Search Results for: inflation

The Seattle Times editorial board (many of whom’s members don’t actually live in Seattle) weighs in on Proposition 1, which would create a Seattle Park District to manage and fund the city’s parks and recreation facilities.

SEATTLE loves its parks, and should have access to beautiful, safe and well-maintained urban green spaces.

Yes we do!

But in the name of good parks, the Seattle City Council is asking voters to give them a blank check, with increased power and weaker oversight.

We just don’t want to pay for them!

Citizens should reject Proposition 1, the Seattle Park District measure. This is not merely a replacement for the existing parks levy, which citizens have generously passed every six years. (Currently, property owners pay about 20 cents per thousand dollars of assessed value per year — or about $88 on a home valued at $440,000.)

It isn’t? Then I suppose in the very next sentence you are going to effectively describe exactly what Proposition 1 is:

As pro-parks community activist Gail Chiarello so effectively describes Proposition 1: “It’s pretending to be a Bambi, when it’s really a Godzilla.”

Um, what? I’m pretty sure that’s a non sequitur.

With the support of Mayor Ed Murray, Proposition 1 proposes a new, permanent taxing authority controlled by the City Council. Collections in 2016 would start at a total of 33 cents per $1,000 of a home’s assessed value (about $145 on a home worth $440,000), but the council could more than double that amount to 75 cents per $1,000, or $330 per year — without ever having to check with voters.

That’s not entirely true. Once the initial levy rate is set, the parks district would be subject to the same absurd one percent annual cap on regular levy revenue growth that Tim Eyman’s Initiative 747 imposes on all taxing districts. It is unclear to me whether the Parks District would be born with banked levy capacity up to the maximum revenue that could have been raised under the 75 cent per $1,000 statutory cap at the time of the initial levy, but even if so, that banked capacity would not grow with property valuations. In fact, since property values generally appreciate at a rate much faster than 1 percent a year, the actual maximum parks district levy rate per mille will inevitably decrease over time without a voter-approved lid lift.

Either the editors are too stupid to understand that, or they are engaging in dishonest scaremongering, pure and simple.

Under state law, this district cannot be dissolved by a public vote. Neither would citizens be able to file initiatives against decisions they disagree with.

Which is true. But citizens already can’t file initiatives against parks decisions now! The mayor proposes and the council amends and adopts parks appropriations through the annual budget process. City appropriations are not subject to initiative or referendum. How the parks department subsequently goes about spending its appropriations is a purely administrative function. Administrative actions are also not subject to initiative or referendum.

Again, either the editors don’t understand the law, or they’re hoping you don’t.

Though a 15-member citizens’ committee would ostensibly provide oversight, the real control is with the City Council. The parks district essentially creates a shadow city government, run by the same Seattle City Council with the same borders as the City of Seattle, but with vast new authority to levy up to about $89 million in new annual taxes on the same Seattle taxpayers.

How is it a “shadow city government” if it is composed entirely of the actual city government? Its meetings and records are open to the public. Its members are directly elected by voters. What is shadowy about that.

In fact, if you read the interlocal agreement that is part of the formation of the Parks District, nothing at all changes about the way decisions are actually made. The city will continue to own the parks. The mayor will continue to propose parks budgets. The council will continue to amend and approve parks budgets (before passing it on to itself in the guise of the Parks District for a pro forma vote). And the city’s parks department will continue to operate the parks on behalf of the district. Other than adding a citizens oversight committee, the only thing that substantively changes is the taxing authority. Nothing else.

There are not enough safeguards to stop the council from diverting general funds to other causes, such as sports arenas.

No safeguards except, you know, the ballot, the same safeguard that already stops the council from diverting funds to unpopular causes. These are elected officials. They answer to voters. That’s the safeguard: democracy.

(Also, “sports arenas?” Really? Now they’re just making shit up. In editorial board interviews and other forums, Parks District opponents have gone as far as to raise the specter that a Parks District could build an airstrip at Cal Anderson Park! That’s how stupid these sort of paranoid fantasies are.)

Proponents promise yearly department audits, but only after the measure becomes law.

Because you can’t audit something that doesn’t exist. Duh-uh.

Why wait? The city should conduct a robust, independent performance and financial audit before even attempting to ask voters to trust them and sign a blank check.

The office of the Washington State Auditor conducts annual financial and accountability audits of the city—including the Parks Department—the results of which are all available online. There are no outstanding negative findings regarding parks operations. As for a performance audit, it couldn’t hurt; but neither have the state’s performance audits proven to help all that much either.

Citizens deserve to know how funds have been used so far, and how the city might invest limited parks revenue more wisely.

See, this is really the heart of the disagreement here. The editors believe that parks revenue should be limited, whereas Mayor Murray and the council disagree. All their talk about accountability is bullshit. What they are really arguing for is more austerity.

• According to The Trust for Public Land, Seattle Parks and Recreation is ranked second in the nation for the number of employees per 10,000 residents among the nation’s 100 most populous cities. City spending on parks ranks fourth in the nation. Yet, it faces a daunting maintenance crisis that has left some buildings dilapidated, pools unusable, bathrooms dank and even allowed a broken pump at Green Lake to leak raw sewage.

Shorter Seattle Times: It’s all the fault of those greedy, lazy parks employees!

To be clear, the Parks Department has eliminated 142 positions since 2008, about 10 percent of its workforce. Further, Seattle Parks & Recreations is almost unique in the nation in that it encompasses community centers as well as parks, thus skewing our employee per resident and revenue per resident numbers upwards. Indeed, if you read the TPL report in its proper context (instead of cherry-picking data and deliberately presenting it out of context like the editors do), what you see is Seattle’s parks rankings slipping year over year compared to similar-size cities, do to our lack of investment.

So let’s be honest. One of the reasons the Seattle Times consistently opposes raising taxes (again, taxes many of its non-Seattle-resident editors will never pay) is because they view every funding crisis as an opportunity to punish unionized public employees. Not enough money to meet our paramount duty to amply fund public schools? Fire teachers, cut their pay, and break their unions! Sales tax revenue shortfall threatening 600,000 hours of Metro bus service? Fire bus drivers, cut their pay, and break their unions! Initiative 747’s ridiculous 1 percent cap on annual regular levy growth strangling the city’s ability to pay for parks and other public services? Fire workers, cut their pay, and break their unions!

• Despite campaign rhetoric calling on voters to invest in fixing parks, Proposition 1 would dedicate only about 58 percent, or $28 million, of revenue in the district’s first year toward chipping away at the city’s $270 million maintenance backlog. Eight percent, or $3 million, would pay for maintaining facilities. More than a quarter of the budget is slated for new programs and expansion.

That’s 58 percent toward addressing the maintenance backlog and 8 percent toward avoiding adding to it. Yes, a big chunk of the remainder goes to “expanding” programs… but only within the context of several years of program cuts. For example, we’re talking about restoring community center hours and routine park maintenance and service that had been cut during budgetary lean years. Over anything longer than a one-year time frame, that’s not an expansion.

As for new programs, the proposed budget would develop and maintain parks at 14 sites the city had previously acquired, but never had the funds to develop. Also a new program: performance monitoring! The editors oppose spending additional money on the exact sort of accountability they insist must be delivered before spending additional money! Imagine that.

Seattle needs to care for current assets before amassing more. It also ought to expand partnerships with nonprofits and private groups willing and ready to help sustain recreation programs.

Or, hell, why not just privatize?

Preserving parks is critical to quality of life and public health.

But paying for it is not.

The mayor and council members are understandably eager to create dedicated parks funding and free up room in limited levy capacity for other worthy programs, such as universal preschool. But they have failed to make a case for a Seattle Park District that gives elected officials so much additional, unfettered power to tax and spend.

Again, bullshit. The power isn’t unfettered and there’s zero loss of accountability. What the editors are really opposed to is “free[ing] up room in limited levy capacity for other worthy programs, such as universal preschool.” They want to drown city government in a bathtub.

By rejecting Proposition 1, voters send a strong message to city leadership: We love parks, but return with a levy or alternate measure that prioritizes park needs, holds officials more accountable and preserves citizen participation.

Actually, it would send the opposite and most obvious message: that we don’t love our parks. And they know that. But the anti-tax/anti-government/anti-Seattle editors just couldn’t give a shit.

Let’s be 100 percent clear: For all the over-the-top vilification, the proposed Seattle Municipal Parks District is little more than an accounting maneuver. For a hundred years, this latent taxing authority has been left untapped because a prosperous Seattle didn’t need it. But I-747’s ridiculous 1 percent cap (less than inflation let alone population-plus!) has left the city unable to grow revenues commensurate with its needs.

A parks district would provide a stable and adequate alternative revenue source while freeing up taxing capacity for other crucial services like universal pre-school. And it would leave the parks department just as accountable as it is now, if not more so.

What the Seattle Times is arguing for is what its editors always argue for: a slow and steady decline and erosion of the public sector. Tell them to go fuck themselves: Vote “yes.”

The best thing about the Seattle Times hiring Erik Smith, is that finally there’s somebody on the paper’s editorial board with the courage to give a voice to Seattle’s downtrodden business community:

A rare voice on minimum wage

Howard Behar, former president of Starbucks, explains why he supports a referendum campaign that would send Seattle’s minimum-wage ordinance to the ballot.

That’s Smith’s column and kicker. Really. Because there is nothing rarer in American politics than the voice of a rich white guy.

Seattle’s business community didn’t put up much of a fight when the City Council passed its highest-in-the-country $15 minimum-wage ordinance this month — at least not the united opposition that might be expected in a city of lesser size.

Um, there’s a difference between not putting up much of a fight, and losing. And they didn’t completely lose, either. No, Seattle’s business community didn’t win a permanent tip credit or “total compensation”, or the lower $12 minimum wage for which many business leaders belatedly fought. But they did get what amounts to an eleven-year phase-in before all Seattle workers will earn the inflation-adjusted equivalent of about $14.50 an hour in cash take-home pay in the year 2025.

But at long last, Howard Behar has had it with that talk of “sticking it to the man.”

“First of all, it’s not just the man anymore,” he says. “It’s the man and the woman. But is that what we think this is about? We’re trying to get somebody?”

Well then, he should stop watching re-runs of The Mod Squad, because I’m not sure I’ve heard anybody actually use that phrase since the early 1970s. I mean, I love “the man” as an apt metaphor for the way society actual works, but then, I’m old. I’m over fifty. “Sticking it to the man” is about as much a part of modern American parlance as “groovy” or “the cat’s pajamas.”

And no, $15 was not about “trying to get somebody.” It was about trying to get somebody a living wage. The rhetorical focus was always on the plight of the working poor. That’s why fast food workers became the symbol of the movement.

If anyone is the man, it is Behar. He is the former president of Starbucks, the Seattle-based coffeehouse chain with more than 20,000 outlets worldwide. Though Starbucks is one of the world’s most recognizable brand names, it was not vilified during the campaign by union organizers and political activists in the same way as favorite corporate targets McDonald’s and Wal-Mart.

So wait. Behar is “the man”…? And nobody talked about “sticking it” to him…? Now I’m just confused.

The company prides itself on the fact that it pays a bit more than the current minimum wage, provides health insurance for its employees and recently implemented a college tuition benefit.

Starbucks baristas average less than $9 an hour nationwide, only 42 percent of employees are actually covered by Starbucks’ health insurance (less than Walmart!), and it turns out the company’s much ballyhooed tuition benefit program isn’t all that much of a benefit. Starbucks is far from the worst company in the world to work for, but it isn’t a charity.

Yet, with a corporate headquarters about a mile from Seattle City Hall, the company is affected by the raised minimum wage as clearly as the smallest espresso hut along Highway 99.

And your point is… what? Starbucks should get a volume discount?

In criticizing the Seattle plan, Behar is not speaking for the chain he helped build from 28 stores before his retirement as president in 2007 — his only direct financial interest in Starbucks is the one share of stock he keeps framed on the wall.

No, he’s speaking for his class. I’m no Marxist, but this is clearly a class struggle. And as multi-billionaire investor Warren Buffett famously said: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

A lifetime spent in business tells him the Seattle plan will hurt the low-wage earners it aims to help by raising the cost of living, and driving light manufacturing and distribution jobs beyond the city limits.

Ah, he’s just looking out for the little people. God bless him.

But while I don’t dismiss Behar’s business acumen, there just isn’t any data to support the claim that minimum wage hikes—even massive ones—have a substantial impact on employment.

That is why he is a major contributor to Forward Seattle, the organization gathering signatures to place a referendum on the November ballot to undo the ordinance. Behar agrees the wage should rise, but says the city ought to phase it in over a much longer period of time, perhaps at twice the rate of inflation until $15 is reached, for businesses of all sizes, uniformly.

So let’s do the math. Assuming our current annual inflation rate of about 1.75 percent (and that may be on the high side), it would take 14 years—not until the year 2028—before workers finally earned $15 an hour. But by then, $15 would only be worth about $11.78 in 2014 dollars. So in real dollars, Behar is proposing a $2.46 an hour raise phased in over a decade and a half.

Behar’s voice is important because so few in Seattle’s big-business circles have been willing to say a word. In smaller cities, small business dominates the Rotary clubs and the chambers. The silence from many Seattle-based business organizations reflects the fact that this is a regional headquarters city for so many large corporations. Some shrug — they pay more than minimum wage — and by taking a stand in Seattle they could bring picket lines elsewhere in the country.

You’re kidding, right? Twelve of the 21 non-elected members of Mayor Ed Murray’s Income Inequality Committee represented business, including the Seattle Chamber of Commerce, the Seattle Hotel Association, Nucor Steel, and Space Needle owner/hotelier Howard Wright. Alaska Airlines and the car rental, lodging, and restaurant industry spent a record $227 per vote in their failed attempt to defeat SeaTac’s $15 minimum wage initiative at the polls! The International Franchise Association is spending $1,000 an hour to file ridiculous lawsuits in an effort to bully other cities from moving forward. You call that silence?

“Business leaders are scared to death,” Behar says. “Because you know in today’s world what happens when they speak up? They are accused of being greedy, they are accused of not caring about people.”

Oh, boo fucking hoo! Workers are scared to death of being fired for attempting to unionize, but Behar is scared that some people might say he’s mean? Talk about asymmetry.

Behar calls the Seattle plan unjust and immoral — some reasons familiar, others not.

“Unjust and immoral?” You mean like paying somebody a poverty wage? You mean like the service industry practice of denying workers more than 29.5 hours a week so that they don’t qualify for benefits? You mean like the wage and tip theft that is rampant in the industry?

The Seattle plan will require big companies, chains and franchisees to raise wages faster than mom-and-pop operations, the idea being that big corporations can afford it. Franchisees are, of course, small-business owners themselves, a fact the Seattle ordinance ignores. And Behar notes that in a chain, each store is considered a stand-alone business and each is expected to turn a profit.

So, either Seattle chain outlets will raise prices in Seattle, just like mom-and-pop stores will — or, perhaps worse, they might allow that store in Cincinnati to subsidize the one in Seattle, and keep prices low until shakier independent merchants close their doors.

My god, when will America wake up to the holocaust that is befalling our nation’s persecuted big businesses? If only they had unlimited financial resources to buy high priced lobbyists, expensive advertising, and credulous editorial boards to defend their interests.

And, while the proposition was sold with the idea of reducing income inequality, the shock on the local economy will mean higher prices for things bought locally — buying power of a higher minimum wage is reduced.

So first we’re told we’re supposed to heed Behar’s warnings due to his “lifetime spent in business,” and then he throws this incredible piece of economic bullshit at us? Does he think we’re stupid?

If labor was the only cost of doing business, this argument might largely hold true. But of course, it’s not. Labor is about a third of the cost of a Big Mac. So if the entire cost of raising the minimum wage were passed on to McDonald’s consumers (and it won’t be), you’re looking at about a 19 percent price hike over the same period of time McDonald’s workers see their wages rise 56 percent.

Low-wage workers clearly come out ahead. And that’s just with burgers. The inflationary pressure won’t be zero, but big monthly expenses like electricity, utilities, cable, phone, and of course housing will see little direct impact from a hike in the minimum wage.

Behar says a proposition with such a dramatic effect on the city ought to bypass a council where special-interest groups hold sway. “The idea this got a fair hearing is garbage. Labor was going out the back door and business was sitting in the lobby.”

Again… you’re fucking kidding me, right? Is he really making the argument that corporate money doesn’t have enough influence in politics? That if Behar were still president of Starbucks, the mayor and every council member save Socialist Kshama Sawant wouldn’t take his phone call in New York minute?

The vilification of big business to promote an unworkable economic ideal hits him in the gut: “If we are a just society, we treat everybody the same.”

First of all, perhaps some people vilify big business leaders as “greedy” and “not caring about people” because capital-as-victim narratives like this make them come off as greedy and not caring about people? Just a thought.

Second, if Behar is really advocating for a “just society,” one in which we “treat everybody the same,” perhaps he should start with reforming Washington State’s most regressive tax system in nation? This is a system in which the bottom 20 percent of earners (you know, Starbucks baristas) pay 16.9 percent of their income in state and local taxes, whereas the wealthiest 1 percent (you know, Howard Behar) pay only 2.8 percent.

Does this sound like a just society in which we treat everybody the same? Of course not. And yet Behar has chosen to use his voice to champion the moneyed interests that benefit most from the status quo.

In a city where no one has spoken for big business on the issue, Behar does seem to be the man.

No one except all the big businesses I mentioned, and of course, the Seattle Times editorial board. Relentlessly. But nice attempt at an emotional bookend, Erik.

Seattle may have been the first city in the nation to approve a $15 minimum wage, but San Francisco may be the first city to get there, at least for all its workers. The dominos continue to fall:

San Francisco voters will decide in November whether to raise the city’s minimum wage to $15 an hour in 2018.

The mayor, city supervisors and business and labor leaders announced on Tuesday that they had reached a deal on a ballot measure for the increase.

“I can’t tell you how happy I am. San Francisco is yet again setting the bar on workers’ rights,” said Supervisor Jane Kim, who helped broker the deal. “All San Francisco employers will be paying $15 an hour by 2018. There will be no tip credit, no health care credit. These are pure wages workers will be bringing home to their families.”

[…] The city’s current minimum wage is $10.74 an hour. Under the ballot measure that will go before voters, it would increase to $12.25 next May, then to $13 in July 2016 and $1 each year after that until it reaches $15 in 2018.

Under Seattle’s recently passed ordinance, minimum wage workers at companies with more than 500 FTEs will earn $15 an hour as soon as 2017, 2018 for workers who receive benefits. But workers at companies with 500 or fewer FTEs won’t fully phase in to an inflation-adjusted equivalent wage until 2025. That means that when all San Francisco workers will be earning a minimum of $15 in 2018, tens of thousands of Seattle workers will still be earning as little as $11.50 an hour. On the other hand, since Seattle’s minimum wage is pegged to $15 in 2017 dollars, rather than 2018 in San Francisco, Seattle’s inflation-adjusted minimum wage will ultimately be a little bit higher.

Personally, I much prefer San Francisco’s more straight forward four-year phase-in than the convoluted multi-schedule phase-in Seattle settled on. But either would be a huge victory for low-wage workers.

But of course, the bigger story is that thanks in part to the history-making effort here, the fight for $15 is on the verge of victory in another American city. On to the next battle.

With a unanimous 7-0 vote today, the Seattle City Council passed out of committee a modified ordinance raising the city’s minimum wage to $15 for employees at some large businesses by 2017, with all other workers being phased in to an inflation adjusted equivalent by 2025. Despite a series of amendments weakening the proposal, and her strident advocacy for $15 Now, Socialist council member Kshama Sawant voted “yes.” So much for her being unable to compromise.

The council will officially vote on the ordinance at its Monday meeting, but that is just a formality. A $15 minimum wage has passed in Seattle.

An amendment giving city regulators authority to approve a teen sub-minimum wage mirroring that of the state (currently 85% of minimum for workers under age 16) was approved 4-3, with Sawant, Mike O’Brien, and Sally Bagshaw voting no. An amendment moving the start date from January 1, 2015 to April 1, 2015 also passed 4-3, with Sawant, O’Brien, and Harrell voting no. (Council members Nick Licata and Tom Rasmussen were both absent and on vacation.)

That said, several Sawant and O’Brien amendments strengthening enforcement did pass the council, as did a Sally Clark amendment that removed adjustment formulas for wage schedules post-2018 and replaced them with a hard schedule based on a presumed 2.4 percent inflation rate. Since inflation will likely average less than 2.4 percent over the next decade, this latter amendment will likely prove a minor net plus for workers.

This ordinance is far from perfect. But it is historic, as is the fact that it will pass the council by a unanimous vote. Furthermore, it is now possible that the ordinance might not see any serious challenge at ballot box. With Sawant on board, $15 Now will likely drop its initiative and pivot to defending the ordinance while pushing the movement nationwide. Meanwhile, the business-backed One Seattle has reportedly decided not to file an opposing initiative of its own.

So I guess a $15 minimum wage is “thinkable” after all.

National (and international) headlines will likely tout this as “the highest minimum wage in the world.” Well, maybe. I wouldn’t be surprised if our wage is surpassed by the time the first workers hit $15 in 2017, let alone by the time the wage is fully phased in in 2025. But Seattleites should kvell with pride at our leadership on this issue, and the role we’re playing in improving the lives of the working poor nationwide.

The cheap labor capitalists on the Seattle Times editorial board are at it again:

THE comedian Louis C.K. has a brilliant rant about an airline passenger who bemoans problems with in-flight Internet. As Louis C.K. said, grumping about the airline Wi-Fi ignores the miracle of flight itself. “Everyone on every plane should just constantly be going, ‘Oh my God! Wow!’ You’re flying! You’re sitting in a chair, in the sky!”

We should all be impressed that the new generation of editors at this genteel family newspaper are young and hip enough to enjoy foul-mouthed Louis C.K.. Good for them. Though to be fair, from a consumer perspective, the airlines do suck way more than they have to, and as a technology, flying is no more magical than, say, electricity. So this is far from one of the comedian’s more brilliant rants.

Advocates pushing for a $15 minimum-wage are at a similar moment. The Seattle City Council, with backing from Mayor Ed Murray, is racing toward a radical economic policy that would have been unthinkable even a year ago.

Um, it was very thinkable even a year ago. In fact, a year ago, Kshama Sawant was running on a $15 minimum wage as the centerpiece of her insurgent Seattle City Council race at the same time organized labor was running a $15 minimum wage initiative in nearby SeaTac. And both of them won! That’s the very definition of “thinkable.” So I’m not sure why we should use the editors’ year-old paucity of imagination as an argument for watering down the measure now.

Yet Councilmember Kshama Sawant, and some of her allies in labor, are grumping about proposals to make this radical policy slightly more palatable for the business community.

“Grumping?” Really? Are they really equating defending the interests of working people with being grumpy? Maybe if Sawant just took a nap or something she’d stop sulking over efforts to pay teens and immigrants a sub-minimum wage… is that what the editors are implying? Remember: pro-worker = grumpy, pro-business = well rested! Way to infantilize the colored woman on the council, Seattle Times!

At the City Council’s first hearing on Murray’s $15 proposal last week, other council members pondered allowing a sub-minimum wage for 16- and 17-year-olds, as well as allowing a lower wage for a month or two of training.

Huh. How curiously nonspecific. A few paragraphs later the editors claim the sub-minimum wage is “usually defined as 85 percent of the standard wage,” but that’s not what state senate Republicans proposed last session. Their business-backed bill would have paid a training wage of 75 percent of the standard wage for the first 680 hours of work. That’s about four months of full time work. But as I explained at the time, it would pretty much mean that a college student working a part-time job would never earn the standard minimum wage.

Also screwed by a training wage would be every worker in high turnover industries like fast food and chain retail where annual turnover rates range up to 200 percent. With the typical worker getting no more than 30-hours a week, these jobs might never pay the full minimum wage. Which of course, is exactly the point.

The training wage idea is strongly backed by micro-businesses in Seattle’s ethnic minority community to facilitating training of new immigrants with limited English.

Except, the fact is, these ethnic minority owned “micro-businesses” (again, intentionally vague and nonspecific) are almost exclusively hiring immigrants from the same ethnic minority community. They speak the same language. So how exactly does paying them less money “facilitate” anything but poverty?

The teen wage idea acknowledges that employment rates for workers aged 16 to 19 in the Puget Sound have fallen by half since 2000, according to the Brookings Institution.

First, there is no correlation between teen employment and the minimum wage. None. Second, teen employment has fallen dramatically everywhere in the US since 2000, as our ever crappier economy has forced more and more adults into minimum wage jobs. What would the editors prefer—that a 26-year-old single mother lose her job so that her employer can pay a 16-year-old 25 percent less?

In response, Sawant said a lower minimum wage for teens means “condemning those low-wage workers to not having the best start in life.”

Sawant said, “The whole idea of $15 is to go forward. A training wage takes it backward.”

What’s missing from that analysis is this fact: Those earning a training wage would make slightly less than what would be the highest minimum wage of any city in the country.

And what’s missing from the Seattle Times analysis is the fact that the precedent of a training wage in Seattle would be seized upon by Republicans in Olympia (and some cheap-labor Democratic collaborators) as an opportunity to create a training wage statewide, cutting the already stagnant wages of tens of thousands of Washingtonians.

It may be an unwelcome burden to some, but Seattle’s $15 minimum wage ordinance is setting an example for the state and the nation. What we do here will surely influence what lawmakers do elsewhere. And that is what Sawant is talking about when she astutely warns that “a training wage takes it backward.”

Under Murray’s proposal, Seattle’s minimum wage would be more than $18 an hour by 2025 — $6 more than what the state minimum wage, which automatically rises with inflation, would be. Even with a subminimum wage — usually defined as 85 percent of the standard wage — teens and trainees would be making more than $15 an hour.

Okay, now the editors are just pulling numbers out of their collective ass, guessing at the training wage discount, mixing 2025 dollars with 2014 dollars in the same paragraph, and willfully inflating the inflation rate for maximum effect. By the same logic, we could just argue for leaving Seattle’s minimum wage law unchanged, because the status quo would have all workers making at least $15 an hour by 2034! Hooray!

The Seattle City Council should allow both. That would not make the council sellouts to business. It would acknowledge that Seattle is about to take off on a flight unfathomable just a year ago.

Again, it’s only “unfathomable” if you are totally out of touch with the will of Seattle voters.

Furthermore, sub-minimum teen and training wages are unacceptable to Sawant and organized labor not because they are “grumpy,” but because it would create a wage-stealing loophole big enough to drive a Walmart delivery truck through. Study after study finds that low-wage workers are routinely cheated, and these sub-minimum wage loopholes are nothing if not a recipe for cheating workers.

And finally, let’s be clear about what this teen and training wage proposal is really about. It’s not about accommodating immigrant-owned micro-businesses. It’s about destroying the delicate compromise worked out by the mayor’s Income Inequality Advisory Committee—a compromise that already takes 11 years to phase all workers in to what would be the equivalent of only $14.50 an hour in today’s dollars. Tack on a subminimum teen and training wage, and that whole deal falls apart.

Which I’m guessing is what the Seattle Times editorial board wants. Because I suppose it’s unthinkable to them that the far less business friendly $15 Now initiative could possibly pass.

Last fall I walked into the McDonald’s on Madison Street in Seattle to order myself a metaphor. The point was to demonstrate how incredibly cheap fast food is by historical standards, and how little impact a $15 an hour minimum wage would really have on fast food prices.

I estimated that even if the entire cost of raising the minimum wage to $15 was passed on to consumers (and it wouldn’t be), menu prices would rise by only 20 percent, tops. Probably closer to 16 percent. Maybe as little as 10 percent.

And considering that, adjusted for inflation, the same 15 cents that bought you a McDonald’s hamburger back in 1948 buys you a $1.49 double cheeseburger today, it’s hard to argue that consumers can’t afford to pay a little bit more for their burgers.

Friday I walked into that exact same McDonald’s and paid $1.69 for the exact same double cheeseburger, a 13.5 percent price hike in less than six months. And yet for all the warnings from the industry that higher prices would drive away customers, it was business as usual at the Madison Street McDonald’s.

The fact is, restaurants and other businesses implement price hikes like these all the time, for various reasons, and nobody notices! In the worst case scenario for franchise owners under the proposed minimum wage ordinance, their labor costs would rise by no more than 18 percent a year over three years, before being indexed to inflation. But labor only accounts for a third of their costs. Pass all of that along to consumers (and again, they won’t), and you are looking at just a 6 percent annual price hike—less than half the rise in double cheeseburger prices just since December.

To put that in perspective—using the industry’s same minimum-wage-hikes-equals-higher-prices math in reverse—if all of the gains from a 13.5 percent price hike were passed on to employees in the form of higher wages, Madison Street McDonald’s workers would be making about $13.35 an hour today! Just from charging the equivalent of 20 cents more for a double cheeseburger! A price hike that customers apparently accepted with a shrug, if they noticed at all!

So let’s not pretend that fast food franchisees can’t afford to cover the cost of raising the minimum wage to $15 over three years, when they routinely pass on to consumers similar cost increases all the time.

When I laid out the details of the mayor’s minimum wage proposal last week, I promised to follow up with a political analysis. But man is this a difficult post to write. Political journalists may not like to admit it, but there is an observer effect to what we do—a kinda Heisenberg uncertainty principle of politics, in which the mere act of analyzing the political process can influence its outcome.

And so it is with many, many, many caveats that I reluctantly characterize this deeply flawed and disappointing compromise as a huge fucking victory for minimum wage workers.

Um… huh?

To be clear, this is not the minimum wage proposal I would write—its phase-in is too long and complicated, its definition of “small” business too broad, and the temporary tip and benefit deduction it imposes is both unwarranted and unfair. But I’m no idiot. Given where we were just a year ago on this issue, this proposal is a bit astounding. By 2025 every worker in Seattle will earn an inflation-adjusted equivalent of $15 an hour (in 2017 dollars)—twice the current federal minimum wage of $7.25 an hour—no tip penalty, no health benefit deduction, no total compensation, no nothing. And most fast food and other national chain workers will earn this by 2017.

Come on. Be honest. When fast food workers first walked out last year demanding a $15 minimum wage, did you really think they were going to get it?

Sure, given the strong public support for $15 and the very real threat of passing a less business friendly ballot measure, I had hoped that labor leaders would have held out for a better deal. But that said, if the city council doesn’t further water down this deal, and if our local business community not only refrains from challenging the ordinance at the ballot, but stands with workers to defend it against challenges coming from outside the city, Seattle will have achieved something truly momentous. Business buy-in wasn’t necessary to pass a $15 minimum wage at the ballot in Seattle; a ton of grassroots canvassing and a couple million dollars of well-spent media likely would have been enough. But the acquiescence of businesses groups here in Seattle will help set the frame for the minimum wage debate nationwide.

Second, let’s be clear that if it breezes through into law with little further opposition, that this minimum wage proposal will not only prove a huge win for minimum wage workers, but for the advocates who fought on their behalf, from the folks at SEIU and other unions who organized the fast food strikes and masterminded the SeaTac initiative, to Kshama Sawant, Socialist Alternative, and 15Now.org. Yes, Sawant voted against the proposal on the committee. Because that’s her role. And she’s played it astoundingly well. For without the legitimate threat from the left that Sawant and her organization provides, labor leaders would have been less able to squeeze concessions out of a business community that went into negotiations hoping to pad their profits with tip credits and total compensation and other giveaways.

If a minimum wage ordinance passes the council 9-0, and Sawant suddenly pivots to claim victory, it will be without a drop of irony. And if 15Now.org should suddenly pivot the impressive grassroots organization it is building from pushing a ballot measure to defending against one, well, minimum wage opponents should know that they will have a helluva fight on their hands.

It won’t be easy for 15Now.org to make that pivot, as this is far from a perfect proposal. Workers at small businesses who will only be earning $11 by 2017, the same year some big business workers start earning $15, will be particularly screwed by the lengthy phase-in and the temporary tip/benefit deduction. So they have every right to feel betrayed at being thrown under the bus.

But if this is ultimately the deal, and if the council can keep itself from carving out any additional loopholes, and if the business community delivers on its promise to support and defend it, then I’m enough of a political realist to know a political win when I see one.

If I’ve learned anything from the $15 minimum wage debate it’s that $15 should be thought of not just as how much $15 can buy today, but simply as a number between $14 and $16. So Ed Murray’s plan will get us to $15 but the purchasing power of that will be $13.25 in today’s money. If there’s anything else I’ve learned, it’s that the now part of 15 now means some point many years in the future.

It was with that in mind that I read the table at the bottom of the mayor’s press release on the minimum wage. And good news! According to their numbers, in 2035 inflation will mean the state minimum wage will top $15.

So my modest proposal is do nothing and call it $15 now. Eventually it’ll be $15. Sure, the value will — by virtue of the fact that it’s tied to inflation — be the same as the value of the minimum wage now, but it’ll be the number 15. And if people have to pay rent or eat in the mean time, just tell them that $15 is coming and that they should be glad to have a job at all.

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.

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.

At yesterday’s no-news conference, Mayor Ed Murray refused to release details on the minimum wage compromise on which he says his advisory committee has almost but not quite reached consensus. So in the absence of facts, I’m just going to have to go with some of the rumors leaking from committee members and their posses—the most disturbing of which is a proposed phase-in of as long as seven years for some businesses… not adjusted for inflation. (The inflation index wouldn’t kick in until after the seven-year phase-in was complete.)

So, let’s see, if you phase in a $15 minimum wage over seven years, starting in 2015, and conservatively presume an average annual inflation rate of 1.75 percent, that means that the 2022 Seattle minimum wage of $15 an hour is really only worth about $13.25 an hour in current dollars. Give or take.

Don’t get me wrong: $13.25 an hour is not nothing. It’s damn well better than today’s state minimum wage of $9.32 an hour. But $13.25 is not $15. By that math, we already have a $15 minimum wage—in 1993 dollars. So please don’t call it a $15 an hour minimum wage.

I don’t know where my friends at 15Now.org stand on this, but personally, I could accept a two or three year phase-in to the number 15, if not the actual value, depending on the totality of the package. But five to seven years, not inflation-adjusted, like I’m hearing, that’s just ridiculous.

So if that’s part of your proposal Ed, no patting yourself on the back for negotiating a compromise that gets us to a $15 minimum wage. Because you didn’t.

Seattle Mayor Ed Murray packed a conference room at city hall this afternoon to announce that he has no minimum wage proposal. At least not yet. Oh well.

Murray did outline several main points. If he had made a proposal it would phase in to $15 (eventually), indexed to inflation (eventually), with a slower phase-in for small businesses, however “small” is ultimately defined. There would be no “exemptions” we’re told, but there would be a phased out deduction for the cost of providing some benefits. And maybe a tip credit. That’s still under discussion.

I don’t mean to come off as snarky here. This isn’t easy. But he’s pretty much talking about all the things we’ve all been talking about, but without providing much specificity.

So, yeah. No news, really.

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.

To be clear: I don’t endorse inserting a “tip credit” into Seattle’s minimum wage ordinance. It would incentivize wage theft, while setting a terrible precedent for other lawmakers following in our $15 footsteps. Furthermore, despite its deceptive efforts to use small businesses and their tipped employees as a sympathetic proxy, the restaurant industry has failed to make a compelling argument as to why a tip credit is either necessary or proper.

But unfortunately, I’m not Benevolent Dictator (yet!), so as long as the politicians are debating a tip credit, I thought it might be useful to talk about how we might make the tip credit better, by using it as a tool for combatting both forced part-time employment, and wage and tip theft—two employment abuses that afflict many low-wage workers.

The perfect is the enemy of the good, and all that. So to this end I offer five sincere suggestions on how to make a tip credit a better less worse public policy:

Require Strict Business and Accounting Practices:
Any tip credit we implement must be conditional on establishments meeting strict business and accounting standards intended to impede wage and tip theft (and other abuses), while facilitating the investigation and prosecution of claims thereof. Don’t want to be told how to run your business? That’s fine. Don’t claim a tip credit. It’s your choice. Simple as that.

But of course, all the worker protections in the world aren’t worth shit if there’s no mechanism to enforce them. So with or without a tip credit, Seattle’s minimum wage ordinance should include a stable and adequate dedicated revenue stream to fund enforcement of labor standards—plus criminal penalties for violations. Maybe then every Seattle worker will finally get the paid sick leave required by law?

Raise and Exempt the Monthly Threshold:
Currently, the federal tip credit applies to all employees who regularly earn more than $30 a month in tips—the same monthly threshold that was put in place when the tip credit was first created back in 1966. That’s ridiculous. But raising the monthly threshold is about more than fairness; it could also serve as a powerful tool for incentivizing employers to move part-time employees to full-time work.

For example, let’s say we implemented a tip credit, but set the monthly threshold to $860 a month—the equivalent to earning $5 an hour in tips over 172 hours a month of full-time work. But we’d also need to exempt from the credit the first $860 a month in tips as well, in order to avoid plunging tipped workers off some sort of punitive cliff. (Without the exemption, workers earning $859 a month in tips would keep all of them, while workers crossing that threshold would lose their first $860 in tips, regardless of whether they earned much more that month.)

This takes care of all those mythical $80,000 a year servers we keep hearing about. In fact, the $860 monthly threshold and exemption would pretty much apply to any full-time tipped worker currently earning over $29,700 a year.

But remember: this is a monthly threshold, not an hourly one. So a part-time employee only working half the hours would need to average twice the hourly tips—$10 an hour—in order for the employer to start deducting a tip credit. And since the value of the tip credit would almost always be greater than the cost of providing benefits, it would remove much of the existing incentive for pushing tipped employees to part-time non-benefit-qualifying work.

I’m not sure what the optimal monthly threshold is to achieve the maximum economic incentive, but I’m confident that such a number exists. Regardless, any tip credit without a substantially higher monthly threshold than federal law should be off the table.

Prorate the Tip Credit for Part-Time Workers:
This is a variation or addendum to the monthly threshold provision described above. A half-time employee should only qualify the employer for half the maximum hourly tip credit a full-time employee would. For example, if the maximum tip credit is $5.00 an hour, the prorated maximum tip credit on an employee working only 20 hours a week would by $2.50 an hour.

Again, the goal is to dangle the tip credit as a carrot for moving part-time workers to full-time work.

Calculate Tip Credit Per Shift, Not Per Pay Period:
If you don’t think some employers switch workers’ shifts around in order to maximize tip credit, then you don’t know fuck about capitalism. This may not be an issue at Tom Douglas’s restaurants, where every server is allegedly a millionaire or something, but the third shift at Denny’s is a different story. Earn a tip credit worth of tips early, and you may find yourself filling ketchup bottles while a less well tipped colleague is given the better tables in order to push her over the top too. Likewise, earn some big tips early in your pay period, and you may find yourself bumped from a good shift to make room for a co-worker who hasn’t yet qualified the employer to take the full tip credit that pay period.

Regardless, calculating tip credit per shift is just more honest and less prone to manipulation. This should be one of those required business practices mentioned above.

Tip Credit Phase-Out:
Of course the best tip credit provision would be one that phases itself out, giving qualifying restaurants and other tipped businesses a bit more time to transition into our new living wage economy, but without establishing a tip credit as any sort of credible precedent.

For example, let’s say we phase in a $15 minimum wage with a tip credit over three years: $11/hour in 2015, $13/hour* in 2016, and $15/hour* in 2017. (* Adjusted for inflation.) Then we phase out the tip credit over the next three years, one third at a time.

The maximum legal tip credit would be the difference between Seattle’s higher minimum wage and the effective minimum wage for tipped employees under state and federal law—currently Washington State’s $9.32 an hour minimum wage. Assuming annual inflation of 1.75 percent, and no hike in the state or federal minimum wage other than CPI, the minimum wage and the minimum labor cost for tipped employees would rise accordingly:

Year	WA min wage	Seattle Min Wage	Max Tip Credit	Min Labor Cost*
2015	$9.48	$11.00	$1.52	$9.48
2016	$9.65	$13.23	$3.58	$9.65
2017	$9.82	$15.53	$5.71	$9.82
2018	$9.99	$15.80	$3.87	$11.93
2019	$10.16	$16.08	$1.97	$14.11
2020	$10.34	$16.36	$0.00	$16.36

* Minimum Labor Cost assumes employee earns enough tips for employer to take the full tip credit.

It is important to note that no worker would take home in cash compensation (wages plus tips) less than column three: the Seattle minimum wage. But for tipped employees, the wage portion of that compensation could be as low as column five, with employers deducting from their minimum wage obligation up to the maximum tip credit or the employee’s earned tips, whichever is smaller. Under this scenario, the impact on labor costs at tipped establishments is substantially delayed, giving them ample time to adjust their business model to the new reality.

Conclusion:
The tip credit as implemented in 1966 was little more than a straight-up giveaway to the powerful lobbyists at “the other NRA,” the National Restaurant Association. Washington State voters have twice approved minimum wage measures with no tip credit, and given the subsequently impressive employment growth within our restaurant industry there is no good reason to second guess Washington voters now.

That said, if are going to set a precedent by accepting some sort of tip credit, the least we can do is set a precedent of making the tip credit better by both incentivizing full-time work and combatting wage and tip theft. Any and all of the proposals above would help achieve that, so I hope this post adds a little more thoughtfulness to the debate.