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Minneapolis reveals its plan for getting to a $15 minimum wage

It doesn't include the "tip credit" for servers.
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An outline of the Minneapolis' path to a $15-an-hour minimum wage has been released.

Minneapolis City ouncil members will meet on Tuesday to discuss the proposal. The draft ordinance is now on the council's website, revealing the draft of a plan to increase the minimum wage. It would go from the current state minimum of $9.50 an hour, to $15 an hour by July 2021 for workers at large businesses.

A four-year timeline is set for large businesses to increase wages to $15 an hour, which is set as follows.

  • Increase to $10.50 an hour on July 1, 2018
  • Increase to $12 an hour on July 1, 2019
  • Increase to $13.50 an hour on July 1, 2020
  • Increase to $15 an hour on July 1, 2021

What hasn't been decided yet, and what will likely be discussed at Tuesday's meeting, is what constitutes a "large business" for wage purposes. A separate minimum wage increase schedule would also be created for small businesses.

Who it would benefit

The council document highlights that a "living wage" for anyone living in Hennepin County is estimated to be around $15.25 an hour, and that currently 150,000 workers in Minneapolis don't earn this much. The document says the rise in housing costs is making the city "increasingly unaffordable for many people."

An increase to a $15-an-hour wage would benefit around 71,000 workers, the city says, many of them Latino and black employees who are the worst hit by racial income disparities in the city.

The proposal also includes a "training wage," that allows companies to pay workers under the age of 20 a rate of 85 percent the minimum wage for their first 90 days on the job.

Minneapolis is able to pursue its minimum wage after Gov. Mark Dayton vetoed Republican lawmakers' "preemption bill" last week. It would have banned local governments from setting their own minimum wage or sick leave policies.

The controversy over tip credit

The proposal does not include the "tip credit" wanted by members of the city's restaurant industry. They argue that the tips servers receive should be taken into account when calculating their incomes, so that restaurants and bars don't have to increase their base wages.

Around 100 Minneapolis restaurants are supporters of the Pathway to 15 group, which argues that many servers earn more than $15 an hour right now because of tips. They say that forcing restaurants to increase their base wages from the $9.50 state minimum could lead to scrapping tips in favor of a "service charge" or raising menu prices, which could slash servers' incomes.

They prefer a system where tips are counted towards the $15 minimum wage, and if a worker falls below the minimum during a given week/month, the restaurant makes up the difference. Read about how one brewpub says it would be out $300,000 a year, and add a service charge.

But Mayor Betsy Hodges is not a fan of tip credit. Among her objections is that it disproportionality impacts female servers forced to rely on tips for income, which opens them up to sexual harassment.

The Star Tribune notes that Minneapolis – if it follows through on its proposal – would join other cities including San Francisco and Seattle in implementing $15 minimum wages.

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