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Last Ditch Lawsuit Filed to Save Minneapolis Jobs

A last ditch effort was launched yesterday to save the jobs of untold numbers of employees of small businesses in Minneapolis from the unintended consequences of the $15 minimum wage ordinance set to take effect January 1. The Minnesota Chamber of Commerce’s odds of prevailing in the lawsuit–or not–were broken down by Business North.

 The chamber contends the city legislation is unlawful on the grounds that it conflicts with existing state law. The action also asks the court to prevent Minneapolis from enforcing the measure.

“Employers know what they have to pay to compete for a talented workforce and to deliver goods and services at a competitive price,” Doug Loon, Minnesota chamber president, said in a news release. “A patchwork of local laws creates burdensome and time-consuming regulations on employers. They make it increasingly difficult for businesses to have a compensation system that works for employees and employer alike and hinder the creation of jobs.”

The Minneapolis minimum wage will bring maximum disruption for many businesses, even for some located outside the city.

The ordinance creates a new Minneapolis minimum wage for any employer with employees working in Minneapolis as few as two hours per week, regardless of whether their physical offices are located within or outside the Minneapolis city limits. The wage is increased to $10 per hour effective Jan. 1 and is ratcheted up to $15 in 2024 for small and large employers.

Loon said a patchwork of inconsistent local laws creates an administrative nightmare for employers, especially those with facilities in multiple locations.

“Businesses will spend more time understanding and complying with laws and less time innovating, growing and hiring new employees,” he said.

The legal action overlaps a similar lawsuit challenging the city’s paid sick leave ordinance that’s already on the books.

The Minnesota Court of Appeals ruled in September that the city may not require employers located outside the city limits to provide employees with certain paid leave. The court also ruled that, for now, the city could impose that mandate on employers located within the city. The Minnesota Chamber is appealing the ruling to the Minnesota Supreme Court. Similar rules will soon be considered in Duluth.

“The Minneapolis city government unfortunately has strayed into public policy that has always been left to federal and state authorities,” Loon said. “This and other wage and benefit mandates passed by Minneapolis – and passed and contemplated by other cities – threaten to open the floodgates to a whole new area of legislating for local governments. This overreach ought to be stopped, and municipal authorities should not stray in their authority. “

Graco, the Minnesota Recruiting and Staffing Association and TwinWest Chamber of Commerce joined the Minnesota Chamber in targeting the ordinance. But the City of Minneapolis is all in with Big Labor, according to the Star Tribune.

Minneapolis City Attorney Susan Segal said the chamber’s minimum wage lawsuit echoes its fight against paid sick and safe time.

“They have raised the same failed arguments as they raised in their suit challenging the city’s Sick and Safe Time Ordinance,” Segal said in an e-mail Friday. “We will be vigorously defending against this suit.”

The likely impact on jobs and employment opportunities is as predictable as city officials’ undying support for the $15 minimum wage. As American Experiment pointed out recently, a study by the University of Washington shows it’s already happening in Seattle.

The authors find that “the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016.” That’s $1,500 per annum.

In other words, the price of labor went up and people bought less of it. Labor demand curves slope downward.

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