By Ian Simpson

(Reuters) - Baltimore's mayor said on Friday she would veto legislation that would nearly double the Maryland city's minimum wage to $15 an hour in a setback for advocates of a "living wage" for restaurant workers and other low-wage earners.

The legislation raising the minimum wage from $8.75 an hour would have put the city at a competitive disadvantage with neighboring cities and suburban counties, Mayor Catherine Pugh said.

Raising the minimum wage to $15 an hour would have linked Baltimore, a port city that once had a vibrant steelmaking industry, to efforts across the United States to boost the standard of living of many low-wage service workers.

A fourth of the residents of Maryland's biggest city live below the federal poverty level, according to the U.S. Census Bureau.

Maryland has already mandated a minimum wage increase to $9.25 an hour in July and to $10.10 in 2018.

Baltimore would become a "hole in the doughnut" if it required a $15-an-hour increase, the Democratic mayor said at a news conference.

The measure would boost pay for about 100,000 workers, or 27 percent of the city's workforce, according to an estimate from the Economic Policy Institute, a nonpartisan Washington think tank.

The City Council voted 11-3 this week to approve the increase, with one supporter of the measure absent. Lawmakers need 12 votes to pass it over Pugh's veto.

Even so, the legislation's sponsor, Councilwoman Mary Pat Clarke, said she was not confident that fellow lawmakers would be able to override the veto.

"To vote against a mayor's wishes sometimes changes people's minds, whatever the subject," she said in a telephone interview.

The vetoed measure would raise the minimum wage to $15 an hour by 2022 for businesses with 50 or more employees and by 2026 for businesses with fewer than 50 workers.

Elsewhere, New York and California are raising their statewide minimum wages to $15 an hour, along with such cities as Seattle, San Francisco and the District of Columbia.

Voters in Arizona, Colorado, Maine and Washington approved increases in minimum wages in November, but at rates below the $15 level. The federal minimum wage is $7.25 an hour.

But in Montgomery County, Maryland, a Washington suburb, the county executive vetoed a $15-an-hour basic wage measure in January.

(Reporting by Ian Simpson; Editing by Jonathan Oatis)