Minneapolis leaders negotiate timing of $15 minimum wage amid national debate over impact

Minneapolis leaders, expected to approve a $15 minimum wage this week, are still negotiating the timeline of the pay hike for thousands of workers in an attempt to assuage the concerns of hundreds of business owners across the city.

The ordinance will go before a council committee Wednesday and is expected to win approval of the full council Friday, making Minneapolis one of several cities nationwide that have passed similar measures in recent years.

Meanwhile, economists across the country are debating whether significant wage increases ultimately help or hurt low-wage workers, after researchers at the University of Washington found that the number of low-wage jobs — and hours available to workers in those jobs — dropped in Seattle when the minimum wage rose to $13 in 2016.

"I think this is new information and we need to pay attention to it," said Council Member Elizabeth Glidden, the chief author of the Minneapolis ordinance, "but also be careful that we put it within a context of other reports and information that's out there."

Seattle was the first city in the nation to pass a $15 minimum wage and has been a model for Minneapolis. Seattle leaders asked the University of Washington to track the higher wage's effect over time.

An early version of the Minneapolis ordinance gives employers five years to phase in the $15 wage and includes a lower "training wage" for younger workers starting jobs, but it does not allow employers to count tips as wages.

As proposed, the ordinance would be fully implemented for both small and large businesses by July 1, 2022. Some details, including the phase-in schedule, are likely to change before the council votes.

Council Member Jacob Frey said he would like small businesses to have at least two more years than big businesses to start paying $15 an hour — but whether that would change the 2022 deadline is unclear.

Seattle's minimum wage, which passed in 2014, is being implemented over several years and has different phase-in schedules for small and large businesses. It includes a tip credit until 2025.

The first increase, from the state minimum of $9.47 to $11 in 2015, had little effect on the marketplace, according to a study released by University of Washington researchers last summer that tracked individual workers before and after the wage increase.

The research released Monday uses the same data, but it looks at overall low-wage employment and hours worked instead of individual workers. The study doesn't include large employers, such as fast-food chains, that have locations both inside and outside Seattle. But the researchers say they did account for big employers in a separate survey of more than 500 Seattle businesses. The results showed employers with multiple locations were more likely to cut jobs as a result of the wage increase than those with just one location.

"It's fair to say that it is a blind spot in our data, but it's not a blind spot in our survey," said Jacob Vigdor, a University of Washington public policy professor who worked on the study. "Our best guess as to what we're missing is we're missing effects that are even more negative than what we reported."

Supporters of the $15 minimum wage in Minneapolis and elsewhere have been quick to point out what they say are glaring flaws in the University of Washington study.

Ben Zipperer, an economist at the nonprofit, nonpartisan Economic Policy Institute, co-authored a report detailing problems with the research, including the exclusion of big employers and the lack of comparison data from cities outside Washington. Those flaws make this an outlier among existing minimum wage research, he said.

"The noise around the University of Washington study needs to be taken with a heavy dose of salt," said Paul Sonn, program director with the National Employment Law Project. "The economic evidence that spurred cities and states to move ahead with significant pay increases remains the same."

Critics have pointed instead to research from the University of California, Berkeley, which shows that Seattle's minimum wage law has raised pay without hurting jobs. But that study only looked at workers in the restaurant industry — and the University of Washington researchers also found that group was not negatively affected by the minimum wage increase.

Restaurant employees account for just one sector of the low-wage workforce, but the debate over whether the Minneapolis ordinance should include a tip credit has placed them at the center of the minimum wage discussion here.

Supporters of the tip credit — which would count tips toward the $15 minimum — say restaurants' profit margins are too small to accommodate a wage increase while also retaining workers. Opponents, including Mayor Betsy Hodges, say tipping leads to sexual harassment in the workplace, particularly for women.

Regardless of the details — whether there's a tip credit, a training wage, a longer phase-in or not — the City Council likely has enough votes to pass a $15 minimum wage Friday.

Council Member Blong Yang has raised concerns about the effect a $15 minimum wage will have on businesses and workers in the north Minneapolis ward he represents. At this point, he said, there's enough support on the council that he may be the only dissenting vote.

"There isn't a battle to be won there," he said.

Emma Nelson • 612-673-4509