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MRA Report: $15 Minimum Wage Debate Continues in Minneapolis

The Minnesota Supreme Court ruled on August 31 that the proposed charter amendment to set the minimum wage in Minneapolis at $15 would not be on the November ballot. The ruling by our highest court followed an extended effort to have the issue decided by voters rather than by the city council. The pathway to the Supreme Court decision wasn’t a simple one.

• Proponents, organized by 15NowMN.org, succeeded in getting the required signatures on a petition to place a ballot item for a charter amendment on the November ballot to set the minimum wage in the City of Minneapolis at $15 an hour by 2020 for employers with 500 or more employees and by 2022 for smaller employers. Most franchised businesses would be considered large employers, no matter how few employees the local operator may have.

• The city attorney wrote an opinion that the proposal was not appropriate as a charter amendment because it was an ordinance in disguise and did not deal with the governance or organization of the municipal enterprise. The Minnesota Court of Appeals upheld a similar argument over medical marijuana a few years ago.

• The city council, following its attorney’s advice, voted two in favor (Alondra Cano and Cam Gordon), 10 opposed and one out of town, NOT to place the issue on the ballot in November. Several city council members stated they support the higher wage but not in the form of a charter amendment. City staff has been directed to prepare a draft ordinance for discussion, likely in February.

• The proponents appealed the council decision to the district court in Minneapolis.

• District Court Judge Susan Robiner ruled in favor of the advocates and ordered Minneapolis to place the question on the ballot.

• The city attorney, with support from the mayor and a majority of the city council, appealed the district court decision to the Minnesota Supreme Court and requested an expedited process.

• The Supreme Court accepted the appeal and scheduled oral arguments for August 30.

The Minneapolis Chamber of Commerce and a long list of other business associations—included both the Minnesota Restaurant Association and the Minnesota Lodging Association—filed an amicus, “friend of the court,” brief in support of the city’s position that the charter amendment should not be on the ballot in November. Well-known law firms Faegre Baker Daniels and Lockridge Grindal Nouen prepared the legal brief.

• Hennepin County extended the deadline for language to be on the ballot from August 26 to September 2.

• The Supreme Court overruled the District Court order and kept the question off of the November ballot.

Despite the court ruling, this issue will continue to be a major debate in Minneapolis.  

At an open meeting for the hospitality industry at Jax Café on Friday, August 26, we had about 35 business owners discuss the impact of a higher minimum wage on businesses, employees and guests. Some of the ideas shared include:

• If there is a Minneapolis-only minimum wage passed, restaurants will need to change the way they operate in order to continue in business. Adjustments will need to include higher prices for o guests and changes for employees.

• Most restaurant owners know their employees by name and often know their families. Our team members are not strangers. This isn’t an impersonal subject for owners or employees.

• Minneapolis is home to about 1,500 restaurants, most of which are small, locally owned businesses. Many nationally branded outlets are operated by local, family-owned franchisees, not by large global companies. The proposal will impact all outlets, but will be hardest for small operators who can’t spread the increased costs over many locations that aren’t located in Minneapolis.

• Unlike state and federal minimum wage laws, the proposed Minneapolis charter language makes no recognition of young workers, temporary workers or very small employers. This potentially puts the jobs of these groups, who include thousands of workers in our industry, in jeopardy. Our youth unemployment rate is already high, particularly for black and Hispanic teens.

• The proposed change may not accomplish what the advocates hope to achieve. A recent study by the University of Washington found that the minimum wage increase in Seattle from $9.57 to $11 an hour in 2015 resulted in a small increase in income for low-wage workers, on the order of a few dollars a week, but that the gains were offset by fewer hours worked per person and slightly less overall employment. The press has described the conclusion as “no net gain for low-income families.”

• The proponents of this change cite San Francisco and Seattle as examples of large cities on a path to a $15 minimum wage. But those communities are larger, have very large tourism industries and are surrounded by water, while suburbs surround Minneapolis, allowing for a huge competitive disadvantage for business and confusion for consumers.

• According to the Quarterly Census of Employment and Wages, there are about 19 employees per restaurant in Minnesota. Washington and Oregon had about the same level of employment a few years ago and now average 14.5 employees per restaurant. These states were among the first to raise their minimum wage and add employer mandates.

• The future of traditional tipping may be at risk from this proposal. A conversion to fast-casual or automated ordering will have a big impact on the people who work in the front of the house.

• Restaurant owners care about the welfare of their 26,000 employees. One very important way to strengthen Minneapolis working families is to develop and maintain a climate where businesses can succeed and grow in our city.

• A 58 percent increase to the current $9.50 minimum wage, already among the highest in the country, will certainly have a substantial effect on our prices and on the ability of Minneapolis restaurants to compete with businesses in other cities. An increase to $15 an hour represents an increase of 106 percent since 2014.

• Many good restaurants have high labor costs and large work forces because they cook from scratch, prepare ingredients on site and offer table service. Observers in Washington and Oregon report many conversions of former full-service restaurants to fast-casual formats and a trend toward less scratch cooking and more pre-processed ingredients.

Please check our website at www.mnrestaurant.org for more information, and please plan to be involved in this important debate in Minneapolis. 

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