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St. Paul Mulling Minimum Wage Changes

St. Paul’s exploration of a city-mandated $15 per hour minimum wage continues. The City Council is expected to take next steps, after receiving a Citizens’ League report in February. The report was presented as a scoping document, to flesh out issues for questions for specific sectors of the economy.

St. Paul City Council members would like to have their city’s ordinance ready for consideration by fall, said Council President Amy Brendmoen. She and other council members said they need to look at all aspects of what a wage increase would mean.

More than 60 people, many in red shirts and holding pro-wage increase posters, filled a February council policy session to hear the report. After the policy session, the group, $15 Now, held a press conference to urge swift action.  

Minneapolis last year approved an increase in wages to $15 an hour, to be phased in by 2024. The state minimum wage is $9.65 per hour for large employers and $7.87 for small employers.

The nonpartisan Citizens League has studied the wage issues since November 2017, said Pahoua Yang Hoffman, its executive director. More than 100 online responses were reviewed, and 277 people were spoken to in person. 

The initial study will inform further discussions and studies of the wage issue, said Hoffman. One key finding is that more than 40 percent of St. Paul residents live in poverty, more than any other city in the Twin Cities region. According to the Metropolitan Council, between 2011 and 2015, 40-plus percent of city residents were living on annual incomes within 185 percent of the federal poverty level, or $44,875 for a family of four.

Much of the debate in St. Paul thus far has centered on bars and restaurants, and the tip credit or tip penalty. The report notes that as many as 60 percent of restaurants fail within three or fewer years, and that labor costs are a factor. Thin profit margins mean many restaurant owners and workers are concerned that a minimum wage increase would result in reduced staffing or a restaurant’s closure.

“Owners are concerned about being able to operate a profitable business and workers are concerned about their jobs, especially those who have made service a career,” the report stated. It notes that servers fears restaurant owners could end tipping and substitute service charges.  

Minnesota law states that tips are the sole property of the direct service employee and employers cannot require employees to share their tips with indirect service employees.

In listening sessions, the Citizens League learned tipped employees are some of the highest-paid hourly employees in table-service restaurants, earning at least $18 per hour with minimum wage and tips, and in some examples earning more than $40 per hour. The league heard from more service workers than restaurant owners who demanded a tip credit. 

The possibility of a wage increase has hospitality business owners worried. Many restaurant owners did not think they could or would increase prices due to the competitive pressure. 

The report also outlines a series of questions for each employment sector, including the hospitality industry. Read the report at citizensleague.org. 

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