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UPDATE 2-Seattle approves hike in minimum wage to $15 per hour

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SEATTLE, June 2 (Reuters) - The Seattle city council voted unanimously on Monday to approve a sharp increase in the city's minimum wage to $15 an hour over the next seven years, marking the first time a major U.S. city has committed to such a high base level of pay.

Under the terms of the plan, businesses with fewer than 500 workers must raise wages to the $15 mark in the next seven years, an increase of more than 60 percent from Seattle's current minimum wage of $9.32 an hour.

Larger businesses must meet that level within three years, or four if they provide health insurance.

"We have worked alongside organized labor in Seattle who have campaigned vigorously for $15 (an hour)," said socialist council member Kshama Sawant, a supporter of the measure.

"We forced the establishment to lift the wages of 100,000 low-wage workers in Seattle, to transfer $3 billion from business to workers at the bottom of the pay scale over the next 10 years. We did it. Workers did it," Sawant said.

Seattle is among several cities leading the way in a national push by Democrats to raise minimum wages. The Seattle suburb of SeaTac approved an initiative last year enacting a $15 minimum wage for many workers, although airport employees were later excluded.

President Barack Obama has pushed Congress to raise the federal minimum wage to $10.10 an hour from $7.25, but has failed to win the backing of the Republican-controlled U.S. House of Representatives.

Proposals to raise the minimum wage have been considered in nearly three dozen states in 2014, according to the National Conference of State Legislatures. Increases have been approved in Connecticut, Delaware, Maryland, Minnesota, West Virginia and Washington, D.C.

The long lead-in time for implementation of the Seattle wage measure appears in part a compromise to placate businesses that had wanted to count tips and employer contributions for healthcare benefits toward the wage target.

"This legislation sends a message heard around the world: Seattle wants to stop the race to the bottom in wages and that we deplore the growth in income inequality and the widening gap between the rich and the poor," council member Tom Rasmussen said.

(Reporting by Jimmy Lovaas; Writing by Dan Whitcomb; Editing by Peter Cooney and Jim Loney)