Goldy

One thing that both the minimum wage and the taxi/TNC debates constantly remind me, is that contrary to our popular mythology, this is not a country that honors hard work. No, this is a country that honors financial success.

Start a successful business or reap a stock option windfall at some spiffy startup, and we celebrate your ingenuity and effort. Fail at business, or find yourself on the wrong side of some economic disruption (or just unable to overcome the inherent socioeconomic disadvantages of being born poor) and we revile you as a loser and a moocher, no matter how long or strenuous your labor.

It is no doubt comforting to believe that those less comfortable than ourselves struggle due to some fault of their own, rather than from some structural inequity in the system from which the rest of us prosper. But it is much more than that. No, this fetishization of financial success (and contempt for failure) is deeply rooted in the Calvinist ethos that still pervades even the modern secular American psyche—one in which your reward in this world is reflective of your reward in the next, and thus a full measure of your moral worth.

You do not need to understand the theology behind this ethos to understand that it still holds sway. How else to explain the unselfconscious argument that the interests of business owners are somehow more worthy than the interests of the low-wage workers they exploit, or the total lack of empathy for (and even vilification of) the taxi drivers who have failed to effectively compete against the disruptive technology of the TNCs?

We do not reward hard work in this country because we do not honor it. And it is financial reward alone by which we generally measure a person’s true worth.

Pretty awful.

Yet another example of how Seattle voters have grown increasingly out of touch with the Seattle Times editorial board: “Let companies set lower minimum wage for more teens.” The goal, supposedly, is to address the declining employment rate amongst teens. But…

The minimum wage may not have had anything to do with that huge decline. The recession put lots of adults in competition for the entry-level jobs that historically gave teens their start. A lower minimum wage for 16- and 17-year-olds could displace older workers.

Still, a lower minimum for more teens is worth exploring. Sixteen- and 17-year-olds are less likely to be supporting themselves than 18- or 19-year-olds.

Um… except… those are all reasons for not lowering the minimum wage for teens. I mean, apart from the fact that there’s no actual data suggesting a connection between the minimum wage and declining teen employment (if there was even the flimsiest data, the editors would sure cite it, since flimsy data seems to be their favorite kind), our labor market is already so incredibly unbalanced—do we really want to put even more downward pressure on the wages of workers who are supporting themselves and their families?

The problem is not that wages are too high. It’s that older, more experienced, more competent workers are being forced to take jobs that used to be filled by teens, thanks to a lack of other opportunities. If you can make an compelling argument that lowering the minimum wage for teens would actually help create more jobs—and the editors don’t bother—I’m willing to listen. But if all we’re doing is creating an economic incentive for employers to shift jobs away from older employees, then this proposal should be a nonstarter.

I’ll have more thoughts on this later, but in a rather anticlimactic meeting this afternoon, the Seattle City Council approved final passage of taxi and “transportation network company” (TNC) regulations that impose a cap of 150 drivers per TNC actively picking up passengers at any one time. Also, it makes these services legal, so it’s not like Lyft, Sidecar, and uberX don’t get anything out of this.

“What we’re actually doing in these regulations allowing the ride-shares to operate in the market,” explained council member Bruce Harrell.

Council member Tom Rasmussen had proposed an amendment that would have removed these caps, but only he, Sally Bagshaw, and Tim Burgess voted for it. There were a bunch of other amendments passed, some technical, some a bit more policy oriented. For example, the minimum rating for an insurance company providing commercial taxi insurance was lowered a notch, increasing the number of insurers in the market and thus potentially lowering costs. Also, an amendment trying to prevent, say, Uber, from getting around the cap by creating UberY and UberZ, was also added to the ordinance.

Despite the 3-6 dispute over caps, the final entire ordinance passed unanimously. So there.

Before the start of today’s meeting, noted city council heckler Alex Zimmerman was escorted from council chambers, due to violating a 28-day exclusion order (PDF of exclusion notice available here) resulting from disruptive behavior at prior city council meetings. The most interesting thing we learn from the exclusion notice? That Alex Zimmerman’s legal name is Avrum Tsimerman. Who knew?

Perhaps sensing such despotic censorship was coming, Tsimerman savvily spoke to the audience about ten minutes before the meeting’s scheduled start. Take that, tyrants!

With the Seattle City Council finally scheduled to vote on proposed taxi and TNC (Lyft, Sidecar, uberX) regulations today at 2 pm (really, this time), I thought it appropriate to post some comments from an actual taxi owner. Taxi owners have without a doubt been the most reviled stakeholders throughout this entire debate, cast by TNC boosters (and some for-hire drivers) as a cabal of greedy medallion-hoarders, sucking the lifeblood from immigrant drivers while assuring crappy service.

Responding to my coverage in The Stranger, one of these allegedly greedy drivers (who wishes to remain unnamed to protect his music career) emailed me with his personal story:

Just want to thank y’all for your coverage on the taxi v tnc issue. Honestly it’s where I’m getting most of my information.

Nowadays I’m temporarily making a living with music & have rented out my cab, watching in panic as my future job (can’t survive on music in the long term) and planned retirement crumble away to dust, and it’s even worse for the guy leasing my cab right now, who can’t make the payments or support his refugee family. Let’s just say it’s very personal for us.

Last time I was in Seattle I was shocked to see hipster oligarch David Mienert opining on the topic in some article, not sure if it was with y’all or the Weekly, but clearly there must be a shortage of expert opinions if someone is turning to him. If you ever need an inside perspective just holler, I’ve been in this business for a tedious eighteen years, drove for Broadway, Greytop, Orange & finally Yellow before buying my own taxi.

And if you think this cab owner’s story is an outlier, think again. “There is this myth out there that a few people own all the taxi cabs,” Green Cab general manager Chris Van Dyk tells me, “but the vast majority of taxi cabs are individually owned.” Van Dyk, a longtime industry insider, says that there is only one owner in the city who owns more than 50 cabs, and only about 25 who own more than five. At Yellow Cab—the largest taxi association in the city—Van Dyk estimates that there are about 370 owners of Yellow’s 559 cabs.

Of course, there are many more drivers than owners. The costs of owning and operating a cab are so high that they require 24/7 operation to provide a return on investment, so every owner leases out his cab for at least one 12-hour shift a day. In addition to purchasing a medallion (which went for as much as $140,000 just two years ago) and a $30,000 car, the musician/cab-owner above estimates his recurring costs to be:

• $600/month commercial taxi  insurance
• $550/quarter for Labor & Industries insurance ($225 per driver)
• $170/week to be a part of a taxi association
• $1000/year in licensing & inspection fees to the city, county and state

Plus, you know, gas, maintenance and depreciation. Van Dyk says that 24/7 operation puts about 100,000 miles a year on the typical taxi, meaning the vehicle is totally depreciated after just three years. That comes to $10,000 a year in recurring depreciation costs. And that doesn’t begin to count the steadily depreciating value of taxi medallions, which are reportedly now selling for half what hey did just a couple years ago, if you can find a buyer at all.

Lyft, Sidecar, and uberX currently bear none of these costs but for some indeterminate cost for insurance coverage. The drivers do bear the cost for gas, maintenance, and depreciation, though the part-timers may not fully appreciate the total tally.

“Imagine for a moment how much we could lower the taxi leases and lower the customer fares if we had less fixed costs,” our musician/cab-owner writes. “Alternately,  imagine how much  the fares would rise in UberX if these same business costs were applied to them?”

It is ironic that some of the same people arguing that a $15 minimum wage would crush struggling small businesses, have absolutely no empathy for the hundreds of small business people in the taxi industry—most of them current or former drivers, and many of them immigrants—who have sunk their life savings into purchasing a medallion and a cab, only to have their livelihoods ripped out from under them by the illegal operations of the TNCs.

It is that uneven playing field that the council is expected to at least partially address this afternoon.

Genesis 19:30-36
Lot and his two daughters left Zoar and settled in the mountains, for he was afraid to stay in Zoar. He and his two daughters lived in a cave. One day the older daughter said to the younger, “Our father is old, and there is no man around here to lie with us, as is the custom all over the earth. Let’s get our father to drink wine and then lie with him and preserve our family line through our father.”

That night they got their father to drink wine, and the older daughter went in and lay with him. He was not aware of it when she lay down or when she got up.

The next day the older daughter said to the younger, “Last night I lay with my father. Let’s get him to drink wine again tonight, and you go in and lie with him so we can preserve our family line through our father.” So they got their father to drink wine that night also, and the younger daughter went and lay with him. Again he was not aware of it when she lay down or when she got up.

So both of Lot’s daughters became pregnant by their father.

Discuss.

Losing a job isn’t fun under any circumstance, but it used to be made all the more stressful by the loss of health insurance that went with it. Now, thanks to Obamacare and Washington State’s relatively easy to use health insurance exchange, the newly unemployed have one less thing to fret over.

Logging in to WAHealthPlanFinder.org this morning, it took me about a half hour to complete my application, compare plans, and sign up. I chose a “silver” plan from Group Health with a $200 deductible for only $92 a month after a $300 a month federal subsidy (based on my current meager income from unemployment). And I could’ve done it quicker if not for some repeated glitches in the Safari browser. Once I switched to Firefox, everything went smoothly.

The downside with switching to Group Health is that I can’t keep my current primary care physician, but that was likely true of The Stranger’s insurance too, as my doctor recently switched his practice from Polyclinic to Swedish. The exchange reported that my doctor would’ve been covered under a $168/month plan from Community Health Plan, but my doctor’s office couldn’t confirm that. On the cheap side, I could’ve alternatively purchased a $42/month plan from Coordinated Care, but their HMO offered far fewer providers, so I split the difference and went with the larger and more established Group Health, which also conveniently has a clinic down the street.

By comparison it would’ve cost me $329/month via COBRA to continue on my less comprehensive Stranger insurance. So Obamacare will end up saving me quite a bundle.

As long as I’m unemployed, that is. Should I get a decent paying job relatively soon, I’ll probably have to pay back some of this subsidy on my 2014 tax return. But that’s okay; I’ll be able to afford it. Whereas right now I’m operating under a very tight budget.

So, thanks, President Obama, for easing my job transition with some affordable health insurance. And thank you, WAHealthPlanFinder.org, for putting together such a relatively well designed website. While I would have obviously preferred a single payer system that wouldn’t require me to change my health insurance every time I change employment, this is a helluva lot better than the individual market that used to ream people like me.

There goes that crazy Socialist Kshama Sawant being soooo divisive by bringing class into it again:

[I]t’s hard to escape the suspicion that class interests are playing a role. A fair number of commentators seem oddly upset by the notion of workers getting raises, especially while returns to bondholders remain low. It’s almost as if they identify with the investor class, and feel uncomfortable with anything that brings us close to full employment, and thereby gives workers more bargaining power.

Oh. Wait. That quote wasn’t from Sawant. It was from Nobel Prize-winning economist Paul Krugman. My bad.

The best part about leaving The Stranger is that nobody can make me write a wrap-up of the Rodney Tom shit-show in Olympia. Just sayin’.

Having already lost the local debate on the minimum wage in general, and on $15 in particular, the business interests on Mayor Ed Murray’s Income Inequality Advisory Committee have largely adopted a strategy of attempting to redefine the meaning of the word “wage” itself. The restaurant industry has long pined for a “tip credit” (or “tip penalty” from the perspective of workers) in which tips are counted towards meeting the minimum wage. But that wouldn’t lower the labor costs of businesses that rely on non-tipped employees, and so a strong push is being made to adopt the more sweeping notion of “total compensation.”

I’ll delve more deeply into the tip penalty debate in a subsequent post, but for the moment I want to focus on total compensation, which in addition to tips, would count the cost of providing  health insurance, sick leave, vacation leave, 401K matches, and other non-cash benefits toward the employer’s requirement to pay a minimum $15 an hour wage. And to better understand the impact of adopting a $15 an hour total compensation minimum wage, it is useful to start with a real-life example:

Let’s say you are a dishwasher working full-time at a midrange Seattle restaurant, earning $10.50 an hour plus $3 an hour in pooled or shared tips. You’re taking home the equivalent of $13.50 an hour, plus benefits. I guess there are worse jobs, but it’s hardly a living wage.

Now let’s say we pass a $15 total compensation minimum wage.

Based on the monthly price I’ve been quoted for COBRA, minus my share of the premium that had been deducted from my paychecks, I can estimate that I had cost The Stranger about $1.60 an hour for our so-so medical and dental coverage—let’s assume that’s typical for a restaurant. Then there’s a shift meal, with a retail price of $12.00, or another $1.50 an hour over the course of an 8 hour shift. Add two weeks vacation for another $0.40 an hour. Paid sick leave, that’s another $0.20 an hour still. I’m sure there are other benefits I’m missing, but this is more than enough to make my point. That’s already $3.70 an hour in benefits just there.

So… $10.50 an hour in wages, plus $3 an hour in tips, plus $3.70 an hour in benefits, and after our wonderful new $15 minimum wage ordinance passes, you’ll magically be making $17.20 an hour! That’s great! Except your take-home pay won’t increase a penny. In fact, some unscrupulous employers may seize this as an opportunity to actually lower wages. Hooray for total compensation!

Of course, not all employers are going to be dicks about it. But in this imbalanced labor market, some will. Wage and tip theft are already rampant. So if you don’t think that some employers are going to be eager to creatively use a $15 total compensation minimum wage as an opportunity to cut labor costs, then you don’t know fuck about capitalism. (Or human nature.) 

But wait—it gets even worse.

Your $15 minimum wage would be indexed to inflation, but the cost of one of your biggest benefits—health insurance—will inflate at many times that rate. Health care inflation is currently at a historic low of about 6.5 percent, but the Consumer Price Index is only expected to rise about 1.75 percent during 2014. That means that the costs of your benefits will rise significantly faster than the putative minimum wage, pushing the effective wage floor ever lower in inflation adjusted dollars over time. For example, after five years at the inflation rates above, the official minimum wage would rise about 9 percent to $16.36 an hour, while the cost of your dishwasher benefits will have gone up about 21 percent to $4.48 an hour, bringing your official total hourly compensation to $17.98—again, without raising your take-home pay a single penny!

Total compensation effectively shifts the burden of healthcare inflation from the employer, entirely onto the employee. And as benefits make up an increasingly larger percentage of total compensation, real take-home wages will steadily fall. For low-wage full-time workers, a total compensation minimum wage would be a formula for expanding the income gap, not closing it.

Admittedly, the impact on part-time workers is different. Lacking the cost of benefits to subtract from total compensation, low-wage part-timers could see their effective wage floor rise substantially. This in turn would remove from employers some of the economic incentive they currently have to shift low-wage full-time work to part-time work. So that’s one possible positive impact of total compensation.

But as a policy for raising the effective incomes of all low-wage workers—which is what the $15 minimum wage movement is presumably about—a total compensation minimum wage miserably fails. It would provide little or no immediate wage hike to most full-time workers while eroding the effective wage floor over time. But most importantly, it would be a lie. Mayor Murray and other leaders have promised voters $15, but total compensation only gets to that number by redefining the meaning of the word “wage.”

And that would not be a promise fulfilled.

When the Washington State Supreme Court handed down its historic McCleary decision, ruling that the state had failed to meet its constitutional “paramount duty” to provide for the ample funding of our public schools, Democrats cheered at the opportunity. The court ordered the state to add billions more to K-12 spending. Finally we would reverse decades of foolish disinvestment. Hooray!

Except, it’s beginning to look like Republicans and their drown-government-in-a-bathtub agenda are going to end up the big winners.

The indisputable mathematical truth is that we simply cannot meet McCleary and maintain existing government services at constant levels, without raising new revenue. It can’t be done! And anybody who tells you otherwise is either a liar or an idiot. Washington state has a structural revenue deficit. There is absolutely no way we can magically fund McCleary through economic growth alone. The math doesn’t work. Which means there is no way the state doesn’t eventually find itself in contempt of court.

It is going to happen. It is inevitable. Barring a farfetched pro-tax Democratic sweep in this November’s legislative elections, the state will not meet the McCleary mandate.

So how will the court react? Legislators enjoy immunity, so the court can’t throw them in jail on contempt charges, as much as they might deserve it. And the court lacks the authority to levy taxes itself. So the only remedy really available to the justices would be to order drastic across-the-board cuts in discretionary spending in order to repurpose those funds to our public schools.

Which is exactly what the Republicans want!

The Republicans correctly view McCleary as an unparalleled opportunity to defund the rest of state government in the disingenuous name of educating our children. But as the Washington State Budget & Policy Center correctly observes, such a policy would force “devastating cuts to health care, public safety, child care, and other important investments kids need in order to succeed in the classroom.” It would be a total fucking disaster.

But the alternative—doing nothing—would be a disaster too. For if the Supreme Court is proven toothless in the face of legislative insubordination, then the system of checks and balances inherent within our constitution would be forever broken.

Washington State is headed toward a constitutional crisis. There is no avoiding it. And Democrats better start preparing themselves to handle this McCleary crisis a helluva lot better than they handled the McCleary opportunity.

Primary Colors, an organization dedicated to electing more liberal Democrats, has released its list of the 90 “Good Democrats” in the US House—those representatives who consistently vote more progressive than their districts. And of Washington State’s six Democratic House members, only Jim McDermott makes the list.

That’s pretty impressive for McDermott, considering that he already represents Washington’s most progressive district. And that’s pretty pathetic for the rest of the delegation.

Of course, the conventional wisdom is that McDermott isn’t a very effective congressman. But could it be that the conventionally wise just aren’t nearly as progressive as the 7th Congressional District voters who routinely reelect McDermott by overwhelming margins, and so they dismiss (or even resent) what he brings to the table?

And could we do a crappier job as a state of recruiting and supporting progressive candidates?

I’m all for a vigorous public debate, so I certainly don’t mind letting restaurateurs air their views on a $15 minimum wage. But when Tom Douglas makes the alarming claim that Seattle could lose a quarter of its restaurants should a $15 minimum wage pass, I just think it is fair to point out that there’s no historical data to support it.

While our proposed 60 percent hike in the minimum wage is certainly steeper than most, it’s not the steepest. Thanks to 1988’s Initiative 518, Washington restaurants endured an even more imposing 85 percent increase in labor costs, and survived with no evidence of mass layoffs or mass business closures. Indeed, over the following decade, growth in restaurant employment actually outpaced total growth in employment statewide.

I’m not saying that a $15 minimum wage wouldn’t hurt some businesses. I’m just saying that there is no historical evidence to support the dire warnings of mass business closures.

There. I said it. By any reasonable reading of the municipal code, Lyft, Sidecar, and uberX drivers are operating illegally in the City of Seattle. They are are unlawful. They are illegal. They are against the law. And this basic statement of fact is absolutely crucial to understanding that, rather than crushing innovation in the service of protecting the status quo, what the city council is really in the process of doing is legalizing an industry that has thus far operated in brazen violation of the law.

Whooh. I can’t tell you what a relief it is to get that off my chest.*

There is likely no issue on which I more broadly pissed off Stranger readers, than my coverage of the proposed taxi and “ride-share” regulations. Capitol Hill hipsters apparently love booking rides on their smartphones almost as much as they love to hate on traditional taxis, and so the coverage they wanted and expected was one that would unflinchingly embrace this disruptive new technology, while telling the decrepit old regulated taxi industry to go fuck itself. And I totally agree, based on my own anecdotal experience, that these new “transportation network companies” or “TNCs” (as they are referred to in the proposed ordinance) generally provide a far superior user experience than Yellow Cab and its cohorts.

But having plunged into this issue with no predispositions, and having ultimately wrapped my mind around an exceedingly complex policy debate, that is not the coverage I could provide. More nuanced critics accused me of being “anti-urbanist;” the less nuanced attempted to dismiss me as being in the pocket of the taxi industry (as if there’s any money in that). But the truth is that the taxi industry provides essential transportation services to a customer base that the TNCs cannot or will not serve. And the truth is—and this at the heart of the issue the council is addressing—the TNCs are operating illegally.

“No matter how sexy these services are,” council member Bruce Harrell proclaimed before voting to cap the number of TNC drivers, “they are unlawful in the City of Seattle.” And Harrell, an attorney, did not choose his words carelessly. It is a criminal offense in the City of Seattle to pick up paying passengers without a for-hire license, punishable by up to 90 days in jail and a $1,000 fine. The Seattle City Attorney’s Office determined last year that TNCs “are subject to for-hire vehicle licensing and regulation requirements.” While the city has yet to enforce these regulations on TNC drivers, it might not take more than a handful of prosecutions to chill the industry.

So whatever limitations the council might impose on the TNCs in the ordinance it is expected to pass next week, above all what the council is doing is legalizing an industry that has heretofore operated without licensing, without inspection, without training, without guarantees of adequate insurance, and in blatant violation of the rule of law. So it’s not like the TNCs aren’t getting anything in return.

The TNCs angrily denounce proposed caps, accusing the council of limiting competition in order to protect the taxi industry. And they are right. That has always been part of the challenge facing the council: how to legitimize the popular TNC services without undermining the still indispensable taxi industry. Not everybody has a smartphone and a credit card. A recent study found that taxis, which accept cash and scrip, serve a disproportionately older and poorer customer base, as well as our crucial tourism industry. Taxis operate accessible vehicles, and provide discounted fares through Hopelink and other social service contracts. They also provide a livelihood to their traditionally immigrant drivers and owners.

However superior uberX might be at getting you home after a night of heavy drinking, it is in the public interest to maintain a healthy taxi industry as well.

How do we sustain the taxi industry in the face of all this new competition? Seattle disastrously experimented with taxi deregulation in the 1980s, removing all caps and price controls only to see prices rise, service deteriorate, and incomes fall in the face of a Malthusian collapse—so there is understandably little support on the council to repeat that experiment in the interest of accommodating the TNCs. And “if we are regulating one half of the market,” argues council member Nick Licata, “we can’t ignore the open-source half” without creating an unlevel playing field.

That is the delicate balance the council is attempting to strike: a regulatory structure that allows the TNCs to legally enter the market while giving the taxi industry the breathing space necessary to adapt to a new reality. Apps like TaxiMagic and particularly Flywheel are already close to providing the same slick user experience TNC customers have come to expect; Yellow Cab, by far the city’s largest taxi association, is in the process of upgrading its dispatch system with plans to release its own competitive app later this year. There’s no question that the innovative TNCs are forcing the the taxi industry to improve its service. There’s also no question that the council will need to revisit taxi and TNC regulations in the years to come.

Maybe the proposed TNC cap is too low. Maybe it is too high. Maybe, ultimately, caps will prove unnecessary at all. But the goal is to transition into a market where both the TNCs and the taxis can peacefully and profitably coexist. And the first step is legalizing the TNCs currently unlawful operations.

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