HorsesAss.Org

Okay, so I’ve finally had a chance to wrap my mind around Mayor Ed Murray’s minimum wage proposal, and found it to be both a little bit better and a tiny bit worse than it first appeared. The good news is that it would indeed get all workers to a $15 minimum wage in 2017 dollars—that’s about 50 cents an hour less than the wage would have been had we bumped it up to $15 now on January 1, 2015. The bad news is that some workers won’t reach this real-dollar-equivalent wage until 2025—a ten year phase-in, not the seven-year phase-in that has been touted.

Also good news is that the employee count for “big” businesses—defined as greater than 500 FTEs—refers to the number of employees nationally, not locally, and lumps franchise employees together with those at other franchises throughout a national chain. That’s great news for fast food workers for example, most of whom receive no tips or benefits, and thus would be phased in under Schedule A: $11 an hour in 2015, $13 an hour in 2016, and $15 an hour in 2017, inflation indexed after that. “The people who had the courage to walk out on strike got a pretty good deal,” SEIU 775 president and committee co-chair David Rolf told me by phone, referring to last year’s fast food strikes.

And if everybody was getting that deal, I’d be thrilled. But they’re not.

Big business employees who receive health care benefits (Schedule B) wouldn’t reach an equivalent wage until 2019. Workers at “small” businesses (defined as 500 or fewer FTEs) who receive no health care benefits or tips (Schedule C) wouldn’t reach an equivalent wage until 2021. And small business employees who receive tips and/or health benefits (Schedule D) would not reach that inflation-adjusted 2017-era $15 minimum wage until 2025, a full decade after the proposed ordinance first goes into effect.

The mayor’s office has provided a nifty table detailing the full 10-year phase-in for all four schedules. But it’s kind of misleading. The way it works is that the straight-up hourly wage to which all four schedules eventually merge is based on Schedule A’s $15 an hour wage in 2017, adjusted annually for inflation. But the annual increases under Schedule A all presume a 2.4 percent annual inflation rate—substantially higher than most experts are predicting. Inflation has held steady at about 1.5 percent these past couple years, while the Federal Reserve Bank of Cleveland just two weeks ago forecast a 10-year average CPI of 1.87 percent. The proposal’s 2.4 percent estimate may be closer to the historical average but it is totally divorced from our current economic reality.

I’m not a gambling man, but I’d wager that this proposal would bring Seattle’s minimum wage closer to $17 in 2025 than it would to $18.13. So don’t take the numbers between the highlighted rows too seriously. They’re just estimates. Overly optimistic estimates.

The important numbers are $15 in 2017 dollars (about $14.50 in 2015 dollars) and the year in which the figure in each column first matches that in Column A: 2017, 2019, 2021, and 2025 respectively. That is what is meaningful to workers in terms of their inflation-adjusted take-home pay.

As for the meaning of Schedules C and D, well, it depends on how you choose to look at it. Schedule D is the absolute minimum wage a small business may pay its workers (again, estimated from 2022 on) as the state currently defines wage. But Schedule C is the minimum total compensation a small business employee must receive, including wages, tips, and health benefits.

A charitable spin on minimum compensation uses Schedule D as the baseline, and views Schedule C as guaranteeing that small business workers receive total compensation a little above that guaranteed in the base minimum wage. A negative spin on minimum compensation uses Schedule C as the baseline, and views the difference between the two columns in any given year as an unwarranted deduction the employer gets to take against his minimum wage obligation. It’s like that classic optical illusion: Is it a vase or is it two faces?

So that’s what the mayor’s compromise proposal does. Many, many workers—those who earn no benefits working at big businesses—would reach $15 an hour by 2017, and receive cost-of-living increases thereafter. The remaining workers will be phased in to an inflation adjusted equivalent minimum wage by 2019, 2021, and 2025 respectively. Once this 10-year phase in is complete there would be no tip penalty and no benefit deductions.

Tomorrow I’ll consider the political ramifications, and whether they conspire to make this 10-year phase-in a good enough deal.

I haven’t seen the details but it sure sounds like the minimum wage proposal Mayor Ed Murray is sending to the Seattle City Council is much along the lines of the crappy one leaked late last week: $15 in three years for large businesses (more than 500 employees), four years for those that provide health care benefits. But small businesses don’t get to $15 for seven years, with some sort of five-year total compensation scheme on top! And the minimum wage isn’t indexed to inflation until $15 is reached.

To be clear: $15 seven years from now is actually only $13.25 in today’s dollars.

Is that a helluva lot better than today’s $9.32 an hour Washington State minimum wage? Sure. Is it $15 an hour? No. It’s just not. So if Ed and his cohorts want to celebrate getting us to a $13.25 minimum wage over seven years, have at it. But don’t call it $15. Because it’s not.

All that said, I’m just watching the Seattle Channel live stream. The proposal may appear better or worse, once I read the details. More later.

UPDATE: So, I’ve finally had a chance to take a look at the mayor’s press release (I couldn’t make it to the conference) with it’s complicated four-tier schedule, and something leapt out at me right a way. Take a look for yourself. Catch the anomaly?

An estimated 2.40 percent CPI? Really? That seems overly optimistic (depending on your view of inflation). I’ve been using a relatively conservative 1.75 percent CPI estimate in all my calculations, and even that overestimates inflation by today’s standards. The Federal Reserve has a 2 percent target, but we’ve been holding steady at about 1.5 percent inflation the past couple years. The Federal Reserve Bank of Cleveland recently forecast a 1.87 percent 10-year average CPI. So estimating 2.4 percent strikes me as an exercise in massaging the numbers in order to present a more worker-friendly 10-year outcome.

In case you’re wondering, Schedule A is for big businesses that don’t provide benefits, Schedule B is for big businesses that do provide benefits, while Schedules C & D are for small businesses (less than 500 employees). Haven’t quite wrapped my mind around how the total compensation works. More on that later.

But the gist is, to get to $18.13 in 2025, you have to estimate average annual inflation rates of 2.4 percent starting in 2018. That’s a huge assumption. At today’s 1.5 percent rate, we’d only get to $16.90 by 2025. That’s a big difference.

I’ll have a more thorough analysis later, from both a policy and political perspective. But at first glance, I can’t help but feel a tad disappointed.

– What anarchist/immigrant activist will be crowned May Queen and get to be a distressed plane? I may not quite know what’s up with the holiday, but the SPD blog has some info.

– I predict that the tunnel will be finished sometime between now and infinity years in the future.

– US Workers Were Once Massacred Fighting for the Protections Being Rolled Back Today

– Should I be worried whenever I go to Magnolia?

– Politico remains the worst.

– Do people still read Maureen Dowd?

– I need to get other humans to carry me like that.

Allegedly at 10:30 am. But then that’s what he said last time he called a press conference. So we’ll see.

Don’t expect I’ll be pleased.

UPDATE: Just a reminder: this is a P R O P O S A L. The council makes the final decision, which means the negotiating is not done. So don’t expect all parties to just abandon their bargaining positions, whatever they might ultimately accept from an ordinance.

Because they can:

A proposal to raise the federal minimum wage to $10.10, an underpinning of President Obama’s economic agenda and an issue that Democrats hope to leverage against Republicans in the midterm elections, failed in the Senate on Wednesday.

The vote was 54 to 42, with 60 votes needed to advance the measure.

All but one Republican voted to sustain a filibuster against the measure, saying that the increase would damage the fragile economy and force businesses to cut hundreds of thousands of jobs.

Democrats were mostly united behind the bill.

Think about that. Republicans bothered to filibuster a bill that would raise the federal minimum wage from $7.25 an hour to just $10.10 an hour—despite the fact that this bill was almost certainly never would have reached the floor in the Republican controlled House. That’s how much Republicans are opposed to raising the incomes of working people.

There is class warfare being waged in our nation, and Republicans are not on the side of the vast majority of Americans.

God Damn.

A botched execution using a disputed new drug combination left an Oklahoma inmate writhing and clenching his teeth on the gurney on Tuesday, leading prison officials to halt the proceedings before the inmate’s eventual death from a heart attack.

Clayton Lockett, 38, was declared unconscious 10 minutes after the first of the state’s new three-drug combination was administered. Three minutes later, though, he began breathing heavily, writhing on the gurney, clenching his teeth and straining to lift his head off the pillow.

Shame on us as a society for allowing this to happen. There has always been the option of not executing people no matter how horrible their crimes.

No doubt there are some actual Dems who are actually disappointed at the way Kirkland mayor Joan McBride was shoved aside in the 48th Legislative District state senate race in order to make room for incumbent Democratic state Representative Cyrus Habib. McBride had gotten into the race early against turncoat incumbent state Senator Rodney Tom, but once Tom dropped out, she and Habib quickly switched races. It’s a smart political move given that the seat could determine control of the senate, but I certainly empathize with McBride or her supporters if they feel like she got the short end of the stick.

That said, the concern-trolling coming from the Washington State Republican Party is hilarious!

Democrat Kirkland Mayor Joan McBride has been running for the State Senate in the 48th legislative district for months. However, Representative Cyrus Habib has now pounced on a perceived opportunity, seeking to throw yet another woman Democrat under the bus. Habib, taking the easy way out, avoided running against Rodney Tom, but now that Tom has announced he will not seek reelection Habib wants McBride to step aside so that a more high-profile candidate (such as himself) can seek the seat. He promised he would have “a number of conversations” with party leaders. The goal seems clear: push the woman Democrat to the curb and tell her to support a male Democrat who wants to advance his personal political career.

That’s a, um, hysterical line of attack coming from state GOP chair Susan Hutchison after she made such a big stink about her party paying her less than her male predecessor. “The pay cut defies the concept of equal pay for equal work, playing into the ‘war on women’ narrative against Republicans,” Hutchison lamented at the time. But this recent I’m-rubber-you’re-glue press release is more than just ironic; it’s also an entirely calculated response intended to blunt criticism of the GOP’s anti-women policies, by, you know, accusing Democrats of hating women too!

“You know, it confuses the voters so much when both sides are accusing each other,” Hutchison told fellow GOPers January 25 at the Mainstream Republicans annual Roanoke Conference, “that you just say ‘okay, it’s a wash.’ Both anti-women.”

Ha, ha! Voters are sooooo stoopid, says Hutchison! (Okay. Maybe. But I’m not a state party chair, so I can say it.)

But Hutchison’s war on the War on Women doesn’t end there. In addition to advising Republicans to accuse Democrats of hating women, Hutchison also has some advice specifically for male candidates: “Please don’t mention the word ‘rape’ in any way,” Hutchison sagely advises. “Also, let’s not talk about anything to do with women’s reproductive cycles or um, um, women’s sexuality,” continues Hutchison before state Representative Liz Pike (R-Camas) helpfully adds in: “Don’t talk about things in the bedroom or the doctor’s office.” Because letting women know that Republicans want to control their sexuality makes it harder to win women’s votes, I suppose.

Instead, if the topic comes up, just change the subject. “Talk about the Seahawks,” suggests Hutchison.

Really:

A moment later, just beyond the end of the audio above, Hutchison goes on to amazingly describe former Republican presidential candidate Mike Huckabee as “a victim of the war on women.”

That she even has to tell male candidates not mention the word “rape” tells you everything you need to know about a Republican Party whose policies are profoundly anti-woman. But it’s not just talk, it’s action. Hutchison’s party opposes choice—both when it comes to abortion and birth control. Republicans overwhelmingly opposed the Violence Against Women Act. They even opposed the Lilly Ledbetter Fair Pay Act, an irony apparently lost on Hutchison in her own struggle for equal pay.

The truth is, Democrats effectively brand Republicans as being anti-women because Republican policies are anti-women. The embarrassing “rape” talk only make it easier. So if Hutchison really wants to change that perception, perhaps she should advise the men in her party to change the party platform?

– What could go wrong?

– Fuck.

– The unfortunate fact is that plunder—of land, labor, children, whatever—is a defining characteristic of this country’s relationship with black people. American militias have rarely formed to end that sort of plunder. They’ve generally formed to enable it.

– Why would anyone go out of their way to defend Donald Sterling?

– Interesting to read Jean Godden on the renovation of lower Kinnear Park.

– Why are we still pretending waterboarding is a reasonable discussion?

It is important to remember that none of this would have been necessary had Olympia not cowardly reimposed I-747 after Tim Eyman’s fiscally irresponsible tax-limiting initiative had been ruled unconstitutional:

Over the objections of some advocates, the Seattle City Council on Monday unanimously approved forwarding to the August ballot the creation of a Seattle Parks District to provide a new and permanent source of funding for the city’s parks and recreation programs.

Seriously. How is it that our local daily continues to cover this story without covering the context?

Also, you know how some of the establishment folk continue to roll their eyes at Kshama Sawant for being some sort of ridiculous one-and-done accidental council member, inflexibly incapable of pragmatic compromise?

City Councilmember Kshama Sawant said she agreed that additional property taxes placed a burden on middle-income residents when the “superwealthy and big business” should be paying a larger share.

But she said the city had limited taxing authority and that low-income residents and those on fixed-incomes are some of the heaviest users of parks and community centers.

“Sometimes, these are the only services they have access to. It’s important that we’re doing this as a council.”

That’s crazy talk! Amiright?

Please join us for an evening of politics over a pint at the Seattle Chapter of Drinking Liberally.

We meet tonight and every Tuesday at the Roanoke Park Place Tavern, 2409 10th Ave E, Seattle. The starting time is 8:00 pm, but some folks show up earlier for dinner.

Can’t make it to Seattle? Check out another Washington state DL over the next week. They’re everywhere! The Tri-Cities chapter also meets this and every Tuesday night. For Thursday, the Tacoma chapter meets. On Friday, the Enumclaw chapter meets. And next Monday, the Yakima, South Bellevue and Olympia chapters meet.

With 214 chapters of Living Liberally, including nineteen in Washington state, four in Oregon, and three more in Idaho, chances are excellent there’s a chapter meeting somewhere near you.

One thing I’m not going to be able to do as well when the Metro cuts happens is hopping on a random bus and just getting off and wandering around. Sometimes I’ll just wait on 4th Ave or the Bus Tunnel, and take whatever comes next. Usually, it’s quite lovely. The last time I did it, I was caught in some rain, but it wasn’t too bad. Before that happened, I managed to have this exchange with some random person outside an apartment complex on the Eastside that I’d never be able to find again with a map:

Random person: Hey what are you listening to?

Carl Ballard: A Podcast.

RP: What Podcast?

CB: Um, Overthinking It

RP: Never heard of it. Do you want to buy some meth?

CB: No!

RP: Hey what type of music do you listen to?

CB [puts ear buds back in; walks away]

There is a lot to hate about the minimum wage proposals leaking out of the mayor’s Income Inequality Advisory Committee, not the least of which being that they are fundamentally dishonest. A $15 an hour minimum wage that takes up to seven years to phase in for some workers before annual cost of living adjustments (COLAs) kick in, is not $15 an hour—it’ll be about $13.25 in 2014 dollars. So let’s not pat ourselves on the backs for doing something we’re not doing.

But the compromise under discussion is also overly complicated, reportedly requiring four different phase-in schedules depending on the size of the business and whether or not the employee earns tips or health care benefits. That’s just crazy. It will be difficult to implement, difficult to comply with, and difficult to enforce. It creates an economic incentive for businesses at or near the full-time equivalent employee (FTE) threshold to reduce employment (or just plain lie about it) in order to qualify for a more favorable schedule. And imagine the regulatory complexity for dealing with businesses that straddle the FTE threshold (some months more, some months less) and that hire both part-time and full-time tipped and untipped workers!

Also, the math doesn’t work! If $15 is phased in over four different schedules before COLAs kick in—three, four, five, and seven years respectively—either we’ll end up with four different minimum wages, or those workers phased in after three years won’t get a raise for another five years: one year after workers on the seven-year schedule are phased in.

Fortunately, there is a simpler way to achieve similar results without all the mess: Math!

First, we phase in a $15 minimum wage over a single two- or three- year schedule—say, $11 in 2015, $13 in 2016, $15 in 2017—adjusted for inflation thereafter. That in itself would represent a huge concession, one which would have had me booed off the stage at Saturday’s $15 Now conference. But most minimum wage hikes are phased in over two years, and this one is bigger than most, so that is a rhetorical and political fight that I don’t want to get sidetracked by in this post.

Second we give employers a deduction against tips and the cost of providing health benefits, phased out over several  years, and inversely proportional to the employer’s current number of FTEs. This may sound complicated, but the math is actually quite straight forward:

Max_Deduction = (City_Min – State_Min) * (((Years + 1) – year) / Years) * ((FTE_Cap – FTEs) / FTE_Cap)

The starting point for the maximum deduction is always the difference between Seattle’s minimum wage and the effective minimum wage under state and federal law, currently the state minimum wage of $9.32 an hour, indexed to inflation: (City_Min – State_Min). Then we adjust for the deduction phase-out. For example, in the first year of a five-year phase out, 100 percent of this deduction would be available, in the second year 80 percent of the deduction, in the third year 60 percent, and so on: (((Years + 1) – year) / Years). Finally, the maximum deduction available to each employer is further reduced by the employer’s total number of FTEs as a percentage of a defined FTE cap. For example, if the ordinance defines the FTE cap at 1,000 (the number of FTEs at which companies no longer qualify to take any deduction), and a business employs 100 FTEs, then that business could claim up to 90 percent of that year’s available deduction: ((FTE_Cap – FTEs) / FTE_Cap).

How might this work in reality. Well, presuming the three-year $15 phase-in described above, a five-year tip and health benefit deduction phase-out, an FTE cap of 500, and a conservative 1.75 percent annual inflation rate, Seattle’s minimum wage for various sized businesses would phase in as follows:

Year	Base Min.	10 FTEs	100 FTEs	250 FTES
2015	$11.00	$9.51	$9.79	$10.24
2016	$13.00	$10.37	$10.86	$11.66
2017	$15.00	$11.95	$12.51	$13.45
2018	$15.26	$13.20	$13.58	$14.21
2019	$15.53	$14.48	$14.67	$14.99
2020	$15.80	$15.80	$15.80	$15.80

You can adjust the FTE cap or the length of the phase-out, or inflation-adjust the three-year phase-in, but a similar pattern emerges: smaller businesses essentially phase in to the full Seattle minimum wage a lot more gradually than large businesses.

It is important to note that all businesses at or above the FTE cap will pay the base Seattle minimum wage in column two. Likewise, non-tipped non-benefit employees will also receive the base Seattle minimum wage. Further, an employer’s deduction against his minimum wage obligation can never exceed the amount the employee receives in tips and health benefits. For example, if a 10 FTE employer only paid the equivalent of $2.00 an hour in health benefits during 2017, he must pay non-tipped employees an effective $13.00 minimum wage, not the lower $11.95 rate that would otherwise be available.

This formula-based phase-out has huge advantages over the fixed schedules the advisory committee is considering. First, it doesn’t attempt to address the needs of five-employee businesses and 500-employee businesses in one broad stroke—deductions are targeted along a finely calibrated continuum. Second it avoids an arbitrary definition of a “small” business that might incentivize employers to limit their number of FTEs in order to stay on one side of a threshold. And finally, it acknowledges that FTEs rise and fall over time due to seasonal and other reasons; during any pay period the employer need merely go to a city website and plug in his current number of FTEs in order to calculate his current maximum deduction. Easy.

As for not-for-profits, we might remove the FTE adjustment altogether, giving them the opportunity to take the maximum benefit deduction available in any given year.

I make this proposal reluctantly, as I do not accept the economic (or moral) necessity of constructing such a prolonged phase-in. But if this is the direction the committee and the council are going, an FTE-adjusted deduction phase-out is a much more rational, flexible, and targeted approach. City council members would do well to consider the regulatory nightmare a four-schedule minimum wage could create, and then steer well clear of it.

But mostly I offer this proposal in the interest of refining and focusing the debate. All sides agree that smaller businesses and not-for-profits need to phase-in more slowly than large businesses. Even the 15Now.org charter amendment embodies that principal. Achieving this objective through an FTE-adjusted phase-out allows us to focus on defining the variables in the formula—the number of years and the size of the FTE cap—rather than rehashing the same old political arguments. And by eliminating the necessity to define “small business” by an arbitrarily abrupt FTE threshold, we eliminate some of the political pressure to raise that all-or-nothing threshold in order to satisfy one or more special interests.

To be clear, I would never advise 15Now.org to put such a compromise on the ballot. But if the city council were to adopt a minimum wage along the lines of what I’ve described above, I could in good conscience advise them to drop their objections, and move on to the next item on their agenda.

Now, I’m not suggesting that all restaurateurs are crooks, anymore than I’m suggesting that all Republicans are. But, you know…

Representative Michael G. Grimm, a second-term congressman from Staten Island, was indicted Monday on federal fraud charges for underreporting the wages and payroll while running an Upper East Side restaurant, concealing the actual payroll in a separate set of computer records.

The charges, unsealed Monday, detail how Mr. Grimm concealed more than $1 million in gross receipts for the restaurant, and hundreds of thousands of dollars in employee wages, thus getting around federal and New York State law. He also lied under oath in January 2013, while he was a member of Congress, during a deposition, the indictment says.

The indictment charges Mr. Grimm with, among other things, perjury, wire fraud, mail fraud, obstruction of justice, employment of illegal immigrants, obstructing and impeding tax laws, and conspiracy to defraud the United States.

[…] The concealment, perjury and obstruction of justice charges come in connection with a January 2013 deposition given by Mr. Grimm as part of a lawsuit by two former Healthalicious employees who alleged that Mr. Grimm was not paying them minimum wage or overtime.

Grimm is more than just a congressman, actually. He’s also a former US Marine and FBI agent. So “Semper Fidelus” and “Fidelity, Bravery, Integrity,” and all that. (Not sure what the motto of the restaurant industry is, but I doubt it emphasizes fidelity in any language.)

The point is,* if we build a minimum wage law that not only facilitates wage and tip theft, but incentivizes it, then some businesses owners will surely exploit it to cheat their workers.

* (Also, given the prevalence of accounting shenanigans, I don’t trust restaurateurs pleas of poverty. I just don’t.)

– Good on Governor Kitzhaber for his opposition to coal exports.

– I’m looking forward to someday riding on US Bike Route 10.

– Do any of these 4 Seattle Police Chief candidates inspire you, or is it going to be more of the same under any of them?

– So much about the conservative movement is a scam.

– It’s too bad about Oregon’s health care exchange (NY Times link).

– 5 Insane Lessons from My Christian Fundamentalist Childhood

Last week’s contest was won by Seventy2002 for his second in a row. It was Thomson, Georgia.

This week’s is related to something in the news from April, good luck!