St. Paul city leaders got more feedback Wednesday night on plans for raising the city's minimum wage, as the City Council inches toward drafting an ordinance to set it at $15 an hour.
Last week, the nonpartisan Citizens League released a 446-page report that had been commissioned by the St. Paul Foundation. It concludes that base pay in the city should be $15 an hour indexed to inflation, and that the minimum should phased in over four to seven years.
The current state minimum is $9.65 an hour for large employers and $7.87 and hour for businesses with annual gross revenues of less than $500,000. In Minnesota, only Minneapolis has begun phasing in a $15-an-hour minimum, which it will reach in 2022.
The league is leaving it to City Council members to figure out the particulars.
Those include possible exemptions for youth training and disability employment. But the biggest area of controversy is whether to allow a lower minimum wage for workers who earn tips.
A contingent of restaurant employees is pushing for such a carve-out. At a City Council hearing Wednesday, Matt Gray, a server at W.A. Frost, said he fears a big minimum wage hike will rattle the industry and result in drastic business model changes that'll lead to a big cut in his take-home pay.
"Our largest concern is not that patrons will stop tipping, but rather that restaurants' labor costs will increase by 55 percent and the only viable option for restauranteurs to remain open is to abandon the tipping model and shift to service charges," he said.
But servers and even restaurant owners are far from unified on a tip adjustment. Alicia Hinze, who owns the Buttered Tin in Lowertown, says the minimum wage should be the same for everyone.
"I care tremendously for my employees and the wages of my servers, as well as the wage of everybody else in my restaurant," she said. "I do believe a tip adjustment will hinder the servers as opposed to help them, and that's why I'm not in favor of that."
The rising Minneapolis minimum does not include an exception for tipped employees.
Few opponents of a citywide minimum wage showed up for Wednesday night's meeting. But St. Paul Chamber of Commerce President B Kyle, who co-chaired the Citizens League's study committee, says it could isolate the city.
"Establishing ourselves as an economic island can create so many challenges," she said. "It's a mixed bag in terms of its targeted impact on St. Paul's poorest residents. It'll disproportionately benefit residents of other communities who drive in to St. Paul for these higher wages, and will most certainly result in lost business hours and jobs where employers cannot absorb the externally mandated cost increases."
The Citizens League report also outlines concerns from St. Paul's five private colleges. Schools including St. Catherine University, the University of St. Thomas and Macalester College fear higher wages for work-study students could total as much as $2 million a year per institution. And the extra money would have to come from tuition paid by students.
St. Paul City Council President Amy Brendmoen says she and her colleagues will begin hammering out these and other issues in the coming weeks.
"We'll put together skeleton language of what we'd like to see in an ordinance, and from there fill in the substance and the bones with the meat that comes out of the conversations we'll continue to have going into the fall," she said.
Brendmoen says the council is on track to pass a minimum wage ordinance by the end of the year.