$15 wage floor slowly takes hold in SeaTac
Six weeks after SeaTac’s minimum wage jumped to $15, the impact varies from business to business.
Seattle Times business reporter
For all the political uproar it caused, SeaTac’s closely watched experiment with a $15 minimum wage has not created a large chain reaction of lost jobs and higher prices, nor has it led to an embrace of union membership.
Six weeks after the new hourly minimum standard took effect at some hotels and parking lots in SeaTac, proponents and opponents alike say any evidence to gauge its impact is still anecdotal.
At the Clarion Hotel off International Boulevard, a sit-down restaurant has been shuttered, though it might soon be replaced by a less-labor-intensive cafe. The nearby Cedarbrook Lodge, by contrast, is undergoing a $16 million expansion.
Other businesses have adjusted in ways that run the gamut from putting more work in the hands of managers, to instituting a small “living-wage surcharge” for a daily parking space near the airport.
Meanwhile, workers are flocking to SeaTac to apply for minimum-wage jobs, and recipients of the mandatory pay raise say they’re enjoying the freedom of having extra money to spend or save.
The new surcharge of 50 cents a day at MasterPark in SeaTac is an attempt to recoup some costs of the $15 minimum wage, said managing partner Roger McCracken.
He said he also is considering cuts to MasterPark’s advertising budget, but he called layoffs “foolish” and rejected the notion that cashiers soon would be replaced by automation.
“Whatever we do, service is key,” he said. “We want an employee answering our phones, and anytime someone pulls into one of our lots, they’re greeted by a human being.
“That’s great news for our employees,” he added. “They’re pretty happy campers right now.”
SeaTac is being watched nationwide for the wage’s effects on both workers and businesses as policymakers at the federal, state and local level consider minimum-wage increases to try to reduce poverty and boost stagnant family incomes.
The referendum known as Proposition 1 took effect in January after a November election campaign that drew hundreds of thousands of dollars from labor unions and business groups. A judge’s last-minute decision blocked enforcement at Seattle-Tacoma International Airport and set the stage for a showdown before the state Supreme Court.
As it stands, the law applies to hotels with 100 or more rooms and at least 30 nonmanagerial employees, and parking lots with more than 100 spaces and at least 25 nonmanagerial employees.
An estimated 1,600 workers at a dozen airport-related businesses in SeaTac are believed to be covered by the law — about a quarter of the 6,300 people who had been expected to fall within its scope.
A complete list of employers that must comply is elusive: The city of SeaTac provides no such list, and many hotels thought to be near the minimum size threshold declined to comment.
Even management at the Cedarbrook Lodge, which had been a vocal opponent of the minimum-wage measure, went quiet after breaking ground in December on a project to add new rooms and a luxury day spa.
Cedarbrook general manager Scott Ostrander, a former co-chairman of the campaign against Proposition 1, said when announcing the expansion that it would generate additional revenue to help pay for higher wages.
Gary Smith, formerly a spokesman for opposition group Common Sense SeaTac, said he’s heard “a number of businesses made sure they fit the small-business category, even if they had to make adjustments to do that.”
Proposition 1 created an uneven playing field by handing some businesses a cost advantage over their larger rivals, Smith said.
“It makes this artificial distinction in the community that’s probably not healthy for the economy, and it’s certainly unfair,” he said.
To be sure, SeaTac’s $15 minimum wage has claimed some casualties.
The 215-room Clarion Hotel closed its full-service restaurant in December, laying off 15 people, said general manager Perry Wall. The hotel also let go a night desk clerk and maintenance employee and is considering a 10 percent increase in room rates for the spring travel season, Wall said.
He estimates that without a reduction in head count, the hotel’s annual payroll costs would have increased $300,000. It still employs about 30 people for jobs Wall describes as more in-demand than ever.
“I just think unskilled workers are going to have a harder time finding jobs,” he said. “You’re going to have people from as far away as Bellevue or Tacoma wanting these jobs, and they’re going to come with skills and experience. For $15 an hour, they’ll go that extra distance.”
Others say workers who already made at least $15 an hour want a raise to stay ahead of their less-experienced colleagues, leading to tense relations between labor and management. Some managers say they’re covering shifts for hourly-wage workers who are out sick to avoid paying overtime, and generally are doing more to hold down labor costs.
“I’m not resentful, of course. I love how it benefits my staff,” said Homer Ignacio, assistant manager at WallyPark, which employs about 80 people at three SeaTac locations. “But it’s almost a cutback for me because I’m a salaried employee, and I’m having to pick up the slack when people go home earlier than before.”
Many staff members are paid minimum wage and now earn 60 percent more, he said. WallyPark has adjusted without layoffs and is getting an unprecedented level of attention from job seekers, he added.
“It’s a lot more applications than ever before. I’ve gotten at least five applications a day since Jan. 1.”
Among the applicants is Sherry Marsing, 56, who recently stopped by WallyPark in search of a job after moving to SeaTac from Virginia.
“I will take what I can get because I need a job. I’m not looking only at $15-an-hour jobs, but it would be nice,” she said. “In Virginia, the minimum wage is $7-something.”
In addition to a $15 minimum wage, Prop 1 requires affected employers to provide paid sick leave, promote part-time workers to full time before hiring additional part-timers and retain employees for at least 90 days after an ownership change.
Arindrajit Dube, associate professor of economics at the University of Massachusetts-Amherst, predicts the lessons learned from SeaTac will take a long time to decipher.
The U.S. Census Bureau provides a breakdown of jobs by business sector in SeaTac, but the most recent year for which data is available is 2011.
“Being able to tell what’s happening will be limited by a number of factors, not the least of which is seasonality,” Dube said. “Month to month, there are differences in the pace of business activity, prices and employment. January and February usually are the slowest months.”
Anthony Anton, president and CEO of the Washington Restaurant Association, which opposes the wage increase, compares the situation to 1998, when voters approved raising the state minimum wage to $5.70 in 1999, then to $6.50 in 2000, followed by annual inflation adjustments.
“After the 1998 minimum-wage measure, it took 2½ years for the final impact to settle,” Anton said. “Initially, everyone tried everything.”
Among the lasting effects, he said, are fewer employees per restaurant, more frequent price increases and small differences in pay between workers regardless of their skills or experience.
At the SeaTac Radisson, one of eight nonunionized hotels believed to be complying with Proposition 1, things are business as usual, said regional general manager Ray Assemi. He said there have been no layoffs or price increases but that it’s too early to determine the cost effects.
“We basically go by what the market demand dictates,” he said. “With any change, you have to wait to see what the cost structure is. A few months need to go by.”
SeaTac has become a testing ground for raising the minimum wage to a more livable level amid widespread concerns about the growing income gap between rich and poor.
President Obama is pushing for an increase in the national minimum wage to $10.10 an hour from $7.25, the rate it’s been since 2009.
As of January, 21 states and Washington, D.C., have minimum wages above the federal requirement, compared with 18 two years ago. Nine additional states could join them by the end of 2014.
In Olympia, House Democrats want to lift Washington’s hourly wage floor from what already is the highest of any state, at $9.32, to $12 by 2017.
And in Seattle, Mayor Ed Murray used his first news conference Jan. 3 to direct his staff to move toward raising the minimum wage for city workers to $15, with a broader mandate still under review. A task force made up of local business, community and labor leaders is expected to recommend legislation this spring.
Critics charge that SeaTac’s law is a backdoor attempt to drive unionization among hospitality and transportation workers, because it allows a waiver for unions.
While local labor leaders want to see more hotels unionized, that has not happened since Prop. 1 took effect, said Stefan Moritz, political director at Unite Here Local 8.
He said SeaTac’s three large unionized hotels will continue to provide good wages and benefits and safety protections, and “take-aways” are not part of the continuing discussions about the law’s impact on union workers.
“All workers, nonunion and union alike, will see improvements,” Moritz said.
The two sides of the Proposition 1 battle spent $2.2 million combined in an election campaign that’s believed to be Washington’s most expensive ever on a per-voter basis.
The Nov. 5 ballot measure passed by only 77 votes out of about 6,000 cast, meaning each vote cost $370.
Opponents Alaska Airlines and the Washington Restaurant Association pressed their case in court and found some success with an argument that the law violates the Port of Seattle’s exclusive jurisdiction over the airport.
King County Superior Court Judge Andrea Darvis ruled in late December that the municipal ordinance could not be enforced at the airport but is legally binding at nearby hotels and parking lots.
Heather Weiner, spokeswoman for Proposition 1 advocacy group SeaTac Committee for Good Jobs, said a showdown before the state Supreme Court is expected this spring.
The group also is calling on the Port to adopt the law at the airport through an interlocal agreement with SeaTac. The Port has said it wants to be part of the solution to income inequality, but also sided with Alaska Airlines against the measure.
For now, the clear winners are low-wage workers such as Vicky Castro, 23, a cashier at WallyPark in SeaTac.
Castro said she’ll use her 60 percent pay raise to jump-start her college savings. She’s studying biology at Highline Community College and hopes to transfer to a state university for her bachelor’s degree.
“I really want to go full force in school,” she said. “I don’t want to be a cashier forever.”
Amy Martinez: 206-464-2923 or email@example.com. On Twitter: @amyemartinez