Opinion

The Great Debate

Four lessons from Seattle’s 60 percent minimum wage hike

By Pramila Jayapal
May 15, 2014

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Today, fast-food workers in 150 cities across America and 30 countries across the world are striking over what they say are low wages and unfair working conditions in order to achieve what Seattle is very close to implementing: a $15 per hour minimum wage.

The Seattle proposal is a giant experiment. Developed by a committee of business, labor and community representatives convened by Seattle Mayor Ed Murray, the proposal could be implemented as early as October. The wage hike would be the largest of any city in the country: a $5.68 per hour increase over 2.5 years for Seattle’s largest businesses. An estimated 100,000 workers would be affected; by one estimate the proposal would put $2.9 billion into the wallets of low-wage workers over the next 10 years. Other cities have raised their minimum wage without lasting negative impacts on the economy, but no other increase was as big as this one.

As a member of the advisory committee that developed the final proposal, here are four lessons from Seattle that would help other wage-hike proponents replicate our model.

1. Small is beautiful

If Seattle is any indication, voters don’t necessarily care about the largest businesses, but we do love our small businesses. Getting small businesses on board was key to building a proposal that could make it through the city council without too much tinkering. It was also necessary to fend off a big business-backed initiative that would have attempted to introduce a “tip credit” into state law, allowing companies to pay less than minimum wage if employees receive tips.

The committee recognized that small businesses have little profit margin to play with and could fold if they had to implement a 60 percent increase in minimum wage too quickly. So the proposal gives small business time: five to seven years to reach $15.

2. Support from big corporations is critical

There’s not a lot of love lost in Seattle for the fast food chains or Wal-Marts of the world. However, big business has enormous amounts of money and time to spend running ballot initiatives that oppose a higher minimum wage. That’s why the final proposal allows a 2.5-year ramp-up to $15, even for the largest businesses. It defines a small business as having fewer than 500 employees anywhere in the country, which prevents national chains from claiming a franchise with fewer employees as a “small” business. These were political, not policy, trade-offs. One hundred thousand workers still get a raise, 50 percent of them within the first 2.5 years.

3. Enforcement is key

seattle89Wage and tip theft is rampant in businesses of all size. Nationwide, Subway franchises committed 17,000 wage violations from 2000 to 2013. Strong enforcement means preventing violations before they occur, with education and monitoring to ensure all workers benefit from our city’s labor standards.

4. Doing the right thing is not the same as doing the easy thing

Some businesses will close, even if others open. Some workers will get laid off, while others will finally have the opportunity to live in the city they service every day.

Seattle is investing in the belief — prevalent until trickle-down economics turned things topsy-turvy — that we’re all better off when we’re all better off. Lifting the floor on wages for the most vulnerable workers grows the economy. It reduces income inequality by giving some of the fruits of labor back to the very laborers who buy the daily necessities that continue to fuel the economy.

This is the same message that hundreds of thousands of fast food workers are yelling across the globe, even as they walk off their jobs. The question now is: Who’s listening? And who is ready to follow Seattle?

PHOTOS: Demonstrators take part in a protest to demand higher wages for fast-food workers outside McDonald’s in Los Angeles, California May 15, 2014. REUTERS/Lucy Nicholson

Seattle City Council member-elect Kshama Sawant addresses a crowd during a rally in support of a $15 per hour minimum wage at City Hall in Seattle, Washington December 5, 2013. REUTERS/David Ryder 

Comments
7 comments so far | RSS Comments RSS

“Support from big corporations is critical?” No it’s not. It was just the path of least resistance for the political hacks who took part in the Mayor’s advisory committee. Someday soon labor leadership in Seattle will have to find the courage to fight, or others who are less afraid will continue to seize leadership of this movement from them.

Posted by theyarenot | Report as abusive
 

Amazing how ingrained the capitalist ideas have become that we instantly equate being poor to financial status when there is ample anecdotal evidence to the contrary.

Posted by Laster | Report as abusive
 

I love your assessment of the wage hike. I think your justifications as to why there should should be a minimum wage increase are very reasonable. The people who will be laid-off as a result of the wage increase can find other jobs. It is simply how the economy works – incentives should be provided to those people who are more productive and that can produce more and therefore should be paid more. Businesses have the right to expect more for the wage hike. Employees who are on the verge of being laid-off need to work harder. If not, they can find a job elsewhere. But government has the obligation to train people to meet the expectations of businesses. It is also the laid-off people’s right to get unemployed insurance. We’ll have to see if this wage hike experiment will work – will the positives be greater than the negatives?

Posted by Kabalen | Report as abusive
 

This is inflationary. People who want more than minimum wage should improve their skills and seek other jobs. How much skill does it take to flip a burger

Posted by stoneon | Report as abusive
 

If you think for one moment that if you pay more you will get more you need to share what you are smoking. People working for minimum wage will not get motivated by paying more. The whole minimum wage idea is a lot of baloney. You are telling me to pay somebody what you think it is worth not what I think it is or what I can charge for the product, if you like that idea then you pay them as they will not be working for me, I will move to a state that will allow me to not pay this ridiculous amount of money and still sell in Seattle through online sales while paying considerably less money for the labor. If it keeps up I can move to Guatemala and still ship to the USA.

Posted by captaindoc | Report as abusive
 

How can you be talking about lessons from Seattle when the increased minimum wage has not taken effect yet. Send a follow up article when fully implemented.

Posted by zotdoc | Report as abusive
 

Four Lessons from Economic Reality

1. Minimum wage jobs exist because they have low entry requirements and there is a very high supply of unskilled workers to fill them. The Economic Laws of Supply & Demand.
2. Raising the wage will only increase the price paid for the products or services provided or shut down the employers businesses. If it cost too much to eat out people will cook at home.
3. The higher you raise those wages the more motivated employers are to replace those workers with automation eliminating those job opportunities altogether.
4. Most people who are in long term minimum wage jobs are doing so because they lack the skills or motivation to do better. More money does nothing to motivate harder working.

Posted by BC5000 | Report as abusive
 

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