$15 minimum wage marches on

By Josh Kelety | Campus News Editor

The heated debate on raising Seattle’s minimum wage to $15 per hour has developed dramatically over the past couple of months, leaving the question of ‘if’ in the dust and moving forward to ‘how and when’ such an increase will be implemented. Everyone is wondering what the final proposal will look like, and how it will affect Seattle as a whole.

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15Now supporters at march 15th rally (photo by Josh Kelety)

Since Socialist Alternative candidate Kshama Sawant’s successful bid for a City Council seat and last summer’s lively fast food workers strikes, the issue of raising the minimum wage has dominated Seattle’s political sphere. Both of last year’s mayoral candidates endorsed $15 per hour (the cornerstone of Sawant’s platform) and Mayor-elect Ed Murray commissioned a Income Inequality Committee to tackle the issue and have a quality proposal drafted by late April.

A February poll conducted by EMC Research showed that 68% of Seattle residents support a $15 per hour minimum wage.

So far the mayor’s committee has kept a tight lid on its closed-door proceedings, leaving the public to sift through a mess of varying voices from the business community, the passionate rhetoric of 15Now (the organization fielding the fight for $15 per hour), organized labor, opposing media outlets, and local town halls and forums.

However, recent policy shifts on the part of 15Now and Sawant in addition to the release of results from a city-commissioned study by the University of Washington on the impacts of a $15/hour minimum wage have changed the conversation dramatically.

The UW study, which was released on March 26th, showed that roughly a third of Seattle residents make less than $15/hour and that a realistic ‘living wage’ in the city is around $25/hour for one parent and one child. In addition, the study found that the majority of low-wage workers fell within industries ranging from foodservice and retail to office administrative support and childcare.

Previously, the conversation was dominated by an uncomfortable wedge between ‘no compromises’ supporters of the wage increase (a position previously encouraged by Sawant and 15Now), and the small business community, who fear that increased labor costs will force many of their operations to cut employee hours and benefits, fire staff, or worse yet; shut their doors.

“Up until now there has been a lot of black and white in the dialogue,” said Michelle Welles, Executive Director at the Capitol Hill Chamber of Commerce and a member of the Mayor’s Income Inequality Committee.

A March 5th town hall on $15 per hour reflected that division, pitting predictions of the possible collapse of small businesses in Seattle against calls for urgent action to combat poverty amongst low-wage workers.

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Income Inequality Committee members listen at town hall (photo by Josh Kelety)

Jasmine Donovan, Vice President of Marketing for Dick’s Drive-In, noted at the town hall that an immediate wage hike would force the company to cut benefits for their employees and raise prices, while Amanda Richards, a McDonald’s employee and SCCC student, said she wouldn’t have to rely on public assistance or her family to help her pay bills and make rent if the minimum wage were $15 per hour.

On a more local level, SCCC Public Informations Officer David Sandler said that while the college supports a higher minimum wage, the State Legislature has not appropriated funds to compensate for $15 per hour.

The conversation has taken a different direction since a March 15th 15Now rally, where Sawant publicly endorsed a three year wage phase-in for small businesses starting at $11 per hour in January 2015. This contrasted with her and 15Now’s original ‘no-exemptions’ platform.

Large corporations and businesses would still face an immediate hike to $15 per hour.

“We have responded to their [small business/non-profit community] stated concerns, now we will see if the concerns for small businesses and non-profit human services are genuine. Without small business to hide behind, will big business show its face?” said Sawant at the March 15th rally out side of SCCC.

Voices from national and multinational corporations and franchises such as McDonald’s and Subway have stayed largely silent throughout the debate, with only Starbucks CEO Howard Schultz coming out publicly in opposition to the wage increase.

“Some of the big players [major corporations] are not in the room [the Income Inequality Committee], aren’t coming to the table and don’t want to come to the table. They don’t want to be seen as a part of this conversation,” said Welles.

Small businesses on the other hand have been highly active in the conversation. Recent survey data (published by the Capitol Hill Seattle Blog) of 18 Seattle neighborhood commerce groups and the Greater Seattle Business Association shows that a 60% majority supported phasing in a 15 dollar an hour minimum wage over three years, with 86% of the survey respondents having 10 or fewer employees.

On Capitol Hill, an area saturated with many cherished neighborhood small businesses, views on the issue increase vary by business.

Ritu Shah-Burnham, owner of Z Pizza on Broadway and employer of 16 employees (paid at minimum wage), is adamantly against $15 per hour. “I think there is this misconception that small business owners and business owners have tons and tons of money, and that we’re making all kinds of cash. We’re not,” said Shah-Burnham.

On the other hand Jamie Lutton, owner of Twice Sold Tales book store on Harvard Avenue, said that her business could absorb the labor costs if applied through a multiple year phase in. She currently pays her three employees 11.50 an hour.

“Yea I’d be paying my employees more, but all of my customers would be making 15 dollars an hour,” said Jason Grimes, owner of Spin Cycle music store on Harrison and Broadway, and supporter of a wage phase-in.

The UW study also found that 34% of Capitol Hill and Central District residents make less than $15/hour.

Robby Stern, President of the Puget Sound Advocates for Retirement Action, described the touted potential negative effects on small businesses as overblown while speaking at the March 15th rally.

“”What has made the present job market difficult is the Wall Street- and bank-created recession, not the minimum wage,” said Stern.

Washington State’s minimum wage has been increasing annually since 1998, when voters opted to tie it to state inflation levels rather than the Federal standard. Lately, cities across the country have been discussing or actively accelerating wage hikes to combat high costs of living in urban areas that state-set minimums don’t necessarily reflect.

Typically, businesses have dealt with increased labor costs of minimum wage hikes through lower employee turnover rates, minor product pricing increases, and small decreases in company profits.

Some instances of city-wide wage hikes have resulted in employment growth. Santa Fe passed a ‘living-wage’ city ordinance back in 2004, raising their minimum wage 65% from $5.15 to $8.50, and saw minimal effects apart from a slight increase in employees per business.

A study done by the Chicago Federal Reserve found that the consumer spending created from the raising of the Federal minimum wage would offset the impact of increased labor costs.

In regards to claims of the potential negative effects on non-profit and publicly funded human service providers, Sawant noted at the March 15th rally that workers should not suffer just because of funding stagnation for city social welfare operations. “The people serving the poor are poor themselves,” she said.

“The work we do is essential to making this city run, and we have a right to live in the city that we serve,” said Jesse Inman at the March 15th rally, a employee at the Downtown Emergency Services Center, a non-profit homeless shelter.

Despite the small-business compromise, Sawant and 15Now made it clear that they are keeping the option of a ballot initiative on the table as a way to leverage pressure on the Mayor’s committee, should their final proposal prove inadequate. The organization filed the initiative on April 14th, calling for a phase-in for business with less than 250 employees and a immediate hike to $15 for those with more than 250. Total compensation was explicitly ruled out in the initiative. 15Now is holding a conference on April 26th to organize for a potential campaign to push the ballot measure.

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Kshama Sawant at March 15th 15Now rally (photo by Josh Kelety)

“If they [the committee] propose something with tip penalty, total compensation, phased in over five years, I think it is pretty clear that people would want a ballot initiative,” said Philip Locker, a 15Now spokesperson.

Tip credit, training wages, and total compensation (i.e. counting employee benefits and tips as part of a worker’s wage) are ideas that have been circulating the city-wide discussion. They are fiercely opposed by Sawant and 15Now.

WA State Law currently prevents employers from counting tip credit as part of wages owed to a worker.

So far a general consensus on defining the difference between small business and big business has yet to surface from the Income Inequality Committee, apart from 15Now’s distinction. They’re also mum about how to factor in local franchises of larger corporations.

Anticipation is high for the upcoming negotiations, given Sawant’s recent policy shift, the filed ballot initiative, and the results from the UW wage-increase study.

“We’ve been doing a lot of education [for the committee] and public outreach,” said Welles. “We haven’t really started to dig in yet and say ‘this is where I’m at’. That will happen now,” he added.

While raising the minimum wage has been a hot-button issue for the past several months, some see raising the minimum wage as only a small part in solving systemic poverty and income inequality.

Assuming that their proposal passes, Locker indicated that Sawant, 15Now, and Socialist Alternative will refocus efforts to properly fund public services, by shaping city tax code to be more progressive via corporate excise taxes, income taxes, and high property developer impact fees.

Welles referred to a minimum wage increase as being a “band-aid to stop the bleeding” rather than a final solution.

Follow Josh on Twitter: @Josh_Kelety

This article originally appeared in the April 2014 issue.

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