Murray endorses compromised min. wage boost

by Casey Jaywork | Editor in Chief

This article was published in the May ’14 issue of the Central Circuit.

Based on feedback from his advisory board, Seattle Mayor Ed Murray has recommended to the Seattle city council a $15 per hour minimum wage, to be phased in over a decade. The plan is a compromise based on negotiations between labor and business groups, and would phase in the min. wage increase over three to ten years for different types of workplaces.

How we got here

The debate over raising the minimum wage was sparked by fast food workers and aided by city councilor Kshama Sawant, who made it the centerpiece of her campaign. Murray, who successfully ran for mayor at the same time as Sawant, has cautiously embraced a $15 min. wage. His recommendation tempers labor’s demand for an immediate increase with business-friendly caveats such as a long phase-in period and a temporary tip-credit.

Sawant and the labor organization 15 Now were unsatisfied with Murray’s recommendation, and have vowed to place a less watered-down $15 min. wage proposal on the November ballot for voters to decide.

Polling by EMC Research has found overwhelming support among Seattleites for the min. wage increase, with 68% for and only 25% against.

How it would work

Most businesses of more than 500 workers (regardless of whether they all work in Seattle) would start paying an $11 min. wage in 2015, $13 in 2016, and $15 in 2017. (If recent rates of inflation holds steady, $15 in 2017 will be equivalent to a little over $14 today.) Then the $15 min. wage will increase annually to keep up with inflation.

Other businesses would have more time to phase-in, but they’d eventually have to catch up with the inflation-tied min. wage described above.

Large businesses which provide their workers with healthcare would get an extra year to phase in, reaching the same inflation-indexed min. wage as other large businesses in 2018. Small businesses and non-profits would have until either 2019 or 2021 to reach $15, depending on tips and employee benefits, and until 2025 at the latest to catch up with the $15 min. wage that was tied to inflation in 2017. By the end of the ten-year phase in, the Mayor’s office estimates the inflation-tied minimum wage will have reached $18 (which, remember, is equal to $15 in 2017).

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The question of whether and how to institute a $15 min. wage in Seattle has been widely discussed in the city’s press and in public events. One underlying dimension of this debate has been different ways of framing the economy. Conservatives have tended to emphasize microeconomic principles of supply and demand, claiming that higher labor costs will discourage employers from hiring workers. Liberals have replied that a higher min. wage will increase consumption, since workers are also consumers, and thus boost the city economy by creating higher consumer demand for goods and services. And Leftists such as Sawant have gone further, arguing that a min. wage is just one step towards a more radical transformation of an economic system that has historically exploited workers for the benefit of a rich minority.

While a vocal minority comprised mostly of small business owners has repeatedly warned that such an increase would hurt business and kill jobs, researchers from UC Berkeley who were contracted by the city found that modest min. wage increases have basically no effect on rates of employment. They also reviewed cases of larger min. wage increases, comparable to the jump from $9.32 to $15 that Seattle is considering, in San Francisco and Santa Fe. Again they found “no statistically significant effects on employment or hours.”

The Mayor’s recommendation to gently phase in a $15 min. wage is just that: a recommendation. The decision ultimately rests with either the city council, or with voters via the November ballot. Both have the authority to institute a new min. wage. While it’s all but certain that some kind of $15 min. wage is coming to Seattle, just what it will look like and how quickly it will get here remains to be seen.

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