Seattle made history this week for being the first major city in the United States to raise the minimum wage to $15 an hour. Nearly a year after “living wage” debates first began in Washington, the Seattle City Council unanimously passed a 7-year plan that will phase in the highest minimum wage anywhere in the country. As Seattle progressives intended, passage of the ordinance places Seattle at the forefront of the national debate over income inequality.
But Mayor Ed Murray’s plan to allegedly stimulate the economy is likely to backfire. His strategy to raise the city’s minimum wage well above Washington state’s current $9.32 minimum – already the highest state minimum wage in the nation – begins next April. Businesses with fewer than 500 employees are deemed “small” and allotted a seven-year phase-in that will reach an inflation-adjusted $15 per hour around 2020. For a time, small employers are permitted to count employer paid health care contributions and consumer-generated tips toward the $15 wage requirement.
Larger businesses, comprised of 500 or more employees, have a more accelerated timetable. Within four years, all large employees will have to pay employees a base wage of an inflation-adjusted $15 per hour. As the Mayor’s proposal states, minimum wage employees working 30hours per week will be paid $6,240 more annually than a minimum wage worker outside Seattle.
Several amendments introduced by Councilmember Sawant to strengthen the ordinance were quickly defeated. Each vote against Sawant’s proposals was answered with chants of “Shame!” by labor activists in the crowded chamber. Sawant took the opportunity to direct the citizens’ anger at fellow councilmembers, observing change only occurred once a socialist took office.
Although silent on the amendments, some Councilmembers voiced their concerns on the potential damage the measure would inflict some small businesses and the job market. Reports estimate the new ordinance is expected to kill at least 19,000 low-wage jobs because many businesses cannot survive a 61% wage increase. Even President Obama’s executive order raising the minimum wage for federal contractors to $10.10 an hour is already closing down fast food outlets in the Puget Sound area. There is no empirical evidence that raising the minimum wage stimulates economic growth or provides employment opportunities.
The councilmembers’ awkwardness surrounding the topic of employment could have to do with SeaTac employees’ disenchantment with last year’s $15 minimum wage initiative. Hotel employees in SeaTac have claimed the new wage has hurt more than it has helped. Hotel maids recently reported losing benefits, such as their 401k, paid holidays and vacation because of the new minimum wage. Tipping was also higher before the $15 an hour requirement.
Not even 24 hours after the City Council’s vote, the International Franchise Association announced it is suing the city of Seattle for passing a discriminatory ordinance that requires independent franchise owners to phase-in the $15 minimum wage as quickly as large businesses. Franchise owners argue their operations are independently managed from their franchisor while Sawant claims their association with big business makes them wealthy enough to warrant the accelerated wage hike.
Activists have repeatedly said the victory for $15 an hour is not complete. They see Seattle as simply the first step of a nationwide campaign. Already, $15 Now has announced plans to push for a wage hike in Tacoma. Will a job-killing $15 minimum wage soon be coming to a city near you?