Editorial: An economic gamble in Seattle as $15 minimum wage becomes reality
Seattle Mayor Ed Murray’s minimum wage committee proposes a massive re-engineering of the city’s economy. The City Council should mitigate its likely consequences.
Seattle Times Editorial
UNTIL Thursday, the $15 minimum-wage debate was a thought exercise, a set of “what-if” games leading to sometimes fantastical predictions that supported or undermined arguments for Seattle to require the nation’s highest wage floor.
The rhetoric was untethered from reality.
The unveiling of a detailed $15 wage recommendation by Mayor Ed Murray’s select Income Inequality Committee last week allows businesses and workers to translate this radical idea to their own circumstances.
Murray deserves some credit for advancing the debate with a fresh take on the famed Seattle process. That process usually grinds expediency to dust beneath the quest for “consensus.” In this case, he employed negotiating techniques from his legislative career — locking a group of people who don’t naturally agree in a room until they compromise .
If Seattle must go to $15 — and that appears a political reality — there are elements to like in this deal. It includes significant phase-in time, allowing employers to adjust to higher costs, and it incentivizes businesses to contribute to health care, at least for some time.
But this should not be considered merely tinkering, but a re-engineering of the Seattle economy. A University of Washington study, based on 2007 data, found 24 percent of Seattle workers — 102,000 — make less than $15 an hour. A higher wage would significantly affect 27 percent of Seattle businesses, who have 30 percent or more of their workforce at $15 or less.
The rhetoric, until now, has downplayed the consequences of this major change. As the Seattle City Council dives into Murray’s proposal, it must keep in mind not only the workers directly affected.
A re-engineering this large will raise costs for Seattle’s large middle class, which is already struggling with Seattle’s rising cost of living. A $15 wage would not help a teacher in Greenwood, but would raise his or her restaurant tab.
If the council rubber-stamps Murray’s proposal, Seattle in 2015 would have a four-tier wage law, with staggered wage increases for businesses larger or smaller than 500 employees, with complicated accounting for health benefits and tips. With wages tied to the Consumer Price Index, Seattle would have an $18.13 minimum wage by 2025. The current minimum wage is $9.32.
The unintended consequences of this radical proposal should be mitigated.
During negotiations, representatives of the food-service industry sought to make tips count toward a $15 wage. But labor activists, who dislike tipping for philosophical reasons, largely won the debate. As a result, the take-home pay for Seattle servers will likely be reduced, because they might get less in tips. Don’t underestimate the price shock on restaurant-goers.
Instead, the City Council should allow some tips to count, and a lower, temporary training wage should be added.
Similarly, the City Council must heed concerns of nonprofits, which are not exempt. How will these nonprofits — which mostly live on public contracts — find money for higher wages? By requiring $15, the Seattle City Council should make a promise to nonprofits: it would help mitigate the cost, with more grants.
In both cases — food service and nonprofits — middle-class Seattle would bear the brunt. Many Seattleites might willingly absorb the higher costs, knowing their neighbors and friends are better off.
But don’t let the rhetoric of the minimum-wage debate obscure this fact: Seattle is gambling with its economy.
Editorial board members are editorial page editor Kate Riley, Frank A. Blethen, Ryan Blethen, Sharon Pian Chan, Lance Dickie, Jonathan Martin, Erik Smith, Thanh Tan, William K. Blethen (emeritus) and Robert C. Blethen (emeritus).