Seattle’s $15 Minimum Wage Proposal: A Flawed and Disappointing Victory

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.

Comments

  1. 1

    Cascadian spews:

    I hope Sawant meets any proposal in council to water this down with a competing proposal to make it better. If we end up with this proposal, it’s a win, but we’ll only end up with this if it’s made clear that there are no concessions left to be made.

  2. 2

    don spews:

    Sawant won’t do anything to modify this proposal. She is staking her entire political career on the initiative. She thinks that one poll showing 70% in favor of raising the minimum wage will translate into a mandate in November. No way will the initiative get that kind of a vote and if the initiative loses, businesses in Seattle will have no interest in coming back to the table.

  3. 3

    spews:

    I hope that $15Now.org pivots to passing this on a state level. The roll out is so long and it has the support of business and labor already, so why only in Seattle. Seattle has high rents, but eastern WA has high transportation costs. Seems like a great plan for the State.

  4. 4

    guerre spews:

    @2 Oh Don so you’ve been coming to 15Now/SA meetings eh? Please do continue enlightening us with our future plans. Please tell me what our assessment of the situation is.

  5. 6

    TerraceHusky spews:

    Agreed, Goldy! This is a huge victory, despite the glacially slow phase-in for small business workers. A shorter phase-in for large businesses would be a nice-to-have as well since it would start the clock on inflation pegging earlier. But three years isn’t terrible, considering $15/hr was a pretty audacious goal to begin with. A little erosion of the $15/hr via 3 years’ inflation (very low inflation) won’t dampen wages too much. Probably less than $1 will be lost to inflation as a result.

    If and when this passes in Seattle, and an adequate defense is mounted (maybe at the ballot box), I’d love to see this fight taken to either King County or statewide. Though I’d be much more OK with a lower minimum wage for King County ($13) or statewide ($11). Snohomish and Pierce could go to $12. This fight has only just begun!

  6. 7

    guerre spews:

    @6 Sawant’s office is saying the delayed COLA will cost$0.59, or $14.31 vs a real $15. This amounts to a 4% difference.

  7. 8

    spews:

    @7 $0.59 would be 14.41. My guess is that inflation will be a tad lower, so we’re really talking about a $14.45 inflation-adjusted minimum wage.

  8. 9

    guerre spews:

    @8 yeah opps meant $0.69, or ~5%. yeah my guess is it’ll be $14.64 in 2015 dollars, given the 1.2% raise we’ve seen over last 14 years, so a lost of $0.36 for a 2% reduction in pay.

  9. 11

    don spews:

    @10

    What are you talking about? The mayor’s committee came up with an alternative. But because Sawant didn’t get everything SHE wanted, she is now pushing the initiative, thinking that 70% of Seattle voters are going to magically vote for it. I’m saying that I don’t believe that is going to happen, that she is squandering the best opportunity to get something moving by ignoring the proposal.

    She’s just as bad as Ted Cruz. Time and time again, Republicans get something they want, and then overplay their hand, this appears to be the same for Sawant. Why even run for political office if you have no interest in working within the system?

  10. 12

    Gary Larson spews:

    Goldy’s comments make sense. But what I’m also concerned about–and what I have not seen anything written about–is the probably impact of this proposal on wages now at and above $15 an hour. Might employers leave those wages untouched as the lower wages rise–in effect equalizing the eventual minimum wage paid to an increased number of workers? And if employers do that–as a way to reduce their costs–is it fair to workers now earning $15+

    Generally, I would like to believe that workers now earning the higher wage do so because their work requires more experience, more skill, more knowledge–so holding them at the eventual minimum wage doesn’t recognize and compensate their value.

    I wonder what the mayor, councilmembers and union leadership think of that possible scenario–and what might they do to prevent or minimize it?

  11. 13

    TerraceHusky spews:

    This entire exercise shows the importance of having a strong and credible threat from the left flank. None of this would have been possible had Sawant or 15Now decided to compromise with themselves and open with a $12.50/hr wage with a tip credit and total compensation.

    The comparison to Obama, the 2009 stimulus, the ACA, and the 2011 debt ceiling negotiations is stark. Obama assumed that by coming to the center as an opening move, he could avoid conflict, build goodwill, and get a quick consensus. We all know how that went. And even Obama wised up eventually, standing his ground in late 2013 on the shutdown and the threat of default.

    I’m glad Sawant and 15Now didn’t need a half-dozen dress rehearsals to figure this out. They came locked and loaded, ready for battle, and the outcome will likely be a lot more favorable than if they’d tried to go post-partisan and build consensus with a hostile adversary.

  12. 14

    TerraceHusky spews:

    @12 When minimum wages rise, the wages NEAR that new minimum wage tend to rise as well. Those workers currently at $16/hr are probably a fair amount more talented, educated, or valuable than today’s minimum wage earner ($9.32/hr). They’re being paid roughly 70% more than the minimum wage, in fact. If you think of it as a 70% premium above the baseline minimum, it makes sense that businesses would likely continue to leave a premium in place, though perhaps not a 70% premium. Maybe that premium drops to 35% above the new $15 minimum. But that would still equate to a new wage of $21.60/hr. Think of it as compressing wage disparities for low-income earners, rather than completely collapsing it for those within or near the $9.32-$15/hr range.

    A premium wage for premium talent/education will continue to exist, even with a higher wage floor in place.

    A good article on the topic: http://www.brookings.edu/blogs.....ney-harris

  13. 15

    spews:

    @11 What @13 said. You underestimate Sawant.

    @12 What you’re referring to is wage compression. Generally, when the minimum wage rises, wages slightly above the new minimum wage tend to rise too, but not as much percentage wise as the minimum wage. So there should be some broad upward pressure on wages.

  14. 16

    Roger Rabbit spews:

    I think labor and labor-supportive voters should take this deal. The key is “no tip penalty, no health benefit deduction, no total compensation, no nothing.” If that changes, it’s no deal, at least where my vote and voice are concerned.

  15. 18

    Roger Rabbit spews:

    @3 That’s a bridge too far. This proposal is intended to address Seattle’s uniquely high living costs. Don’t ask it do more than that.

  16. 19

    Roger Rabbit spews:

    @12 “Generally, I would like to believe that workers now earning the higher wage do so because their work requires more experience, more skill, more knowledge–so holding them at the eventual minimum wage doesn’t recognize and compensate their value.”

    Wages everywhere and always are determined by the relative bargaining power of the parties. Experience, skill, and knowledge may enhance a worker’s bargaining power, but the employer will pay what he has to, not what the worker’s skills are “worth.” That’s why you see people with graduate degrees working in minimum wage jobs.

  17. 20

    Roger Rabbit spews:

    CBS News reports that Sen. Elizabeth Warren plans to introduce a bill to give student borrowers debt relief. This is a needed step for our economy to recover; to do otherwise will hold back an entire generation from forming families and becoming consumers. If conservatives object on the grounds that debts are sacred obligations that must always be repaid in full no matter what, ask them why they don’t apply that reasoning to businesses or billionaires who repeatedly use bankruptcy to stiff creditors, workers, pensioners, and shareholders.

  18. 22

    Indeed spews:

    @19…”That’s why you see people with graduate degrees working in minimum wage jobs.”

    Otherwise known as naive fools.

  19. 24

    ChefJoe spews:

    I’m predicting that nomatter what the council ultimately passes it will be challenged by a referendum and we can enjoy ads like those for liquor privatization all over again.

  20. 25

    MikeBoyScout spews:

    Goldy, it pains me to write this, but you’re FKing wrong. And your characterization of the proposal as “a huge fucking victory” reeks of G.W. Bush’s “Mission Accomplished”.

    The point of $15/NOW is not and has never been about simple political progress. (Yes, the compromise is progress.) The struggle is for enabling a very large amount of people to earn a living wage with their valuable and difficult labor.

    To declare “victory” with this compromise is to surrender to the inevitable loophole bullshit to come. And you well know that all of the opponents of a livable wage are going to go ape-shit trying to duck and weave.

    “Victory”? No. Progress? Yes.
    Now is not the time to declare victory. Now is the time to double down and work harder for members of our community who work their GD ass off every day and are only asking for a living wage.

    So, Goldy, please reconsider the words you used in this post and think again about why $15/NOW was never about $15/later.

  21. 29

    TerraceHusky spews:

    One of the under-appreciated elements of this proposal is that the weaknesses are all realized upfront. The strengths are baked into the long-run. This proposal is less than what 15Now wants. And for some folks on the left this proposal might be less than palatable. But keep in mind that this proposal gets more closely in alignment with 15Now’s demands as time passes. In ten years, it will be nearly indistinguishable from 15Now’s initial demands, with the only lasting concession being the 3-year phase in for big business and the $0.50-0.60/hr lost to inflation during that span.

    There was a real danger (and maybe there still is–I’m not aware of what City Council is planning) that there would be a tip penalty or total compensation BS tacked onto this thing with NO SUNSET. That would be a substantial loss for workers not just in 2015, but in 2025, 2035 and beyond. Ensuring that those concessions are eventually phased out completely is a very important win.

    This proposal concedes in the short run to get the best possible deal in the long run.

    I’m not trying to dismiss the cost being borne by workers for the next 10 years resulting from a glacially slow phase-in. And we should press the council to shorten the phase-in where possible. But I’d take this proposal as-is, imperfect as it is, largely because it improves over time.

  22. 30

    you gotta be kidding spews:

    So I have worked in Seattle restaurants my whole adult life, and saved & bought my 1st restaurant 7yrs ago, and opened a 2nd restaurant last year. I somehow managed to do this with almost exclusively min. wage + tips jobs. Almost all my friends are rest. workers or owners since that is who i have worked with & for over these last 20yrs. The owners i know are all discussing which non-essential jobs we are cutting to eliminate labor hrs. Me, I will fire 2 dishwashers for the Sun-Wed shifts as the labor cost outpaces the value of the position. At $15/hr it is more cost effective to buy extra dishes so we don’t run out of it gets busy & then have the cooks do dishes in their downtime. I also am not gonna micro manage a dishwasher to get $15/hr labor value on the slow nights, when i know they take 5 smoke breaks/hr when they are bored. . In this way I will be able to afford giving the chefs who already make $15/hr a raise to $16 or $17 which is appropriate since they got to do dishes now. If you don’t think this will happen look at Phd Economist, State Treasurer Jim McIntire’s UW study of the effects of the wage increases of 89′ & 90′. He found that for the 100,000 who received a raise another 11,700 were also laid off. Of these layoffs about half the positions were refilled after 2yrs, but by more experienced workers (meaning less opportunities for the unskilled & minorities). But meanwhile almost 12,000 people were out of a job in a more competative labor market. $15/hr is gonna push the inexperienced and unskilled out of job opportunities as employers look for more experience and value for the $15/hr.

    http://blogs.seattletimes.com/.....e-seattle/

    In addition as the tip credit gets phased out it will depress & stagnate kitchen wages, the group most desrving a raise, who make the least in tipped restaurants, and where you find the most minorities. Think about it chefs start around $14-15 anyway, so they get either $1 or no raise at all, meanwhile for every chef there are at least 2 tipped employees and who already take home over $20/hr get raises of $5.68 each. In full service restaurants over 85% of the wage gains go to tipped employees, and this will leave less labor budget to give for kitchen raises & advancement.

    I would like to see a tip credit with a floor to the state minimum wage at full service restaurants in order to avoid wage stagnation & depression in the kitchen. Employers would be able to take tip credit to the state min wage, but no further. It seems more fair give 6 kitchen workers a $1/hr raise instead of 1 bartender who makes great money another $5.68. It also still guarantees every worker gets paid $15/hr which I thought was the point. Employers have to pay payroll taxes on tips, so it kind of seems like the State wants it both ways, employers & employees have to pay taxes of tips like they are wages, the IRS considers them wages, so why aren’t they?

  23. 31

    headless lucy spews:

    re 30: Firing the dishwashers and buying more dishes will create a huge backlog of dirty dishes — a huge problem.

    It would work as well as Boeing firing all of the Sub-assemblers and making the engineers build the aircraft on their ‘downtime’.

  24. 32

    spews:

    @30 So what you are suggesting is that a $15 minimum wage might force you to find ways to increase productivity? Not go out of business, but simply become more productive? That would be consistent with studies that suggest that higher wages lead to higher productivity, offsetting much of the cost of higher wages.

    Also, it should be noted that in the decade following the 89-90 wage increase, restaurant employment grew at a faster clip than state employment as a whole. So it’s hard to see a big negative there.

  25. 33

    you gotta be kidding spews:

    @ 31 Headless Lucy dirty dishes waiting in the dish area is not a “huge problem”, what are they gong to get dirtier while they wait for a chef to have time to clean them? It is not like they will wait long on these slower nights (Sun-Tue) when the dishwashing position will be eliminated.

    @ 32 Goldy my big problem is that as tip credit gets phased out this will depress & stagnate kitchen wages in order to give tipped employees bigger raises than a kitchen guy gets when there is already a huge income disparity between BOH(kitchen) & FOH (tipped staff). I believe the kitchen guys deserve the raise more than the tipped employees but that is not what I am being allowed to do in the long run. I am being forced to allocate more of my labor budget to tipped employees who are already the highest earners in the restaurant. I did a payroll analysis for both restaurants and it increase one payroll 19% & the other by 24%, meaning that I would have to raise prices an additional 10% over normal inflation over the next 7yrs, not quite the economic apocalypse some have predicted, but not nothing when combined with regularly occurring inflation. (granted that is just my scenario).

    In regards to letting some dishwashers go, I probably will on the slower days as they don’t add $15/hr of value, and would require micromanaging to get that value. Yes it will mean increased efficiency as you suggest, but at the expense of somebody else’s job. I am ok with paying $11/hr on slow nights (they also receive tips of $1-1.50/hr). My sincere hope is people will continue to tip at the same percentage as they do now and I will increase the tip percentage to the kitchen as the tip credit gets phased out to offset the wage stagnation caused by FOH taking the majority of the labor equation. For every tipped guy who gets $1-2 there are 2 tipped employees getting $5. So of the $11 in wage gains over 90% go to the tipped employees, this seems likely to increase wage inequality in full service restaurants.

  26. 34

    spews:

    @33 You understand that federal law prohibits mandatory tip pooling with BOH staff where there is a tip credit? Washington is one of the few states where it is currently allowed. So giving BOH staff a greater share of the tip pool will be an option once the tip credit phases out.

    But it’s good to hear businesses owners thinking out loud about how they are going to cope with the wage hike instead of just threatening to fire everybody and close up shop.

  27. 35

    you gotta be kidding spews:

    @ 34 Goldy my intention is to do everything to not only stay in business at the 1st location, but to also succeed at the 2nd location. So as long as it is legal, I will increase BOH tip percentages to even out the fact the wage gains go disproportionality (over 85%) to tipped employees. That may mean BOH tipping might be eliminated in the short term if it is made illegal during the tip credit phase out, and since most of the BOH already make $14+ (except dishwashers) and won’t be receiving the phased in raises it could result in a temporary loss for BOH. The lowest tipped employee hourly is $19/hr, and that is just factoring in verifiable credit card tips. The head bartender had just over $2,000 in credit cards tips for a 2 week period last payroll, and this guy needs another $5.68 at the expense of kitchen raises? Doesn’t seem right to me.

    What is most frustrating to me in this debate is there is a disingenuousness on both sides. The labor side says that raising the min wage will lift all boats and stimulate the economy while citing individual studies supporting that. While the business side acts like it will be economic apocalypse while showing their supporting evidence. I think it is more nuanced than that and that it will be a net positive, but there are significant negative impacts that should also be considered and minimized, and when these negatives are brought up they are dismissed as greedy business trying to take advantage of their employees. Much in the same the business ideologues dismiss the working poor as unmotivated slackers.

  28. 36

    Willard Bickford spews:

    I don’t agree with Goldy. This is just the opening hand of negotiations. Ms Kshama and the heroic and intelligent, caring individuals in 15NOW got screwed by the corporate and cowardly unions and labor bosses. This is just an opening salvo in a war that hasn’t started. When will the people get tired of working for slave wages? you tell me all you corporate fascist elite syncophants. We demand living wages for our communities and families.