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Council President Paul Ostrow says he supports the concept of a living wage ordinance but doesn't support the entire proposal. (MPR Photo/Tom Scheck)

Any company that does significant business with the city of Minneapolis would have to provide employees a so-called living wage under a measure now under consideration by the city council. Supporters say the proposal would make sure businesses are adequately compensating their employees. But critics say the plan would hurt business and economic development in Minneapolis.

Minneapolis, Minn. — The living wage proposal would require businesses that receive more than $100,000 in city contracts to provide their employees at least $12.09 an hour, and $10.23 an hour if they provide their employees with good health insurance coverage. Businesses that receive city subsidies of $100,000 or more would have to create living wage jobs.

Council member Paul Zerby says any business or nonprofit that receives city money should be required to pay their workers a reasonable wage.

"If the city is involved, we owe it to ourselves and to those who are working for us and with us to provide a living wage," Zerby said. "We're talking food stamp levels here."

The proposal is backed by the Minneapolis Central Labor Union Council, several faith organizations and Progressive Minnesota. They say the proposal would advance the current living wage resolution, which is not enforceable.

The proposal before the city council would require city planners to collect payroll records of the affected businesses. If the business does not pay its employees the required wages, the business would have to pay a penalty and would not be eligible for future city contracts.

Ryan Greenwood with Progressive Minnesota says the proposal was designed so all workers would benefit.

"It should apply to anyone, whether you're a part time employee or a full-time employee that is working on a city contract," Greenwood said. "We know that somebody who has a part-time job doesn't mean they have part-time rent."

Small businesses, job training programs and those who create affordable housing would be exempted from the requirement.

The city council did not discuss the ordinance, but referred it to a committee where it will be discussed later this month. Some council members are enthusiastic about the proposal while others are more guarded.

Council member Lisa Goodman she said she hasn't seen the proposal, but went on to describe it as a "massive change to the city's living wage policy."

Council President Paul Ostrow says he supports the concept but isn't sure he supports the entire ordinance. He says council members need to be careful that they don't harm economic growth within the city.

"If there are provisions that might impact development potential in certain parts of our city where our constituents are really advocating for redevelopment, we need to be straight and honest about that," Ostrow said. "I think we need to make improvements in the ordinance but it's important that those choices are out there in front for people."

Todd Klingel with the Minneapolis Regional Chamber of Commerce says the wage increases could be harmful to the bottom lines of both business and the city. For example, he says high school students working in a health club would also have to be paid the proposed wages. Klingel says companies that do business with the city would have to pass the added costs on to the city.

"We have worked with the city to be as an efficient as they can with the taxpayer dollar," Klingel said. "But if the city's costs go up because of a new living wage ordinance, and there's increased cost to business which would then be passed on to the city...Does the city have those kinds of dollars to cover those increased costs?"

Klingel also says the proposal, if passed, would put Minneapolis businesses at a significant disadvantage with other businesses in the region. Mayor R.T. Rybak expresses the same concern. He says he supports most of the ordinance but worries Minneapolis could be the only city in the area to have such a requirement.

"The city of Minneapolis is proud to lead on this issue and other issues," Rybak said. "But we don't want to see advocates come to the city and have us pass something, and then give up on the idea of making this a solution that should be regional."

Rybak says he isn't sure how the city can balance the concerns of those who want higher wages with those who are concerned about business.

Hennepin County Commissioner Peter McLaughlin, Rybak's opponent in the race for mayor, says he fully supports the proposal.

Supporters of the ordinance are pushing for the full council to vote on the issue in the first week of November, just before Election Day.