Both sides brace for impact of SeaTac wage measure
While the minimum-wage boost seems likely to pass after weeks of vote counting, workers and employers are wondering what the effect will be and when the legal wrangling will bring a final decision.
Seattle Times business reporter
SEATAC — In less than six weeks, small-business owner Brett Habenicht could face what he calls a deal breaker: A new $15-an-hour minimum wage for airport-related workers in SeaTac would add an estimated $100,000 to his annual payroll costs, wiping out a year’s profits.
“I don’t know how we’d do it,” said Habenicht, co-owner of a Quiznos sandwich shop in the airport’s B Concourse. “We’re up against a wall.”
Hourly-wage worker Chita Khamvongsa, who makes about $23,000 a year at a MasterPark lot on International Boulevard in SeaTac, also faces major change come Jan. 1: A $15 minimum wage would boost her hourly pay by 36 percent and bring more stability to her and her three young children.
“I’m living paycheck to paycheck right now,” she said. “If it happens, it happens. We just don’t know.”
SeaTac Proposition 1, which would raise the city’s hourly-wage floor for hospitality and transportation workers to $15 from the statewide standard of $9.32 and assure annual inflation adjustments, looks likely to pass after nearly three weeks of vote counting.
But people on both sides face uncertainty that probably will extend beyond the initiative’s Jan. 1 start date. Affected employees are mulling whether Proposition 1, if it holds up, will bring them bigger paychecks or fewer work hours, while affected employers at the airport wonder if they can revise leases that lock in their prices and rents.
With only 76 votes separating the Yes and No campaigns as of Friday, a recount is very possible, and a legal challenge to the Nov. 5 ballot measure likely will stretch even longer. Neither side appears close to waving the white flag.
“We’re still hanging in there,” said opponent Scott Ostrander, general manager of Cedarbrook Lodge in SeaTac.
Labor, which accounts for 60 percent of the hotel’s expenses, would cost 40 percent more under Proposition 1, Ostrander said. The hotel might have to lay off employees or reduce work hours, but he said it’s too soon to give details about the extent of those cuts.
“We prefer to create jobs rather than take them away,” he said. “It’s just a time of uncertainty and concern.”
Indeed, the stakes loom large even as the outcome remains uncertain: Some business owners say a $15 minimum wage could force price increases and closures. The measure’s backers say those doomsday scenarios fail to take into account the economic benefits of workers with more money to spend at local businesses.
Habenicht and his business partner, Dan Eberhardt, employ eight people at their Quiznos franchise in the airport. That puts them below Proposition 1’s minimum threshold of 10 nonmanagerial employees. But they plan to staff up to 10 employees over the holidays and other busy travel seasons, putting them in the measure’s cross hairs.
They ruled out trying to make do with nine employees to avoid compliance, on the grounds that it would lead to longer wait times for customers. They also pointed to the difficulties of attracting and retaining good employees at $9.32 an hour if larger employers covered by the measure are paying $15.
“To me, it’s not a business strategy to stay under 10 employees,” Eberhardt said. “We want to run our business in the most efficient way possible, and we’ve always done that.”
If Proposition 1 passes, Eberhardt and Habenicht say they’ll ask their landlord, the Port of Seattle, for a break on the airport’s so-called street-pricing rules. The Port prohibits merchants from charging more for a product than what it costs outside the airport — that is, on the street.
“I’m not against workers making more money,” Eberhardt said. “I’d love to be more profitable and pay my staff more, but with this business model, it’s impossible.”
He favors being allowed to charge a set amount above street prices. A little lenience, he said, would go a long way toward offsetting Prop 1’s costs without runaway prices.
“I know that if I were to charge $6 for bottled water — which I would never do — my customers would not buy bottled water from me,” he said.
The battle over Proposition 1 puts SeaTac at the forefront of a national debate about government’s role in boosting pay and benefits at a time when job growth is increasingly skewed toward low-wage work.
Socialist Kshama Sawant ran on a $15 minimum-wage platform in her successful bid to upset incumbent Richard Conlin for a seat on the Seattle City Council. New York City’s incoming mayor, Bill de Blasio, made the widening income gap between rich and poor a centerpiece of his campaign, saying he supports a separate standard above the statewide minimum wage. New Jersey voters this month approved a dollar increase in the state’s hourly minimum wage, to $8.25.
As of Friday, SeaTac Proposition 1 led 50.63 percent to 49.37 percent — a difference of only 76 votes out of 5,994 counted so far.
In addition to a $15 minimum wage, Proposition 1 would require employers to provide paid sick leave and to offer more hours to part-time workers before hiring additional part-timers. It also would make businesses keep employees for at least three months after an ownership change. Those requirements could be waived in a union contract.
Roger McCracken, managing partner of MasterPark, which gave $31,890 to fight Proposition 1, has said the company may have to automate some jobs if the measure passes.
“We’re on a razor-thin margin as it is,” he told Bloomberg News.
Khamvongsa, 25, who works at MasterPark as a cashier and receptionist, shares a two-bedroom apartment in Kent with her sister and three children. She says a $15 minimum wage would enable her to get her own apartment and maybe save up for a car.
Although she worries about the potential for layoffs, she also believes her five-year track record with the company makes her a valuable employee.
“It would be really great if it does pass,” she said.
Proposition 1 would cover an estimated 6,300 workers at 72 airport-related businesses in SeaTac, including large hotels and parking lots. Street-pricing rules apply only to businesses inside the airport, so affected employers outside could raise prices to offset a minimum-wage increase.
The last of the votes will be tallied Tuesday, before results are certified at about 3 p.m. There is no automatic recount for local ballot measures, but the No campaign could request one by end-of-day Dec. 2.
The campaign, in turn, would have to pay for the recount: 25 cents per ballot for a manual recount, or 15 cents per ballot for a machine recount. Because of SeaTac’s small voter base, the total cost would be nominal.
Common Sense SeaTac, a business-backed political committee opposed to the measure, raised $665,064 and has $145,848 unspent in its account, according to data filed with the state Public Disclosure Commission.
Yes! for SeaTac, a union-backed political committee that supports Proposition 1, has $122,318 left over after raising $1.4 million in cash and in-kind contributions.
A recount could be done within a week of its being scheduled, said King County Elections spokeswoman Kim van Ekstrom.
“We’re determined to see this to the conclusion. We want to know how many votes there were, and we’ll make a decision about a recount later,” said Gary Smith, spokesman for Common Sense SeaTac. “It’s obvious the electorate is very divided on this.”
What’s more, even a recount won’t end the uncertainty: Opponents of Proposition 1 filed an amended lawsuit Nov. 8 in King County Superior Court seeking to invalidate the measure.
Their amended suit, which names both SeaTac and the Port of Seattle, claims Proposition 1 is unenforceable because it exceeds the city’s initiative power and legislative authority.
The suit, filed on behalf of airport concessionaire Filo Foods, Alaska Airlines and the Washington Restaurant Association, argues that Proposition 1 “improperly encourages unionization and collective bargaining” among employees who “have not chosen to be represented by a union.”
The Port of Seattle said it’s reviewing its legal options but made no remarks about the lawsuit. The Port never has taken a stance on Proposition 1, saying only that it believes the measure “speaks to an important societal debate on wages and benefits.”
The Port already faces a $44 million claim filed in October by Eberhardt and three other airport merchants. They say they have lost millions from low foot traffic near their businesses due to flight changes, putting them at a competitive disadvantage.
Port Commission President Tom Albro said it’s too soon to comment on possible changes to the airport’s street-pricing policy if Proposition 1 passes.
“We expect there to be a recount. I don’t want to speculate on what we may or may not do if it does or does not pass, and does or does not meet the legal test,” he said.
“What I can tell you is, street pricing has been in place for over 10 years and is very popular.”
Proposition 1 comes amid record passenger traffic at the airport. More than 33 million passengers passed through Sea-Tac last year, up 1.2 percent from 2011. Year-to-date through August, the number of passengers boarding planes at Sea-Tac rose 4.7 percent from the same period in 2012.
Given the uncertainty over Prop. 1, Smith said, “There’s a lot of Tums being consumed.”
Seattle Times staff reporters Justin Mayo and Emily Heffter contributed to this story.
Amy Martinez: 206-464-2923 or email@example.com. On Twitter: @amyemartinez