Starting January 1, 2012, the city will become the first in the nation that has a minimum wage above $10 an hour. A 32-cent hike will push the hourly pay to $10.24.
The wage is more than $2 above the California minimum wage and nearly $3 more than the working wage set by the U.S.
San Franciscans passed a proposition in 2003 that requires the city to increase the minimum wage each year, using a formula tied to inflation and the cost of living.
While workers may welcome the extra cash, some employers say the combination of a minimum wage hike, the city's payroll tax and a mandated medical care stipend could lead to layoffs.
The Associated Press contributed to this report.