Despite concerns about cost and effectiveness, the City Council on Friday overwhelmingly approved a new living wage ordinance.
The ordinance will require that companies receiving more than $100,000 in city contracts or subsidies pay their employees a minimum of $12.09 per hour (without benefits) or $10 an hour (with benefits). The ordinance exempts certain nonprofit organizations and will not supercede the wage levels negotiated in union contracts. It also has some teeth: companies that violate the ordinance can be fined and prohibited from receiving city contracts and subsidies in the future.
“It’s a very good small step,” said Council Member Dean Zimmermann (Ward 6), who joined 10 other council members in approving the measure. “I wish we could do a lot more.”
But Council Member Barret Lane (Ward 13) called the vote “politics instead of progress” and challenged living wage advocates to show how the city will be able to pay for the increased contracts costs at a time of limited budgets. “This is not paid for,” he said. “We’re going to have to cut something else. And what are we going to cut. We don’t know.”
City staff have estimated that the measure could cost the city between $500,000 and $11 million a year, and Lane argued that the added costs will have to come from other city programs or from higher property taxes. Advocates argue that the costs will be negligible because the higher wages will generate greater productivity. More than 120 municipalities currently have living wage ordinances on the books.
Ordinance co-sponsor Barb Johnson called the measure an “update” of the current living wage policy, which has been on the books since 1997. But she warned the packed house of union leaders and advocates that the new law would “challenge” the city. “People need to be aware that there will be adjustments,” she said.
Council president Paul Ostrow (Ward 1) also supported the measure, but urged labor activists to push Hennepin and Ramsey counties to pass a similar law so the city would not be “an island” in the region. He asked that city staff monitor that effort and report back to the council next September.
The ordinance passed on an 11-2 vote, with Lane and Council Member Dan Niziolek (Ward 10) voting against it. Mayor R.T. Rybak is expected to sign the measure.