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Originally published May 1, 2014 at 8:52 PM | Page modified May 2, 2014 at 5:35 PM

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Mayor’s plan lifts minimum wage to $15 — eventually

Seattle Mayor Ed Murray announces a deal between labor and business to get all workers to $15 an hour over the next seven years.


Seattle Times staff reporters

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Today the losers and takers celebrate May Day by trashing peoples business and property. The something for nothing... MORE
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Seattle minimum-wage workers could be making $18 an hour in a decade — double the current wage — under a plan announced Thursday morning by Mayor Ed Murray.

The route is lengthy and complicated, and lacks the punch of “15 now,” but it has the support of almost all of the business and labor leaders on the mayor’s Income Inequality Advisory Committee and might head off competing ballot initiatives in November.

“Hopefully, on this day, we will take the first steps toward growing the middle class,” Murray said. “This is a historic moment for Seattle. It’s setting the standard for what a progressive city can do.”

It also was a victory for Murray, who formed the committee and announced the $15-minimum-wage goal before he took office in January. A week ago, the committee met for a final time without reaching an agreement and Murray stood in the spotlight of local and national media with nothing to announce.

A core group of negotiators kept working, though, and contacted committee members late Wednesday when they reached the deal.

The compromise plan calls for the city’s minimum wage to climb to $15 an hour, phased in over three to seven years depending on the size of business and whether workers receive tips or benefits in addition to salary. After that, the wage would be tied to the Consumer Price Index, with estimates showing it rising above $18 an hour by 2025. The current minimum wage is $9.32 per hour.

Murray said 21 of the 24 members of the committee, made up of representatives from labor, business and nonprofit organizations, supported the compromise deal. A week ago, just 13 could agree on a compromise. The mayor thanked his committee members for taking risks and showing courage.

The deal was finalized Wednesday night, after Murray returned from a study mission with the Seattle Metropolitan Chamber of Commerce to New York City. David Rolf, committee co-chair and president of SEIU 775, said the end of April was the deadline and the committee met it with about an hour to spare.

Rolf said the fast-food workers who went on strike last year were the real leaders who got the minimum-wage conversation started.

“They’re tired of waiting for Congress and CEOs to do the right thing,” he said.

The mayor’s proposal defines a small business as one having 500 employees or fewer. Large businesses with more than 500 workers will have to pay workers $15 by 2017 if employees don’t also receive health coverage. If they are enrolled in health-care plans, the business gets an extra year to reach $15.

Small businesses will have until 2019 to reach $15 an hour if their employees do not receive tips or are not enrolled in a health-care plan. All other small businesses will have to pay $15 an hour by 2021. They can claim up to $3 an hour for tips and health-care benefits, if those benefits are verifiable on paychecks. That credit phases out by 2025.

In all cases, the minimum wage would rise each year until the $15 goal is reached.

There are no exemptions for certain industries, organizations or classes of employees.

Large businesses would begin paying an inflation-adjusted wage once they reached $15 an hour. Small businesses would have until 2025 to catch up to the inflation-adjusted minimum wage.

By that year, all businesses would be at the same minimum wage, without credit for tips, benefits or other compensation. Assuming an annual CPI increase of 2.4%, minimum wage would rise above $18 an hour by 2025.

Fewer than 1 percent of businesses in the city have more than 500 workers, but those businesses employ about 30,000 workers, or about a third of those now making less than $15 an hour, according to a study done for the city by the Evans School at the University of Washington.

Howard Wright, CEO of the Seattle Hospitality Group and the other committee co-chair, said the agreement met his goals of giving businesses with generous benefit packages credit for the value of those plans, a phase-in for all businesses and no exemptions for any type of business. But he was disappointed that the phase-in time for big businesses with benefits is four years while small businesses with benefits or tips get seven.

“The employer community didn’t get everything they wanted, but neither did anyone else at the table,” Wright said.

The agreement will go to the City Council, which will be tasked with creating an ordinance. The Council will begin its review at 2:30 p.m. Monday and will hold meetings throughout May.

“Awesome victory”?

The long phase-in for some businesses and the definition of “small business” were immediately denounced by 15 Now activists who promote their initiative effort as the “real $15.”

Socialist City Councilmember Kshama Sawant, also a member of the mayor’s committee, said the agreement had been “watered down” by business and said she would work with fellow council members to approve a stronger measure.

“McDonald’s and Starbucks have no justification for keeping their workers in poverty for a day longer,” she said. 15 Now volunteers on Saturday voted to go forward with signature gathering to place a measure on the November ballot that calls for a three-year phase-in for businesses with fewer than 250 employees and an immediate $15 an hour for larger businesses.

Murray, though, said he expected the committee’s compromise deal would prevent other minimum-wage initiatives from appearing on the November ballot. He and Wright both said they don’t expect the business group OneSeattle to move forward with an initiative.

City Councilmember Nick Licata, who also served on the mayor’s committee, praised the compromise proposal and said he would urge his council colleagues to pass it with a minimum of tinkering.

“This is an awesome victory for the 100,000 workers earning less than $15 an hour in Seattle ... They will see their lives dramatically improved,” he said.

Only three members of Murray’s minimum-wage task force did not sign on to the agreement: Sawant; Maud Daudon, president of the Seattle Metropolitan Chamber of Commerce; and Craig Dawson, CEO of Retail Lockbox, a Seattle payments-processing company.

Daudon was in New York and unavailable for comment Thursday. The Chamber said in a statement that Daudon refrained from voting because its executive committee had not taken a stance “on this or any other minimum-wage proposal.”

Citing its operating bylaws, the Chamber said it would “evaluate any proposals” only after the City Council acts and possible ballot measures are filed.

Dawson said he voted no out of concern for small and minority-owned businesses that do not provide health-care benefits or other forms of compensation.

“They’re the most likely to fail,” he said. “Their daily income will be less than their labor costs. This is a significant increase in a very short period of time, and they will not be able to change their business models in order to meet this new law.”

Debating the impact

Seattle’s debate over a $15 minimum wage is being watched closely nationwide as cities and states take action amid a failure by Congress to tackle the widening income gap between rich and poor.

A Democratic proposal to raise the federal minimum wage to $10.10 from $7.25 an hour by 2016 did not get enough support on Wednesday to advance in Congress.

“When you contrast what we were able to do in Seattle as a community versus what they’re doing in the other Washington, it’s something everyone should be proud of,” said Seattle venture capitalist Nick Hanauer, a committee member and vocal supporter of raising the city’s minimum wage.

He said the proposal, if passed, will boost the economy by putting more money in workers’ pockets.

“The dumbest idea in economics is that if wages rise, employment will fall. It’s simply untrue,” he said. “The first effect of higher wages is more customers for businesses, which results in more hiring.”

But Seattle economist Peter Nickerson says some businesses simply can’t afford to pay their workers more and will cut jobs or move away to avoid a $15 minimum wage.

“In four or five years, the minimum wage in Seattle will be 50 percent above the minimum wage in Bellevue,” Nickerson said. “You’ll see businesses moving or not forming here, and making decisions to hire fewer workers or have fewer hours for those workers.”

Consuelo Gomez, co-owner of Marty K, a commercial property maintenance company based in Bellevue, says the proposal would require her to begin paying a $15 minimum wage to nearly 20 percent of her staff in 2021. She employs about 50 people, including 10 in Seattle, and says the seven-year phase-in is key.

“If it went to $15 right away, I would not be able to afford it,” she said, adding that she plans to extend the increase to employees beyond Seattle. “This is something I’m going to incorporate companywide. It’s only fair. I used to be a janitor, and I want to treat my employees the way I was not treated when I worked my way up.”

The proposal also seems to have won over former critics such as Matt Galvin, co-owner of Pagliacci Pizza in Seattle. He says he employs about 650 people, including nearly 500 full-time, putting him at the threshold for a four-year phase-in, since he offers benefits.

He still wants a lower minimum wage for trainees and the ability to count things like tips and benefits toward his pay obligation — but all in all, he said he could live with the mayor’s proposal.

“When the price of mozzarella goes up, we raise our prices. If the minimum wage went up, we’d probably raise our prices, too,” Galvin said. “I’m not going to say I’d close locations or lay people off. This gives us enough time to ease into it. Because of the way it’s graduated, we’d raise our prices over time in the 5 percent range.”

Seattle Times staff reporter Ken Armstrong and news researcher Gene Balk contributed to this story.

Lynn Thompson: 206-464-8305 or lthompson@seattletimes.com. On Twitter @lthompsontimes.

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com.



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