Labor activists will file papers Monday to give San Francisco voters a chance to raise the minimum wage to $15 an hour - the highest in the nation.

While Congress balks over raising the federal minimum wage to $10.10 an hour, the city's November ballot will probably include the "Minimum Wage Act of 2014," which is designed to lift base pay roughly 40 percent from its current $10.74.

The ballot measure, designed by SEIU Local 1021 and groups including the Alliance of Californians for Community Empowerment, gives businesses with fewer than 100 employees until 2017 to lift wages to $15 an hour. But they must raise wages to $13 an hour by 2015 and $14 by 2016, according to the proposal.

Companies with more than 100 employees would have until 2016 to raise wages to $15 an hour. They must lift base wages to $13 an hour by January, the proposal says. The measure would cover all part-time, temporary and contract employees.

The proposal would also create a new Employment Standards Oversight Committee - with four members appointed by the Board of Supervisors and three by the mayor - to monitor how the new law is implemented and enforced.

"This is about lifting up everybody in the community, not just low-wage workers," said Shaw San Liu, a spokeswoman for the San Francisco Progressive Workers Alliance. "When low-income people have more money, they will spend it in the community, helping small businesses and everybody."

Big worries

While sympathetic to San Francisco's high cost of living and even supportive of raising the minimum wage, some small-business owners like Books Inc. President Michael Tucker say raising it so quickly will have significant repercussions.

"You can't put us in the same league as Walmart or the dot-coms," said Tucker.

Books Inc., which has six bookstores in San Francisco and 111 workers across the Bay Area, operates on a 2 percent profit margin. Tucker says a 40 percent jump in wages would add up to $500,000 annually. He fears he would need to consider layoffs or the closure of a store.

Then there's the "ladder effect." Should the measure pass, not only would Tucker have to raise the salaries of his minimum-wage workers, but also those of employees higher up on the pay scale.

"Supervisors are not going to want to be paid (the same) as the people they're supervising," he said.

If an employer doesn't raise all employee wages accordingly "it would make for some very unhappy employees - and that's not good," said Rick Karp, president of Cole Hardware, which has been in his family since 1959. Cole has 105 employees at four San Francisco locations.

Like Tucker, Karp supports raising the minimum wage - just not so quickly. His store's base pay is $12 an hour, but he says increasing it to $15 would cost him roughly $400,000 annually.

"I know, for one thing, there would be a hiring freeze immediately," Karp said.

Unlike major corporations, small-business owners say they don't have as much flexibility to raise prices to cover increased labor costs. Many are competing with online retailers, who can undercut brick-and-mortar prices, said Hut Landon, executive director of the San Francisco Locally Owned Merchants Alliance.

"This notion that you can just pass on the cost to the consumer isn't feasible in this day and age of people shopping online," said Landon.

Plus, Landon said, "how is a $15-an-hour minimum wage going to solve the housing crisis?"

A needed boost

Raising the minimum wage would help people like Raymundo Gutierrez and Hector Mojon. Both work at Kokkari Estiatorio restaurant, Guitierrez as a line cook and Mojon as a dishwasher.

Guitierrez can barely afford his $480 monthly share for the one-bedroom apartment near Civic Center that he splits with his four brothers - even with a second job cooking at Bistro restaurant several times a week.

Gutierrez never has a full day off and rarely more than a few extra dollars at the end of the month. Anything left goes home to his wife in Mexico, who cares for their child and the children of his sister- and brother-in-law, who died a few years ago. He also is helping out his father, who has had six operations on his colon and two on his eyes.

Gutierrez, who is a citizen, hopes to bring his wife and children to the U.S.

"I love what I do and where I work," Gutierrez said in Spanish through a translator. "But (the workload) is heavy."

Past hike

The city's last minimum wage bump in 2003 didn't cause spikes in retail prices or the unemployment rate.

Even though San Francisco has also mandated universal health care and paid sick leave in addition to its already high minimum wage - the nation's highest big-city base rate - private-sector employment grew 5.6 percent from 2004 to 2011, according to a recent study by UC Berkeley economists. Employers absorbed the costs largely through reduced turnover, lower absenteeism and fewer grievances. Restaurant prices increased just 2.8 percent, the study found.

What's different now is that there is increasing public sentiment that raising the wage floor would help close the city's income gap.

The divide between San Francisco's richest and poorest citizens is growing faster than any city in the country, according to a study released by the Brookings Institution last month. Advocates for low-income workers say raising the minimum wage would put an additional $8,861 annually in the hands of each full-time minimum wage worker.

Support for increase

Last month, The Chronicle reported that 59 percent of the respondents to a survey of likely San Francisco voters supported raising the minimum wage, while 36 percent opposed it. The survey, which was funded by several unions that support raising the minium wage, has a margin of error of 4.9 percent.

Other cities and states are contemplating raising the minimum wage. Last month, the Richmond City Council voted to raise its minimum wage from $8 to $12.30 an hour by 2017. Gov. Jerry Brown signed legislation last fall to raise California's minimum wage, currently at $8 an hour, to $10 by 2016.

San Francisco Chronicle staff photographer Carlos Gonzalez contributed to this report.