The climb toward a $15 minimum wage in Minneapolis begins Jan. 1, when workers at the city’s largest employers will start earning no less than $10 an hour.
Under the wage ordinance, which the Minneapolis City Council approved in June, employers with 100 or more people on the payroll will be the first to raise hourly wages and must reach $15 by July 1, 2022. Workers at smaller companies will get their first raise — to $10.25 an hour — July 1 and will reach $15 by July 1, 2024.
Already, some businesses are cutting back on employee benefits to offset the higher wages, according to one employment and labor attorney.
“I hear from lots of employers that the money has to come from somewhere,” said Cam Winton, director of labor management policy for the Minnesota Chamber of Commerce, an organization that fought the ordinance. “There seems to be this misconception that all employers have massive profit margins, and that’s simply not true.”
The pay increase in Minneapolis coincides with a statewide minimum-wage hike. Minnesota’s hourly minimum wage is $9.50 for large employers — those with annual gross revenue of $500,000 a year or more — and $7.75 for small employers. Those rates will rise with inflation on Jan. 1, to $9.65 for large employers and $7.87 for small employers.
An effort by the state Chamber of Commerce to stop the ordinance from going into effect failed in early December, when a Hennepin County judge denied the chamber’s request for an injunction. As part of her ruling, Judge Susan Burke said the ordinance applies not just to Minneapolis businesses but also to employers that are located elsewhere but send employees into the city for at least two hours a week.
That’s a challenge for some businesses, said Lisa Schmid, an employment and labor attorney with Nilan Johnson Lewis. Those that can afford to pay employees the higher wage for their whole shift — regardless of how much time is spent in Minneapolis — are choosing to do, she said, because it avoids the headache of paying different wages to the same worker.
Meanwhile, Schmid said, some of her clients are cutting back on PTO and health care in order to afford the increase to $10 an hour.
For low-wage workers, though, the pay increase comes as a long-awaited relief.
Alexander Doebler, 24, said he works up to 70 hours a week between Buca di Beppo and Eli’s Food and Cocktails in downtown Minneapolis. He said he’s hoping to eventually cut back to just one full-time restaurant job as the minimum wage rises — but even the small increase on Jan. 1 will make a difference.
“It’s a little stress off my shoulders,” Doebler said.