St. Paul approves phasing in higher minimum wage

St. Paul Mayor Melvin Carter signs an ordinance
St. Paul Mayor Melvin Carter signs an ordinance for a $15 per hour citywide minimum wage on Nov. 14, 2018.
Precious Fondren | MPR News

Updated: 7:05 p.m. | Posted: 4:35 p.m.

The St. Paul city council on Wednesday approved a $15 per hour citywide minimum wage, following the lead of Minneapolis and poising city workers to earn a wage that far exceeds the state's current minimum.

St. Paul Mayor Melvin Carter, who advocated for the wage hike during his campaign and in his inaugural address, said the move will mean a raise for about 56,000 workers in the city, nearly one-third of its workforce.

As he signed the ordinance shortly after the vote, Carter said getting the measure passed required teamwork.

"We've proven something in St. Paul that's far too rare in political discourse and that is that people from different walks of life or from different backgrounds still actually can come together and work together in the common interest of our city and get something done," Carter said.

The statewide minimum wage, which is indexed to inflation, will increase to $9.86 an hour on Jan. 1, 2019, for workers at larger companies, and just over $8 an hour for employees of smaller firms.

That means when the $15 minimum wage takes effect, it could amount to a nearly 90 percent wage increase for some people, in a city where, according to the council, over 62,000 residents have incomes below the federal poverty level — the highest poverty level in the state.

But it's going to take quite a bit of time for some of those raises to go into effect. Here's how the ordinance will be phased in.

• For city of St. Paul workers and employees or large corporations with more than 10,000 workers, the minimum wage will increase to $12.50 on Jan. 1, 2020, and then jump to $15 on July 1, 2022.

• For employees of businesses with more than 100 workers, the minimum wage will step up to $11.50 on July 1, 2020, with several other incremental, annual increases until reaching $15 on July 1, 2024.

• Businesses that employ between 5 and 100 workers must raise their minimum wage to $10 on July 1, 2020, and eventually to $15 on July 1, 2026.

• So-called "micro businesses," with fewer than five employees, must pay a minimum wage of $9.25 by July 1, 2020, and pay $15 by July 1, 2027.

And once the minimum wage reaches $15, it will be adjusted every year for inflation.

There are some exceptions in the ordinance: for youth training and apprenticeship programs, young workers at small employers, and players on the St. Paul Saints baseball team.

But the council chose not to include any exception for tipped workers, despite lobbying from restaurant owners who advocated for a so-called "tip credit," or "tip penalty," which would've allowed employers to count tips toward hourly wages.

Some hospitality workers also argued to have their tips count toward the $15 minimum wage, because they fear that if restaurants raise prices to compensate for wage increases, that customers might in turn reduce the amount that they tip.

In the end, council members decided they didn't want to carve out a special exception for tipped workers, although some council members have said that part of the policy could be amended in the future.

The St. Paul wage hike was informed by recommendations from the nonpartisan Citizens League, which released a 446-page report in August, 2018.

The ordinance approved by St. Paul lawmakers closely mirrors the minimum wage increase the Minneapolis city council passed in June 2017.

Both do not allow tips to be counted toward the minimum wage. And both gradually step up the wage over several years to $15 an hour.

The big difference is in the timing.

In Minneapolis, workers at large businesses with over 100 employees must pay workers $15 dollars an hour by July 2022. Workers at companies with fewer than 100 employees will earn $15 an hour in 2024, a full three years earlier than workers in the smallest businesses in St. Paul.

So far, it doesn't appear that the movement to hike the minimum wage has made much headway outside of the state's two largest cities. Ann Lindstrom, a lobbyist with the League of Minnesota Cities, said she's not aware of any other cities in the state that are considering or debating a minimum wage increase.

But Governor-elect Tim Walz said during the campaign he's open to a statewide $15 minimum wage and said in a tweet he'd "be proud to sign it into law if it came to my desk as governor."

MPR News intern Precious Fondren contributed to this story.