PALO ALTO — Minimum wage workers can look forward to a pay raise come Jan. 1, after the City Council approved a wage hike Monday for the first time in the city’s history.

City leaders also expect the Policy and Services Committee to spend the coming months studying possible exceptions to minimum wage requirements after hearing from local restaurant owners about how the policy could hurt employees who do not get tips.

The council unanimously set the city’s minimum wage at $11 per hour, agreeing to exceed the state threshold because of Palo Alto’s high cost of living.

The state minimum wage is $9 per hour and will go up to $10 per hour on Jan. 1.

The council did not commit to a future $15 per hour minimum wage by 2018 but identified that as a goal needing further study.

Councilman Marc Berman and others on the council said it is important for Palo Alto to be on the same page as other Peninsula cities, but there is no need to rush the process.

“I think we all want to end up in the same place … but we shouldn’t all rush to be in the same place,” Berman said. “We didn’t all start in the same place at the same time.” The city plans to align its minimum wage by 2018 with cities such as Mountain View and Sunnyvale, which set wages at $10.30 per hour last year with annual adjustments for inflation.

Paul George, director of the Peninsula Peace and Justice Center, said a regional approach toward increasing the minimum wage is one way to protect businesses and ensure that not just one city bears the brunt of being a “guinea pig.”

Members of the center sat in the audience with yellow signs that promoted a $15 minimum wage by 2018 “everywhere.”

“It’s part of our overall priority to address economic inequality,” George said. “No one wants to hurt the employers but we want to help the employees.”

The council also heard personal stories from residents about how earning a minimum wage affects their lives.

Carol Lamont said that when she first moved to Palo Alto, she worked multiple jobs in day care, as a waitress and cleaning houses, to survive.

“Often we didn’t have electricity. Often I had to hitchhike or walk. We were homeless and hungry,” Lamont said. “It’s not right. We need to do better for ourselves and the people who work for us. We need to pay a $15 an hour minimum now. Why not $20 an hour? Let’s be realistic.”

East Palo Alto Councilman Larry Moody said the Palo Alto council’s leadership in raising the minimum wage should be celebrated.

Moody said many residents of his city work minimum wage jobs in Palo Alto and just want the opportunity to hope, to have the chance to raise children where there is access to good schools and quality of life.

“Many of them are at work right now, servicing your customers and helping in areas that help build the economy here in Palo Alto,” Moody said to those gathered for the evening council meeting. “We welcome and thank you for the opportunity to work so closely by … will they have the opportunity to continue to be your neighbors two to three years from now?”

Restaurant owners who attended the meeting said they want their workers to live well too. But these owner-operators believe local standards do little to actually improve the quality of life for minimum wage workers and instead hurt businesses.

Nancy Coupal, of Coupa Café, said the majority of workers in Palo Alto already earn more than the $11 the city approved for 2016.

To stay competitive with surrounding cities, Coupal pays her employees more than minimum wage. She said she believes there are more benefits to letting the market determine wages.

With the wage increase, businesses will have to pay higher employer and workers’ compensation taxes, and bump up pay for workers up the chain of command, Coupal said. And higher labor costs will result in higher prices of goods for consumers.

Michael Ekwall, of La Bodeguita del Medio, a full-service restaurant, asked the council to consider a total compensation approach, which he believes would more fairly impact workers who earn tips and those who do not.

Ekwall has 40 employees, 15 who make minimum wage.

With tips, the lowest minimum wage worker earns $23 per hour and the highest earns $50 per hour — giving them a higher wage than non-minimum wage workers.

Raising the minimum wage only bumps the pay for these 15 workers and not the others, Ekwall said.

“It’s a dysfunction of the system; They have to pay taxes on tips, so why doesn’t it count as income?” Ekwall said. “The more money we have to pay our minimum wagers, the less money we have to give staff who don’t get tips.”

Palo Alto’s ordinance is similar to one adopted last week by the city of Santa Clara, which increased its local wage to $11.

Mountain View and Sunnyvale have asked Palo Alto to commit to a shared phasing schedule that targets a minimum wage of $12 by July 2016, $13.50 by July 2017 and $15 by July 2018.

The Cities Association of Santa Clara County wants the 15 cities in the county to be consistent in their approach, stating that a lack of consistency would create unnecessary confusion for residents and competitiveness among cities and businesses.

Email Jacqueline Lee at jlee1@dailynewsgroup.com or call her at 650-391-1334; follow her at twitter.com/jleenews.