provision will damage their businesses and cost them income. 

Not even the amendments that were offered attracted much disagreement, with most passing easily.

One of those amendments could benefit many local restaurants. It would create a longer phase-in period for businesses with fewer than 100 employees. While a draft ordinance had five-year phase-ins for both large and small employers (with slightly steeper increases for large employers), Council Member Jacob Frey proposed an alternative.

Starting Jan. 1, 2018, large employers would pay $10 an hour; they would then be required to pay increases each July 1, starting next year and going through 2022, when the wage would reach $15 an hour.

The timetable would be extended for small employers, though. Businesses with fewer than 100 employees would pay $10.25 on July 1, 2018, and then would have to increase the hourly rate each July 1 through 2024. Once the wages in each employer class reached $15 an hour, they would be increased annually based on the same inflation calculation used for the state minimum wage.

“I feel strongly we should be treating small business different than large,” Frey said. “A small local pizza joint is not McDonald’s, and I think the ordinance at the end of the day should reflect those differences.”

Council Member Alondra Cano, who along with Frey was among the first supporters of a local minimum wage, endorsed Frey’s amendment. But she also said she would have preferred large businesses to have a four-year phase-in period, rather than five. “While, morally, I wish this set forth four years for large businesses and seven for small, I’m willing to support this,” Cano said.

Training wage tweaked

With the big issues resolved weeks — if not months — ago and the Frey amendment serving as the biggest concession for small businesses and restaurant owners, many of whom have expressed concerns about the impact of the wage hikes, the other amendments offered Wednesday dealt mostly with narrow details. Frey, for example, offered an amendment that attempts to make sure franchises or chains cannot count each outlet as a single workplace so as to be considered small businesses under the rules.

Council Members Lisa Bender, Cam Gordon and Kevin Reich attempted to respond to testimony last week against a so-called training wage, which would pay teens a lower wage for the first 90 days of a job. The intent of the provision is to encourage businesses to employ younger, less-experienced workers, but opponents said many young workers are employed because they depend on the income.

Cam Gordon, Jacob Frey and Alondra Cano
MinnPost photo by Peter Callaghan
Minneapolis City Council Members Cam Gordon, Jacob Frey and Alondra Cano in a discussion at Wednesday’s Committee of the Whole meeting.

After a failed attempt to shorten the training wage limit to 60 days, reduce the age and to restrict it to city-approved training or apprenticeship programs, the council approved a motion by Bender to keep the age restriction to those 20 or younger for 90 days, but to limit it to city-approved training programs.

“It’s specific to youth training programs,” Bender said. “So we do not mean any job that a youth happens to have, like at McDonald’s or the grocery store. If they are doing a regular job, this would clarify that they should earn the wage that everyone else does.”

She directed city staff to come back with a report by September on other ways to balance helping youth training programs without harming young people who work in jobs also held by older workers.

The council also passed an amendment proposed by Reich to classify ex-offender transition programs as small business and have the longer phase-in. Council President Barbara Johnson proposed a similar classification for non-hospital residential health care facilities that also passed.

Finally, Reich succeeded in getting an amendment adopted that calls for an annual external assessment of the impacts of the minimum wage ordinance, beginning in 2019. Seattle, the first large city to adopt a higher local wage, has such a requirement in its ordinance — a provision that resulted in this week’s report suggesting that the wage ordinance might be reducing jobs for the lowest-level workers.

A single ‘No’ vote

Council Member Blong Yang was the only member to vote against sending the ordinance to the full council. “With a minimum wage hike this big — close to 50 percent — it will likely hurt some businesses, especially small businesses,” Yang said after the meeting.

Yang said his Ward 5, which includes near North and north Minneapolis, is close to cities like Golden Valley, Robbinsdale, Brooklyn Park and Brooklyn Center, none of which will be subject to the $9.50 state minimum wage.

“Do people deserve it?” he asked of the higher wage. “Probably. But the reality is that we have to deal with the consequences that may result. You look at Ward 5 and there’s not a line of people who want to do business there. … Sometimes we need to beg people. If we create this climate where it makes it a little more difficult for business, what it does is people will be a little bit more reluctant to show up.”

Yang is in a tough re-election race, having already lost the DFL endorsement to challenger Jeremiah Ellison. He said the political impact of his vote has “crossed my mind” but said, “I want to make the right vote and not do it for political purposes. It is a tough vote and it would be easy to go along with the 12 others. We can end up with different conclusions, and my conclusion is that it will hurt.”

Comments (14)

  1. Submitted by Michael Hess on 06/29/2017 - 12:02 pm.

    Have to wonder….

    What % of the yes votes think the way Blong thinks but they lacked the courage to cast a no vote.

    What % of the yes votes think this will usher in a new era of prosperity for workers and employers alike.

    What % if the yes votes know this will hurt business owners in creating a competitive disadvantage vs outside the city borders, but they don’t care.

    Anyone want to guess?

  2. Submitted by David Therkelsen on 06/29/2017 - 12:49 pm.

    There’s a little noticed irony here

    The current City Council, which is so certain it knows how to run businesses better than owners and managers know how to run businesses, held a public hearing on this ordinance about a week ago. It ran for six hours, and may have been the largest-attendance public hearing in city hall history. It was known weeks in advance that there would be a big turnout. Yet the city was completely unprepared. There was not enough space. Air conditioning was not working. There was no signage letting people know how to sign up to speak. There were no city employees providing any help.

    The Council knows best on how to manage business, but it can’t even manage its own public hearing.

    It doesn’t appear the Council gave even five minutes of reflection to the new study reporting effects of Seattle’s ordinance – effects that have not been pretty.

    Cogratulations to Mr. Yang for showing some common sense, and some courage.

    • Submitted by Patrick Steele on 06/29/2017 - 01:42 pm.

      It seemed fairly well run to me. The hallway was definitely warm and a bit disorderly at first but city staff was going around and directing people where to sign up for a speaking slot and where to go watch the hearing in an overflow room. The city had translators available for two different languages. There were monitors with audio set up not only in the overflow room but also in the hallway between that room and the council chambers where people flowed in and out to speak. The members stayed until the final person got their views in. I was quite impressed, in spite of the huge crowd that was there.

      As for the study regarding Seattle’s ordinance, there are some issues with it. I think Jared Bernstein covered most of them pretty well if you are interested: http://jaredbernsteinblog.com/that-seattle-minimum-wage-study-has-some-curious-results/

    • Submitted by Thomas Nicholson on 06/29/2017 - 08:19 pm.

      Not sure of your connection

      There’s a big difference between running a business and setting a minimum wage. Your whole premise seems off.

    • Submitted by Frank Phelan on 07/01/2017 - 08:16 pm.

      Who’s Zoomin’ Who?

      Apparently business owners don’t know how to run their businesses. At least those who have tipped employees.

      Why else would they allow customers to determine their employees wage? If you can’t figure out the economic value of an employee, maybe you’re in over your head.

  3. Submitted by Aaron Albertson on 06/29/2017 - 02:14 pm.

    No tip credit

    Is a bad idea. I could get behind this ordinance if there was a tip credit. The average wage for a server in Minneapolis is $28 an hour, so we’re gonna see wages decrease by $13 an hour in that sector

  4. Submitted by Frank Phelan on 07/02/2017 - 12:23 pm.

    Media Mischaracterization

    The media is doing this debate no favors by burying the lede. If this raised the wage to $15 overnight, or even on January 1, 2018, I would probably oppose it also. But it will take five to seven years!

  5. Submitted by Garth Taylor on 07/03/2017 - 08:19 am.

    Congratulations on a well-vetted plan

    Yang: “Of course they deserve it, but we have to keep in mind the race to the bottom.”

    Committee of the Whole: “We need to consider the vulnerability of the labor force in an era of increasing job instability, higher costs, and declining employer loyalty.”

    Me: “Vote for a better future, we can afford it.”

  6. Submitted by Paul Udstrand on 07/06/2017 - 10:52 am.

    Look…

    The idea that owners are entitled to limitless income while wages and salaries of those working for owners ought to be capped somehow, for the good of the economy… is unsustainable garbage. This is simply class warfare pretending to be economic reasoning.

    Sooner or later workers must receive the fruits of THEIR labor as well, owners can’t keep grabbing all the fruit forever. We live in a democracy so if you kill workers ability to negotiate wages (i.e. kill the unions) workers are left with appealing to the government. You either have collective bargaining, or you have government wage and benefit regulations. Companies have had it sweet for a couple decades with neither collective bargaining or regulations, but that’s not sustainable. We supposedly recovered from out big recession years ago yet most American’s have seen flat or even decreasing wages and salaries. Restaurant owners have enough capital to open (or get loans to open) new restaurants every year but they can’t pay their staff $2-$5 an hour more? Bushwa!

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