$15 a Success in Seattle?
Never let facts get in the way of a good narrative. That seems to be the motto of the unions and labor groups pushing so-called “living wage” laws at the local level in Washington and around the country.
As the first city in the nation to pass a $15 minimum wage law, SeaTac has received a great deal of press coverage. One opinion piece in the Washington Post published a year after the narrow passage of Proposition 1 in SeaTac proclaimed “the sky did not fall” because of the $15 minimum wage.
What often isn’t noted, however, is the fact that the initiative was narrowly tailored, applying only to larger hospitality and transportation employers, as well as employers at the airport. Airport employees comprised the bulk of the workers estimated to be covered by the law. However, litigation kept the law from applying to airport employees until a State Supreme Court decision at the end of August 2015. Even now, some confusion remains about the obligations of airport employers under the jurisdiction of the Port of Seattle to comply with the city wage ordinance.
Anecdotally, there is some indication that SeaTac employers and workers have experienced negative effects. One hotel laid off 17 people and closed its restaurant because of Prop 1. A parking company now adds a “living wage surcharge” to its bills. Employees at another hotel reported losing a list of benefits, with one employee noting that the $15 minimum wage “sounds good, but it’s not good.”
Nonetheless, comprehensive data for SeaTac simply doesn’t exist, at least not yet.
A similar story is playing out in Seattle, which became the first major city to pass a $15 minimum wage law in June 2014. However, the law did not take effect until April 1, 2015. More importantly, not a single employer in Seattle is currently subject to a $15 minimum wage.
The legislation passed by the Seattle City Council was not the “$15 Now!” demanded by socialist activists, but a phased-in $15 that won’t be fully implemented until 2025. In what could be called the most complicated minimum wage regulation scheme in the country, the Seattle ordinance divides employers into four categories, each with different amounts of time to reach the $15 threshold.
- Schedule A: Employers with more than 500 employees that do not offer health benefits have to reach $15 an hour by 2017.
- Schedule B: Employers with more than 500 workers that do provide health insurance are given an extra year, until 2018, to reach the $15 threshold.
- Schedule C: Employers with fewer than 500 employees that do not offer tips or benefits have until 2021 to reach $15.
- Schedule D: Employers with fewer than 500 employees that do provide tips, commissions, bonuses or medical plans are allowed to combine their value with base wages to meet the minimum wage requirement until 2025, when base wages alone must be at least $15 an hour.
The highest minimum wage in effect for any employer in Seattle is currently $11 an hour, with some employers subject to only $10 an hour, not far above the current state minimum wage of $9.47 an hour. As the chart above indicates, Seattle’s $15 minimum wage experiment has a long way to go before it can be called a success.
But labor groups, eager to parlay the headlines into more political momentum, have been claiming victory in Seattle for months.
Their efforts got a boost last week with a headline story in the Puget Sound Business Journal entitled, “Apocalypse Not: $15 and the Cuts that Never Came,” which noted, “After warnings of wage meltdown, new restaurants are opening in Seattle at a blazing pace.”
Civic Skunkworks, the progressive blog outlet backed by Seattle billionaire Nick Hanauer, praised the piece as “top-notch work.” Citing the Business Journal article as proof, a headline on the website for Occupy Democrats blared, “The Numbers Are In: After $15 Minimum Wage, Seattle’s Restaurants Are BOOMING.”
But with Seattle a mere seven months into a 10-year experiment, the numbers are anything but in. Data collected by the conservative American Enterprise Institute indicate that the total number of restaurant jobs in Seattle has actually declined following the minimum wage boost, even though new restaurants continue to open in Seattle and restaurant jobs around the rest of the state continue to grow.
Again, anecdotes can be found on both sides. The CEO of the rapidly growing sports bar chain, Buffalo Wild Wings, recently told the Wall Street Journal the company “probably won’t be expanding” in Seattle due to the minimum wage law. Some existing Seattle employers have blamed the minimum wage law for putting them out of business.
Still, it’s a little too soon to draw any sweeping conclusions about Seattle’s minimum wage law. While there will be and have been some negative consequences for employers, particularly small businesses, and even some employees, just how bad the consequences ultimately turn out to be is hard to predict. Unfortunately, by the time the extent of the damage is fully known, it will likely be far too late for the city’s political leaders to reverse course.
And even in the unlikely event that high-growth Seattle’s “$15 eventually” wage ordinance doesn’t produce widespread negative effects, it should not be assumed that other, less prosperous parts of the state and country would get off so easily.
One thing is for certain: The debate over the minimum wage in Washington is far from over.
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Originally posted at http://www.myfreedomfoundation.com/blogs/liberty-live/15-a-success-in-seattle.