Minneapolis City Council gives tentative approval to $15 minimum wage

Minneapolis City Council members continue to adjust a proposed $15 minimum wage ordinance, pushing the deadline for compliance out to 2024 for small businesses.

With the added phase-in time, a council committee gave preliminary approval to the minimum wage ordinance Wednesday. The City Council is expected to take a final vote Friday, adding Minneapolis to the list of cities that have passed similar measures in recent years.

Minneapolis' proposed ordinance would require large businesses to phase in the $15 minimum wage by July 1, 2022, and does not count tips as wages. Small businesses — those with fewer than 100 employees — would have until July 1, 2024, to implement the minimum wage.

"I think this is the strongest policy for workers that we can pass through this council," said Council Member Lisa Bender.

There are still details to be worked out about implementation of the $15 minimum wage and any exemptions for younger workers and workers in different industries. But council members agreed Wednesday that small businesses should have more time to adjust to the higher wage.

"I feel strongly that we should be treating small businesses different than large," said Council Member Jacob Frey, who introduced ordinance amendments to give small business more time. "A small local pizza joint is not McDonald's."

Jonathan Weinhagen, president and CEO of the Minneapolis Regional Chamber of Commerce, said the group was happy to see the extra phase-in time for small businesses, but still has concerns about how a higher minimum wage in Minneapolis will affect the larger metro-area economy. At this point, Weinhagen said, it seems unlikely that much will change before Friday's vote.

"We are at that phase in the policymaking where we're getting pretty close to a final product," he said.

Council members debated Wednesday whether to make an exception to the size rule for residential health care facilities that rely on Medicare or Medicaid reimbursements. Council President Barb Johnson proposed the exemption, noting that facilities that count on those federal programs may not be able to adjust their budgets as quickly.

Council Member Elizabeth Glidden said she appreciated the reasons for bringing the measure forward, but she didn't want to create an exemption for one type of business.

"I just feel like it creates a little bit of a winners-and-losers situation," she said.

Glidden was the only council member to vote against exempting the health care facilities. But others who voted in favor of the exemption Wednesday said they needed more information — suggesting the issue would be debated further and possibly removed from the ordinance Friday.

Council members were also unable to come to an agreement on the details of a lower "training wage" for younger workers for 90 days. The council decided to take another three months to discuss it and talk with employers that offer youth training programs.

But the controversial question of whether to create an exemption for tipped workers — an issue that's put restaurants at the center of Minneapolis' minimum wage debate — didn't come up once during the nearly two-hour meeting, though it divided the people who packed the chambers.

Bartender Bryan Campbell said most servers and bartenders want the exemption, also known as a tip credit, and he was disappointed it was not included in the ordinance. Restaurant workers and owners have said throughout the minimum wage debate that the industry's profit margins are too small to accommodate a wage increase without counting tips toward the minimum.

"I think they didn't go far enough to help our industry," Campbell said.

The tip credit has gotten no public backing at City Hall, and is opposed by Mayor Betsy Hodges.

It's tough to say what effect the wage increase in Minneapolis will have on workers and businesses, because no other U.S. city has yet reached a $15 minimum wage. Even Seattle, the first city in the country to pass a $15 minimum wage in 2014, won't fully implement it until 2021.

But debate among economists was renewed this week 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.

Critics of that study, including members of 15 Now, have pointed instead to research from the University of California, Berkeley, which shows that Seattle's minimum wage law raised pay without hurting jobs. That study looked only at workers in the restaurant industry — and University of Washington researchers also found that group was not negatively affected by the minimum wage increase.

Outside Minneapolis council chambers Wednesday, members of the pro-tip credit group Pathway to 15 gathered to express their disappointment and frustration, but also to say that, with a little more time before the final council vote — and another minimum wage ordinance likely in St. Paul — their work isn't done.

"Today was a good sign of compromise," said bartender Wayne Roemhildt. "The fight isn't over."

Emma Nelson • 612-673-4509