Goldy

Apart from it being total bullshit, I’m not sure that the “total compensation” crowd has fully thought through their proposal, particularly when it comes to health care benefits.

Because total compensation would allow employers to deduct from their minimum wage obligation the cost of providing health insurance, it effectively shifts the entire cost of health insurance premiums onto the backs of minimum wage workers. Accept your employer provided health insurance and the cost of the employer’s share will be deducted from your paycheck. Cancel your employer provided health insurance (say, because you are covered under your spouse’s insurance), and your take-home pay will rise according.

Whatever your decision, your employer’s cost of labor remains exactly the same. As such, your health insurance benefit ceases to be a “benefit” when your employer’s share of the premium is effectively zero.

And yet under the Affordable Care Act (you know, “ObamaCare”), employers with 50 or more employees will soon be required to offer  affordable coverage to all of their full time employees—”affordable” meaning that the worker does not have to spend more than 9.5 percent of income on premiums.

So what constitutes “income” and what constitutes “premiums” under a total compensation system? These are questions that would surely be litigated, but a quick look at the typical American pay stub makes clear that your federal taxable income (the relevant figure for ACA purposes) is your compensation minus the cost of your health insurance premium. So if your entire premium—including the alleged employer share—were deducted from your paycheck, it would lower your income accordingly.

Now presume a total compensation $15 minimum wage in which your only benefit is health insurance at a cost of $2 an hour ($344 in monthly premiums divided by 172 hours of full time work), bringing your federal taxable income to only $13 an hour. But your $2 an hour in premiums would come to more than 15.3 percent of your $13 an hour income, meaning that your premiums would not qualify as “affordable” under the 9.5 percent rule of the ACA.

Business lawyers might argue that the employer portion of the premium should not be counted toward the employee’s insurance premium costs, but that’s not how it would appear on the pay stub. Both portions of the premium would be listed as deductions to be subtracted from gross earnings. Thus any distinction between the two becomes purely fictional.

Throw in additional deductions under total compensation, and the employer’s ability to meet the ACA employer mandate becomes even less mathematically plausible, exposing the employer to up to $3,000 in annual penalties per employee. Like I said, I’m just not sure the total compensation camp has entirely thought this thing through.

But perhaps just as important to the larger discussion is how the ACA employer mandate rules once again expose total compensation for the lie it is: it simply does not pay $15 an hour. Thus any suggestion that total compensation proponents “aren’t arguing with the $15-an-hour goal,” is a lie as well.

So, who are the people behind the real anti-$15 minimum wage OneSeattle Coalition, not the hilariously fake 1Seattle.org website the Seattle Times stupidly quoted? The video below helpfully explains:

Now you know.

A decade ago, in reluctantly rejecting a guest column I had submitted (a modest proposal on how to increase per-student spending in Washington’s public schools), an editor at one of our region’s dailies lamented that, alas, too many newspaper readers lack “the satire gene.” Well, apparently some newspaper reporters lack this gene as well:

Business leaders aren’t arguing with the $15-an-hour goal. In fact, the OneSeattle website calls the current state minimum wage of $9.32 “undeniably less than it costs to support yourself.”

Yeah, that’s right: Seattle Times reporter Lynn Thompson quotes the wonderfully satirical fake OneSeattle website from a page that is so outrageous (it counts time texting on the job toward total compensation) that it’s hard to believe an informed reader wouldn’t get the joke. But she didn’t. Which has the 1Seattle.org folks crowing.

Amazing.

In other questionable reporting news, the Seattle Times taps a Von Trapp’s bartender as the voice of tipped employees opposing a $15 minimum wage, just days after printing an anti-$15 guest column from Von Trapp’s owner. Hmm.

UPDATE: Ha! I’ve once again earned my reputation as the Seattle Times’ volunteer ombudsman:

Information in this article, originally published April 19, 2014, was corrected April 21, 2014. A previous version of this story incorrectly attributed two quotes to business group OneSeattle’s website.

Okay, now that I’m back writing at HA (at least for the moment), I’m absolutely sick of staring at it’s five-year-old design. It’s cramped and busy and the sidebars are filled with a bunch of outdated bullshit. (Yes, I know.) And it fails to take advantage of all the latest technology that allows websites to automatically resize to fit various screen sizes from desktop to tablet to phone.

So I’m doing a redesign.

Nothing fancy. Very sparse. Lots of white space. Larger text. Wider content column. Won’t win any design awards. But my goal is to make the site a lot more readable than it is today, regardless of the device you are reading it from.

And as long as I’m under the hood, there’s room for functionality improvement too, so I’m interested in hearing from the HA community what changes you might like to see implemented. For example, threaded comments? I’ve always been enamored of threaded comments, although the current chronological display has its merits too. Or how about requiring comment registration? There are available plug-ins that can enable registration via your Twitter or Facebook account, so it wouldn’t be much of a hassle.

And of course, there’s the design and layout itself. Like I said, I’m not planning anything fancy. I’m not a designer. But if you are, and you’ve got some (free) ideas, or maybe you even want to take a crack at a new (and free) logo, let me know.

Or not. One way or another I’m tossing out this tired old template.

Exodus 22:21
“Do not mistreat an alien or oppress him, for you were aliens in Egypt.”

Discuss.

If you can’t beat ’em, join ’em, that’s what I always say, which is why I’ve decided to supplement my unemployment by driving part-time for Hoopty™, Seattle’s newest ride-share company!

Hoopty fully embraces the efficiency of the unregulated free market to deliver the future of ride-share today, conveniently offering both prearranged and hailed pickups through your smartphone—just call, text, or email me from your smartphone, and I’ll come pick you up! All of our vehicles have passed the state emissions test, and are guaranteed to have been driven fewer than 100,000 miles (at least for the next 600 miles or so). You can recognize Hoopty by the cracked windshield, the menacing dog, and our signature styrofoam “TAXI” sign crudely taped to the roof of the car.

Take that, pink mustache!

With Hoopty, you’ll enjoy our casual user experience, sitting right up front with the driver. Unless the dog lets you into the back—Feisty hasn’t bitten anybody in years, and even then, not much more than a nip, so you’ll probably be okay—just don’t make any sudden moves or loud noises.

At the end of your ride, your Hoopty driver will be happy to take your credit card, but unlike Lyft, Sidecar, and Uber, we also take cash and barter. (For example, we could really use a new windshield. And maybe some brakes.) And of course, all Hoopty drivers are carefully screened and fully insured. Don’t worry how much insurance. Just trust us!

And finally, at Hoopty, we guarantee that you get what you pay for! Hoopty doesn’t waste money on bells and whistles like app development or car washing or routine vehicle maintenance, allowing us to offer you the most affordable ride-share in Seattle. Tired of paying Uber’s infamous surge pricing? We promise to charge you something less than that, or your money back!

Ready to try Hoopty? Feisty and I will be cruising downtown Seattle this afternoon picking up hailing passengers; just look for the menacing dog and the styrofoam sign, and scream out the special offer code: “Goldy, I need a ride!” As for Hoopty’s legality, well, it’s not like Lyft, Sidecar, and uberX have a monopoly on breaking Seattle’s taxi and for-hire laws. So while we don’t technically have a for-hire license or anything, we don’t expect the Seattle police to bother to stop us, let alone issue a citation. And if they do, we’ll just sue the fuck out of the city for selective enforcement.

Hoopty™: Because if Wall Street backed ride-share companies can break the law, anybody can!

I’m not sure what all the hoo-hah is over the current “impasse” on a $15 minimum wage. Mayor Ed Murray’s Income Inequality Advisory Committee is exactly that: an advisory committee. As a body, it is empowered to do nothing more than advise. If it fails to come to a consensus, so what? Either way, it is the city council that will ultimately write and pass Seattle’s $15 minimum wage ordinance, whatever the advice of the mayor or his committee.

Now if the advisory committee does come to some sort of unanimous consensus, that would be news, considering that three of its members—Bruce Harrell, Nick Licata, and Kshama Sawant—comprise one-third of the city council. If you’ve got Sawant and the restaurant industry backing the same proposal, you’ve likely got a deal the council can rubber stamp. Hooray! But if there’s no consensus out of the committee, the council will still pass something.

Eight of nine city council members—everybody but Tim Burgess—are already on the record supporting some sort of a $15 minimum wage. So I fail to see the leverage that some advisory committee members seem to think they have in threatening to block some sort of a compromise proposal. An advisory committee proposal would be nice—especially a unanimous one—but it is not integral to the process. And while a consensus might make a ballot battle less likely, I’m not sure that one is avoidable, for no stakeholder on either side of the issue is bound by decision of the committee.

So yeah, if the advisory committee fails to produce a consensus proposal, the mayor will propose something regardless, and the council will do what the council is going to do. Because that’s the council’s job, not the job of a powerless, unelected committee.

Now that Uber, Lyft, and Sidecar have submitted enough signatures to force a referendum on Seattle’s recently revised taxi, limousine, and for-hire ordinance, it is time to start throwing their drivers in jail.

It is a criminal violation in the city of Seattle to pick up paying passengers without a valid for-hire license, punishable by up to 90 days in jail and a $1,000 fine. No doubt the recently passed ordinance didn’t give the “Transportation Network Companies” (TNCs) everything they wanted, but it did legitimize their businesses, giving them a path toward legal operations. But by submitting sufficient signatures to force a referendum, the TNCs have effectively suspended the new ordinance, leaving the old law on the books. So, you know, enforce it!

Seriously. This is a political power play that is about more than just caps. The question here is who gets to write Seattle’s laws? The popularly elected city council after a year of public hearings and excruciating deliberations? Or the venture capitalists behind a handful of clever iPhone apps?

The TNCs think they have the upper hand. But in addition to suspending all caps, insurance, inspection, training and other regulations on their vehicles and drivers (along with all taxes and fees!), the TNCs have also suspended their right to operate legally. So if they hate the new law so much, let’s see how they like the old one.

A sting operation would be easy. Book a ride, and when the driver shows up, issue a citation and impound the car. Because it’s the law. It’ll only take a few high profile arrests to convince most drivers to log off the system. And then maybe the TNCs will be moved to negotiate a new ordinance instead of attempting to impose one.

@GoodJobsSeattle @ @GoldyHA Coalition may reject the idea of health benefits as a part of wage. Larger Seattle nonprof community does not.

— CapitolHillChamber (@caphillchamber) April 17, 2014

Back in Stupidland I sarcastically tweeted back “like that’s believable” to the Capitol Hill Chamber of Commerce’s suggestion that it somehow represents the non-profit community better than the Seattle Human Services Coalition (SHSC). Which apparently offended the chamber’s Michael Wells. You can read the whole stupid, stupid exchange here.

For the record, SHSC—a coalition of hundreds of human services providers, agencies, programs, and individuals—fully supports a $15 an hour base minimum wage “that does not include other forms of compensation.” I later asked Michael if his non-profit championing chamber would accept a straight up $15 minimum wage that allowed a health care deduction only for non-profits?

“Nope.”

Fair or not, the chamber’s claim to be championing the interests of non-profits is simply stupid messaging. It fails the sniff test. It makes them sound arrogant and disingenuous. The chamber should really consider taking my constructive criticism to heart.

Also on Twitter, hipster oligarch David Meinert helpfully suggests that folks might take me more seriously “if you could make a point without all the negativity.”   I suppose he’s talking about posts like this. Huh.

The thing is, politics is an adversarial process. It’s a contact sport. So if you can’t take a few bruises, then get out of the game. I didn’t make these rules—I don’t even necessarily like them. But fuck if I’m going to play with one hand tied behind my back for the sake of not offending people who would congratulate themselves for passing a $15 minimum wage that doesn’t pay $15 an hour.

I honestly have no idea what this editorial is trying to say:

THE Legislature already faces the difficult job writing a balanced, education-focused budget when it reconvenes in January. That job got harder two weeks ago with an $80 million bill sent, as if in a time machine, from 2003.

According to a state Supreme Court ruling, the bill is owed to about 22,000 contracted in-home care providers for the state Department of Social and Health Services’ clients with disabilities.

[…] In this case, the state Supreme Court adds to an already hefty bill it imposed in the education-funding McCleary decision, which is coming due. While the court’s job is not to budget, it also does not operate in a vacuum.

Feel free to read all the in-between parts, but it’s not going to help. The Seattle Times editorial board is arguing what…? That the Supreme Court shouldn’t enforce an $80 million judgment against the state? That the Supreme Court shouldn’t enforce McCleary? I presume there’s an opinion in here somewhere.

No, it’s not the court’s job to write the budget. But if the state lacks the financial resources necessary to meet its legal obligations—as determined by the highest court in the state—shouldn’t our editorialists be urging the legislature to write a budget that raises the revenue necessary to obey the law, rather than chastising the court for, um, something?

I dunno, just seems to me like the responsible thing to do.

I know I promised that yesterday’s post on a “Tip Adjusted Benefit Deduction” would be my last creative stab at proposing a minimum wage compromise that benefits both sides, but I’ve got one more wonky little provision that should be a part of any debate over a so-called “tip credit”: the size of the credit should be indexed to a fixed percentage of the effective state minimum wage for tipped employees, not Seattle’s minimum wage.

Here’s how it would work: Let’s say Seattle set it’s minimum wage to $15 an hour, indexed to inflation, with a maximum allowable “tip credit” set to 50 percent of the effective state minimum wage for tipped employees, currently $9.32 an hour (also indexed to inflation). That would make Seattle’s tip credit $4.66 an hour. Simple.

But because Seattle’s tip credit is indexed to the state minimum wage, it creates within Seattle’s powerful restaurant industry a very strong incentive to politically oppose any effort to establish a tip credit within state minimum wage law. For example, let’s say a bill were proposed in the state legislature to establish a minimum wage for tipped employees set at 50 percent of the state minimum wage. This would effectively halve the allowable tip credit in Seattle to only $2.33 an hour! I’d love to see the Washington Restaurant Association try to maintain unity over that.

It is essentially a poison pill provision aimed at addressing labor’s very legitimate concern that passing a tip credit here in progressive Seattle could set a political precedent that enables the imposition of a tip credit statewide, thus lowering the incomes of tens of thousands of tipped workers outside city lines.

Don’t get me wrong: I oppose a tip credit. I find the arguments in favor less convincing than the arguments opposed. But if we’re debating whether to impose a tip credit we should also be debating the nature of the tip credit itself. I have now proposed a number of variations that could make a Seattle tip credit a helluva lot less worse than the restaurant industry giveaway imposed at the federal level. For example, a tip credit indexed to the state minimum wage for tipped employees as described above, combined with a substantial monthly threshold and exemption, and conditional on meeting strict business and account practices designed to impede wage and tip theft, would have a very different impact than the out-of-the-box tip credit the restaurant industry is demanding.

Both sides would be asked to give a little. Both sides would get a little something in return. That is the essence of political compromise.

Trust me, these series of posts on potential compromises aren’t going over well with my friends at 15 Now, while the folks on the business side of the table continue to pretend that I ceased to exist the second I left the pages of The Stranger. But I know that city council members are still reading me, and they are the ones who will ultimately craft a minimum wage ordinance, not the arbitrarily appointed members of Mayor Ed Murray’s Income Inequality Advisory committee.

If the business community can have the gall to attempt to redefine such a common word as “wage” through their bullshit “total compensation” proposal, then it is certainly reasonable to redefine such a vague and inaccurate term as “tip credit” (which is, in fact, a “tip deduction“) in the service of promoting better economic incentives. Instead of simply opposing or supporting a tip credit, we should take this debate as an opportunity to rethink it.

My sincere advice to both sides as they head into the nitty gritty of final negotiations is to think creatively before digging into an intractable position that triggers a risky winner-take-all confrontation at the ballot box. A modified tip credit that serves to impede wage and tip theft while removing existing economic incentives to push employees into part-time non-benefit work, could actually prove a win-win for businesses and workers alike.

Or maybe not. But it’s worth exploring.

Because voters are stoopid:

Washington state voters support both expanding background checks for gun sales and restricting background checks for gun sales, according to an Elway Poll released Tuesday.

The poll, the first public survey of voters to gauge support for the initiatives simultaneously, shows the pro-background check Initiative 594 is starting the campaign in better shape. But the anti-background check measure Initiative 591 also has support.

… Asked about the initiatives, 72 percent of voters said they would support I-594, while 55 percent said they would support I-591 and 40 percent said they would support both.

I know, I know. Initiatives almost always lose support as the election nears. So this far out from  November, 72 percent support is where the pro-background check initiative wants to be to have a shot at winning, whereas only 55 percent support suggests the anti-background check measure is headed toward defeat.

But still… a majority of voters support contradictory positions. This is just an incredibly stupid way to legislate.

 

It’s also, ironically, my birthday. So celebrate by watching Robert Reich explain why our tax system sucks (for everybody but the One Percent).

When I offered last week my “Five Proposals for Making a ‘Tip Credit’ Less Worse,” I got exactly the sort of response from the business community that I expected: crickets. The restaurant industry really isn’t interested in discussing the pros and cons of the traditional tip credit; they just want it, period. So there wasn’t much risk in proposing compromises that the other side would refuse to consider.

Which is why I have one more tip credit compromise to propose—one which borrows from the arguments made in support of the bullshit “total compensation” proposal—that offers cost savings to employers while removing their incentive to push workers to part-time employment. For want of a better term I dub it: a “Tip Adjusted Benefit Deduction (or TAB Deduction).”

A TAB Deduction is a variation on the traditional tip credit that further limits the credit to an amount not to exceed the cost of providing certain defined benefits. A TAB Deduction would assure that all Seattle workers take home a minimum of $15 an hour in cash compensation, while incentivizing employers to shift involuntary part-time tipped workers to full-time jobs. A TAB Deduction would also be conditional on meeting strict business and accounting practices intended to impede wage and tip theft, while facilitating the investigation and prosecution of claims thereof.

How does the TAB Deduction work?
A qualified employer would be permitted to deduct from its minimum wage obligation an amount equal to the smaller of A) the cost of providing permissible benefits, B) the amount of tips actually received by the employee, or C) the difference between Seattle’s minimum wage and the effective minimum wage for tipped employees under city, state, and federal law.

For example, assume the minimum wage for tipped employees is WA state’s current minimum wage of $9.32/hr, while Seattle’s minimum wage is $15/hr—that makes the maximum TAB Deduction $5.68/hr. Now assume that an employee earns $4/hr in tips and $3/hr in benefits. The employer may deduct the smaller of the three figures—$3/hr—from its minimum wage obligation, with the employee ultimately receiving $12/hr in wages plus $4/hr in tips for a total of $16/hr plus benefits.

Only those benefits defined in ordinance, and in maximum amounts approved by regulators, may be applied to the TAB Deduction. Further, the TAB Deduction would only be made available to employers who follow strict business and accounting practices.

How does a TAB Deduction benefit workers?
While it would guarantee all workers a minimum cash compensation of $15/hr, a TAB Deduction would also modestly reduce take-home pay below what a straight up $15/hr minimum wage might otherwise provide to tipped employees who receive benefits. But the TAB Deduction does broadly benefit labor in two distinct ways:

First, a TAB Deduction removes from employers existing economic incentives to eliminate benefits, or to force workers into part-time work in an effort to cut costs by denying them benefits. In any workplace where average tips routinely exceed the cost of benefits, the labor-cost differential between part-time and full-time work is all but eliminated.

Second, the TAB Deduction addresses our epidemic of wage and tip theft by forcing employers to adhere to strict business and accounting practices (defined in ordinance and approved by regulators) in order to qualify. The TAB Deduction thus serves as a carrot for enticing employers into imposing stricter business practices upon themselves.

How does a TAB Deduction benefit employers?

It saves them money, duh, by permitting qualified employers to deduct the cost of providing benefits from their minimum wage obligation, up to the maximum allowable tip credit.

Conclusion:
Again, my preference would be for a straight-up $15 minimum wage, no tip credit (and certainly no “total compensation,” a proposal that only achieves $15 by totally redefining the meaning of the word “wage”). But if we’re going to talk about compromise, the least we can do is talk about these compromises creatively.

There’s more at stake here than simply the wages of Seattle workers. If we pass a $15 minimum wage, the rest of the state and the nation will look to us as an example. So in a nation where a tip “credit” is already deducted from the incomes of most tipped employees, anything we do to set a precedent for a better tip credit could end up improving the lives of millions of minimum wage workers. Likewise, anything we do to undermine Washington’s position as one of only seven states without a tip credit (or even worse, to set precedent for “total compensation”) could have a dramatically negative impact far outside Seattle’s borders.

That said, I don’t believe that many on the pro-business side of the table are negotiating in good faith, and I don’t believe that they are truly interested in debating compromise. But they are welcome to prove me wrong.

If there’s one thing I dread about the income inequality debate in general, and the minimum wage debate in particular, it’s those occasional uncomfortable moments when the anti-union, anti-immigrant, anti-semitic Henry Ford is brought up as an icon of demand-side economics. In 1914 Ford famously implemented the $5 Day (about $117 in 2014 dollars), more than twice the $2.25 prevailing wage at the time for a 9-hour auto factory shift. The story goes—and it’s a story perpetuated by Ford himself—that the goal was to pay his workers enough to transform them into car buyers themselves, thus increasing sales.

It’s a great story, and one that neatly illustrates the demand-side arguments. But unfortunately, it’s bullshit. No, the real reason Ford more than doubled his workers’ compensation was that he came to believe that paying higher wages would conversely lower his labor costs. And he was ultimately proven right.

An early 20th century assembly line job was brutal and brutally monotonous work—hour after hour of performing relentlessly quick, repetitive, and often dangerous tasks. For example, in 1916, nearly 200 severed fingers and more than 75,000 cuts, burns, and puncture wounds were recorded at Ford’s Highland Park plant alone.

So as you can expect, morale was low at Ford’s factories, and the turnover rate high. Absurdly high. As much as 300 percent annually. Throughout the year of 1913, Ford hired 52,000 workers in order to maintain an average workforce of only 14,000. Every new worker required weeks of costly training and break-in. Assembly lines sometimes screeched to a halt for want of enough qualified workers. Absenteeism and turnover made it impossible for Ford to keep up production and produce cars at the low prices his business model demanded.

And so when Ford introduced the $5 Day the next year, it was with an eye toward reducing turnover, thus lowering labor costs and ramping up production. And it worked! Turnover plummeted and productivity soared. The rest of the auto industry initially dismissed Ford as crazy, but they all soon followed his example.

And here’s the thing: once the other auto makers matched Ford’s wages, taking away his competitive advantage in the labor market, turnover didn’t revert to the bad old $2.25 days. Better paid workers do a better job. They’re more loyal. More productive. Less likely to call in sick. And less likely to constantly be on the lookout for a better deal someplace else.

Yes, Ford’s $5 Day did help kickstart the trend toward higher wages that ultimately primed the demand side pump on which our modern consumer-driven economy was built. So that part of the story is true, at least in effect, if not intent. But the benefits to Ford were more direct and immediate. Higher wages delivered better workers, and lower labor costs.

And those are the same sort of financial benefits employers bemoaning the cost of a $15 minimum wage have refused to factor into their equations.