The four-year hike to a $15 minimum wage in Minneapolis began this month, but the broader discussion and a lot of lobbying is just getting underway.
It was only a few years ago that the custodian union targeted $10 an hour as the wage floor amid the slow job-growth days after the Great Recession. The working stiff sure could make the case for a raise, after a generation of stagnating wages.
Today, the Twin Cities has record-low unemployment. Many employers are offering starting wages at $12, $13, $15-or-more per hour in factories, banks, offices and restaurants for even inexperienced-but-trainable new hires. Employee-hungry employers, from Graco to Target and U.S. Bancorp have effectively established $15 as the new floor for wages.
There are interesting twists to this evolving tale. Here are some of the issues that will surface in coming months:
• In Minneapolis, a Hennepin District Court judge last year declined a business challenge to stop the city from mandating a higher wage than the $9.50 an hour for Minnesota employers of more than $500,000 in revenue. The Minnesota Chamber of Commerce pulled out of the suit. Minneapolis-based Graco continues to remains in the suit.
• Graco, the city’s globe-spanning manufacturer, employs hundreds of workers at its Northeast plant on the Mississippi River. It also soon will consider whether to build a new headquarters in Minneapolis or move to one of its other facilities in the northwest suburbs. With its hourly employees, Graco pays all but a couple part-timers at least $15 to $30 an hour, including good benefits and stock that has led to significant wealth for many.
A third of the 750 headquarters and plant workers are minorities.
“We are not opposed to a $15 hourly wage,” spokeswoman Charlotte Boyd said. “Hourly employees who work in our Minneapolis manufacturing facility make an average of $27.54 per hour. But we are opposed to the city of Minneapolis affecting our ability to compete for talent by creating nonmarket-based rules and regulations.
“Both employees and employers need the flexibility to define what they need in compensation and benefits programs … and allow business to be competitive in their respective markets. A city mandating a minimum wage is a slippery slope … we have no ability to predict what the next mandate will be. Businesses cannot make informed long-term investment decisions in an uncertain environment.”
Graco CEO Pat McHale, a machinist as well as an accountant, grew up in Northeast and put himself through college working on a factory floor. New Mayor Jacob Frey might consider a visit. The city’s Graco-neighborhood riverfront plant contemplates little beyond parks and beaches.
• At huge U.S. Bancorp, where management last week said it would use some of its savings from the just-passed federal corporate tax cut to raise minimum wage to $15 an hour, there is an organizing effort to raise that wage to $20 an hour.
Adinah Zilton, 25, a Macalester College graduate, makes nearly $20 an hour as an account-set up coordinator at U.S. Bank. She started at Wells Fargo for about $11.50 an hour in 2015. Zilton is part of a national movement, funded largely by the Communications Workers of America, to organize and raise wages at big financial institutions. She struggled as a teller, standing all day. She likes her job at USB.
“We applaud the changes at U.S. Bank,” Zilton said. “A $15 per hour starting wage and the $1,000 bonuses will benefit thousands of front-line workers at U.S. Bank, but the raise to $15 is confirmation that we have been underpaid for many years. U.S. Bank management didn’t need to wait for a huge tax break that will give them windfall profits in order to do right by their employees.
“For years, we have been asking for a $20-per-hour starting wage. It’s only right that bank workers make a living wage in return for the massive wealth that our labor generates.”
• At restaurants, the flap over the new minimum wage is hotter than ever. This is a local boom industry, including brewpubs. Frey may need to revisit the decision not to include a “tip credit.” St. Paul is considering its own $15 minimum.
Owners at places such as Northbound Smokehouse & Brewpub and Hell’s Kitchen said a 20 percent hike in menu prices will not cover downstream wage increases, without a tip credit. That means bartenders and servers who already earn $15, $20 or $25 an hour would get a credit for a percent of their tips.
Jennifer Schellenberg, a bartender and server at Northbound in Minneapolis, hopes to influence St. Paul and get the tip credit retroactively instated in Minneapolis. She is a leader in the national Restaurant Workers of America to “preserve and protect tipping and tip credits.”
“We ran through our [financial projections] the other day at Northbound and even with a 20 percent increase in menu prices, we cannot make $15 an hour by 2024 and stay profitable,” she said. “I’m for the minimum-wage increase. Most of us fighting for a tip credit are liberals.
“There’s tremendous demand for cooks and other back-of-the-house workers. A skilled line cook starts above $15. But the economic consequences when a business has to give a 50 percent raise to the [tipped bartenders and servers] is not good.”
Minneapolis and St. Paul can’t lose focus on who they are trying to help with the phase-in to $15 an hour minimum wage. The leaders of the minimum-wage movement must demonstrate the kind of success that will lead to Bloomington and Duluth hopping aboard.
They can’t be an island or do things that hurt or kill the growing independent restaurants and other businesses.
Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at email@example.com.