The Minneapolis City Council approved an ordinance Friday requiring city contractors to pay their employees enough to survive without food stamps.

The living-wage ordinance will go into effect in January and will require businesses that contract with the city, or those that receive subsidies of $100,000 or more, to pay employees at 130 percent of the federal poverty level, or the level at which families are no longer eligible for food stamps. Right now the livable wage is set at $12 an hour, or $10 an hour with health benefits.

A coalition of more than 20 labor, faith and community groups started organizing in May to push for a living-wage ordinance in Minneapolis, said Ryan Greenwood, lead organizer at Progressive Minnesota.

The coalition collected thousands of signatures from residents and approached council members in June to start drafting a proposal, Greenwood said.

More than 100 cities around the country have passed similar living-wage ordinances, but Minneapolis now has one of the strongest on record, he said.

The Minneapolis ordinance combines strong aspects from the other policies, he said.

The local policy covers both contracts and subsidies and ties the livable wage to a specific number – 130 percent of the federal poverty level. It also imposes fines on businesses that do not comply.

“It copied good ideas from around the country and brings the best practices of the laws together,” Greenwood said.

Sixth Ward City Council member Dean Zimmermann, who voted in favor of the ordinance, said paying workers a livable wage is about justice.

“Civilization is not judged by how it treats its most wealthy, but judged on how it treats its most vulnerable in society,” Zimmermann said.

He said lifting people out of poverty will decrease crime and eventually save the city money.

“The price of not (adopting) it is more people being put in desperate situations, and desperate people do desperate things,” Zimmermann said.

But Barret Lane, council member from the 13th Ward, said he could not support the ordinance because he had deep concerns about where the money for increased wages would come from.

“This is not paid for; this has a price,” Lane said.

He said the cost would either come from increased property taxes or cuts to other city programs.

“It’s a good thing to put more money in people’s pockets, but we also have to consider where that money comes from,” Lane said.

The ordinance could also adversely affect the employees it’s meant to help, said Dan Niziolek, from the 10th Ward.

Because the ordinance gives employers a choice of paying workers $10 an hour with health benefits, or $12 an hour without, businesses might choose to pay the higher wage and stop offering health benefits.

“That would put workers in a backslide,” Niziolek said.

Lane and Niziolek also raised concerns about businesses abandoning Minneapolis in favor of other cities in the region that don’t have a living-wage ordinance.

But the hope is Hennepin and Ramsey counties will follow suit and pass similar laws under Minneapolis’ leadership, said ordinance co-author Paul Zerby from the 2nd Ward.

“I frankly hope this spreads like wildfire,” Zerby said.

Greenwood said the coalition is working with the St. Paul City Council to pass a living-wage ordinance there.

Eleven of 13 council members voted in favor of a livable wage in Minneapolis, and Mayor R.T. Rybak has said he will sign the ordinance.