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Appeals Court Upholds Minneapolis $15 Minimum Wage Ordinance

In response to the State of Minnesota Court of Appeals’ decision finding that the Minneapolis $15 minimum wage ordinance is a valid exercise of the city’s powers and not in conflict with state law, Christine Owens, executive director of the National Employment Law Project, issued the following statement:

“Workers and advocates have waged a years-long fight in Minneapolis to guarantee at least a $15 minimum wage for workers who struggle to make ends meet, and the city made history in 2017 when it became the first Midwestern city to adopt a $15 minimum wage law.

“Corporate interests have tried to derail the Fight for $15’s momentum in the Twin Cities by taking Minneapolis to court over its $15 minimum wage law, but today’s decision secures another major win for workers.

“Nationwide, workers have won $68 billion in raises since the Fight for $15 began in 2012, and cities like Minneapolis have played a key role in that success. After decades of declining wages and state and federal minimum wage laws that have become wholly inadequate in many places, more than 40 cities and counties have stepped up to the challenge of setting a more realistic wage floor. Cities like Minneapolis should continue to demonstrate how local democracy can support a worker-led vision for a more just and successful economy.”

Background: A Raise for 71,000 Working People in Minneapolis

The Minneapolis minimum wage ordinance passed by the city council on July 1, 2017 will gradually raise the minimum wage to $15 an hour by 2022 for employees of large businesses (more than 100 employees), and by 2024 for employees of small businesses (100 or fewer employees).[1] About 71,000 Minneapolis workers, or about 23 percent of workers in the city, will see their wages increase under the new law.[2]

The City of Minneapolis, like many cities around the country, has the right to exercise broad “home rule” powers over public health, safety, and general welfare of its residents. In Minnesota, cities have used their broad powers to enact laws pertaining to liquor licensing and regulation,[3] the production of milk and milk standards,[4] the manufacture, possession, sale, and use of explosives,[5] bicycle registration and operation,[6] animal control,[7] housing conditions,[8] food safety and selling,[9] movie theater operation,[10] and much more.

Addressing the consequences of low wages through local minimum wage laws is not new for cities. The City of Baltimore was one of the first cities in the country to adopt a local minimum wage in 1964.[11]

Since the Fight for $15 began in November 2012, more than 40 cities and counties,[12] and more than 20 states have adopted minimum wage increases.[13] These cities and counties include places like Santa Fe, NM; Washington, D.C.; Chicago, IL; Portland, ME; and Flagstaff, AZ.[14] More than 20 cities or counties have adopted a $15 minimum wage.[15]

Local Authority on Wages Empowers Communities

Local power to raise the minimum wage is particularly important for communities that face higher housing and living costs. In 2011, urban households spent 18 percent more than rural households.[16]

The Economic Policy Institute’s Family Budget Calculator estimates that a single worker with no children who works full-time needed over $17 per hour in 2017 to make ends meet in the Minneapolis/St. Paul/Bloomington metro area, and a single worker with one child working full-time needed more than $32 per hour in 2017 to afford the basics.[17] The cost of living in the Minneapolis area is among the highest in Minnesota.[18]

Local power to adopt a minimum wage has also become especially crucial when political gridlock prevents state legislatures from acting—for example, when the governor blocks action to raise wages, or when one or both houses of the legislature refuse to act.

Arguments Against Local Minimum Wage Laws Don’t Hold Water

Proponents of minimum wage preemption claim they are concerned about creating a “patchwork” of local employment regulations. However, backers of preemption laws also generally oppose minimum wage policies at the state level, too.

Businesses already deal with varying local, licensing, tax, and other regulatory policies. Local minimum wage laws—which generally impact just a few high-cost communities in a particular state—have proven effective and manageable for businesses.

The most recent study of city-level minimum wage increases released in 2018 documents the negligible impact on jobs of raising the minimum wage in six cities: Chicago, the District of Columbia, Oakland, San Francisco, San Jose, and Seattle.[19] It is also the first study to examine the effects of increasing the minimum wage above $10.[20] The study concluded that “a 10 percent increase in the minimum wage increases earnings in the food services industry between 1.3 and 2.5 percent” without a discernible negative impact on employment.[21]

Economic research shows that cities and counties can adopt a higher local minimum wage without becoming less competitive with surrounding areas. One of the most sophisticated studies of minimum wages looked at the impact of minimum wage rates in more than 250 pairs of neighboring counties in the U.S. that had different minimum wage rates. The study found no difference in job growth rates.[22]

Corporate Interests Have Already Tried and Failed to Block Minimum Wage, Earned Sick Time

In 2017, Republican legislators in Minnesota introduced several preemption bills that would strip cities in Minnesota of their right to enact a local minimum wage, as well as any earned sick time protections.[23]

The bills were a direct response to the earned sick time legislation passed in both Minneapolis and St. Paul and plans by the Minneapolis City Council to adopt a higher minimum wage this year.

Governor Dayton responded to a public outcry and vetoed the legislation.[24]

The preemption effort forms part of a corporate-backed agenda nationwide that opposes any improvement to workplace standards. The American Legislative Exchange Council (ALEC), a corporate-backed group with extensive lobbying resources and influence in state legislatures around the country, has drafted “model” preemption bills to prohibit local minimum wage laws since at least 2002.[25]

Twenty-five states have passed laws that block cities from enacting local minimum wage laws,[26] and at least 20 have banned local earned sick time laws.[27] In many of these cases, the state preemption laws were a direct response to successful local campaigns to raise the minimum wage or enact paid sick leave legislation.

Most Courts Have Rejected Business Groups’ Preemption Arguments

Having failed to preempt local minimum wages in the state legislature, business groups in this case have argued that the state minimum wage law already preempts local wage hikes.

The strategy of using both the legislature and the courts to try and invalidate a local minimum wage law is nothing new. In Missouri, for example, the City of St. Louis enacted its own minimum wage law. Business groups first sued the city, arguing that the state’s minimum wage law preempted the local law. After more than a year of litigation, the Missouri Supreme Court issued a decision upholding the St. Louis law, finding that state law did not, in fact, preempt the local law.[28] Business groups then rushed to the legislature. They succeeded in passing a preemption law invalidating the St. Louis minimum wage and any future local minimum wage laws within three months of the court’s decision.[29]

Almost all state courts that have considered whether a state minimum wage law preempts a local minimum wage law have not found preemption. Courts in Missouri, New Mexico, Maryland, and Wisconsin have held that their state’s minimum wage law set a minimum wage floor, not a ceiling.[30] Only Kentucky has found that a local minimum wage law was preempted by a state minimum wage law absent an express preemption provision.[31]

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The National Employment Law Project is a non-partisan, not-for-profit organization that conducts research and advocates on issues affecting low-wage and unemployed workers. For more about NELP, visit www.nelp.org. Follow NELP on Twitter at @NelpNews.