U.S. News

Minneapolis approves gradual minimum wage hike to $15 an hour

(Reuters) - The Minneapolis City Council approved a measure on Friday requiring large companies to pay workers least at $15 an hour by 2022, following moves by other liberal-leaning U.S. cities to raise the minimum wage.

The pay hike will be phased in citywide by 2024 and makes Minneapolis the first city in the Midwest to set a timetable for a $15 minimum wage.

The measure, an effective pay increase of 58 percent for workers at large businesses and 94 percent for those at small ones, was approved by an 11-1 vote.

Large businesses, including fast-food chains, must pay at least $10 an hour beginning Jan. 1, according to a news release from the city. On July 1, 2018, small businesses will have to pay $10.25 and the rate will go to $11.25 for large ones.

Supporters of the $15 minimum wage in Minneapolis and other cities believe it provides a floor of support for those on the lowest rung of the economic ladder, including many single mothers and children. But critics say required pay increases lead to layoffs and force some employers out of business.

“The bottom line here is that we have huge disparities in our country and this is one of the ways we can address that,” City Councilwoman Linea Palmisano said at the council meeting.

In Minneapolis, Minnesota’s biggest city, more than 70,000 workers stand to benefit from the increase, supporters say. But it is likely to be monitored closely for any negative impact on the labor market.

Minnesota’s current minimum wage - $9.50 for large businesses and $7.75 for small companies - is already the highest in the Midwest.

City Councilman Blong Yang, who cast the lone dissenting vote, said he was concerned the ordinance would overburden small businesses, including many owned by minority groups, and would raise prices in the city.

“We cannot make Minneapolis an island,” Yang said at the meeting.

Los Angeles, the nation’s second-largest city, as well as San Francisco, Seattle and some others have already approved measures to increase base pay to $15 an hour.

Under a law approved last year, California set a $15 target for all workers, which it plans to reach in 2023. New York State is also gradually increasing its minimum wage to $15 an hour for all workers under a bill signed by the governor last year.

Reporting by Alex Dobuzinskis in Los Angeles; Editing by Frank McGurty and Tom Brown