Lexington council to begin discussion of raising minimum wage from $7.25 to $10.10 an hour

The Urban County Council will begin discussions Tuesday on a proposal to raise the minimum wage in Lexington to $10.10 an hour over the next three years.

If approved, more than 31,000 people could see the first increase in pay this July.

Of the 31,300 people currently making less than $10.10 an hour, 61 percent are between the ages of 20 and 34, according to data provided by the Kentucky Center on Economic Policy, a Berea nonprofit that backs raising the minimum wage. The majority — 57 percent — are women.

Council member Jennifer Mossotti, who is pushing the proposal, said data show about 20 percent of Lexington's workforce would benefit from an increase in the minimum wage to $10.10.

"The bottom line is full-time workers in Lexington should not have to live in poverty," Mossotti said. "I understand that businesses have a bottom line, but so do employees. When workers prosper, so do communities and businesses in which they live. I think it's the right thing to do."

Mossotti said she hopes members on the Budget, Finance and Economic Development Committee will vote the proposed ordinance out of committee Tuesday.

"That's what I am hoping for," Mossotti said. "But it's hard to predict."

Council member Kevin Stinnett, who chairs the committee, cautioned that council members will likely need more than one meeting to fully vet the issue.

"These type of issues are typically not settled in one meeting," Stinnett said. "We have never had a hard look at Fayette County data. Most of the data that we have seen is based on statewide data. We have a stronger economy and a lower unemployment rate. Most employees don't make minimum wage here."

The proposed ordinance would phase in the minimum wage increase over three years.

The proposal would increase the minimum wage from the current federal minimum of $7.25 an hour to $8.20 an hour on July 1; $9.15 an hour on July 1, 2016; and $10.10 an hour on July 1, 2017. After 2017, the increase would be tied to the consumer price index.

The $10.10 minimum wage is higher than Louisville's recently passed minimum wage increase to $9 an hour over three years.

Another key difference between Louisville's ordinance and Lexington's proposal is that Lexington would raise the minimum wage for tipped employees such as waiters and bar staff.

Kentucky is one of only 13 states that has not raised the minimum wage for tipped employees since 1991. It has remained at $2.13, according to information provided by the Kentucky Center on Economic Policy.

Under the proposed ordinance, tipped employees' minimum wage would increase to $2.41 an hour July 1; $2.73 an hour on July 1, 2016; and $3.09 per hour on July 1, 2017.

"We paralleled the same wage increase as we proposed for minimum wage workers," Mossotti said. "That's still lower than what Louisville had originally proposed (for tipped workers) and still lower than what the federal proposal has included."

The inclusion of tipped employees in the proposed ordinance could receive a lot of push-back, Stinnett said. "We have a lot of restaurants," Stinnett said.

Stacy Roof, president and CEO of the Kentucky Restaurant Association, said the restaurant association is one of several business groups that filed a lawsuit Feb. 13 challenging the Louisville council's authority to raise the minimum wage. A hearing date has not been set.

"We oppose the city's authority to raise wage levels," Roof said. "It boggles my mind that the city would want to pursue this when this lawsuit is ongoing."

Mossotti has said she thinks Lexington should move forward with its proposal despite the Louisville legal challenge because Lexington minimum wage workers can't wait the 18 months it might take for that case to be resolved.

Roof said the vast majority of tipped employees make much more than minimum wage when tips are added to their hourly base wage.

"No one makes $2.13 an hour," Roof said. "Most tipped employees make more than any other restaurant employee — sometimes even more than the management."

Tipped employees were originally included in Louisville's proposal but were stripped from the ordinance after backlash from the restaurant industry.

Bob Quick, president and CEO of Commerce Lexington, the city's chamber of commerce, said he has not had time to study the proposed minimum wage increase but plans to attend Tuesday's meeting.

"We were surprised to see this on the agenda," Quick said. "We have not had much input on it yet."

In general, the Lexington business community has concerns if Fayette County raises its minimum wage and other counties do not. But Quick said he wants to learn more about the proposal.

"Businesses always want to make sure that they're on a level playing field," Quick said.

At least one member of council said Friday he opposes the ordinance.

Council member Ed Lane said he's not convinced the government should be in the business of setting wages.

"Philosophically, I think we have to rely on the free market system to determine wages and not 15 members of the city council," Lane said.

Increasing wages could increase costs; those costs could be passed on to consumers, he said.

"We also don't know what the impact could be on our surrounding counties," Lane said.

Vice Mayor Steve Kay said he's supportive of raising the minimum wage and has worked with Mossotti on the proposed ordinance.

"I think it's something that we should do," Kay said. "It would be good for so many people in our community."

Kay said he's not convinced raising the minimum wage will hurt businesses or result in job losses.

"The data from other cities that have instituted a minimum wage increase shows that the impact to business has been either non-existent or negligible, but the positives for employees has been substantial."

Since the federal minimum wage was increased to $7.25 in 2009, at least 21 cities and counties have adopted a minimum wage ordinance, according to data included in the council's packet for Tuesday's meeting.

Kay, Mossotti and Stinnett all agreed Friday that vetting data specific to Lexington will be key to the debate Tuesday and moving forward.

Mayor Jim Gray has not publicly supported the proposal. Even if the council approves a minimum wage hike, Gray could veto it. After the council voted in early February to send the issue to the Budget, Finance and Economic Development Committee, a spokeswoman for Gray said the local government was not the venue to decide wages and salaries. Gray's office did not respond to requests for comment Friday.

"The appropriate place to take this up is at the state or federal level," said Susan Straub, a spokeswoman for Gray, in February. "The mayor is on record as supporting an increase in the federal minimum wage."

A Bluegrass Poll released this week showed 46 percent of voters want the issue to be addressed locally rather than at the state level. Mossotti said that poll and a previous Bluegrass Poll show raising the minimum wage is a top issue for Lexington and Kentucky voters.

"It's a discussion that we need to have," Mossotti said.

This story was originally published March 13, 2015 at 5:37 PM with the headline "Lexington council to begin discussion of raising minimum wage from $7.25 to $10.10 an hour."