The community of SeaTac, Washington, home to the Seattle-Tacoma International Airport, this year became the first in the nation to approve a $15 minimum wage law.
It’s been more than eight months since the policy took effect, and Dana Milbank highlighted the results over the weekend.
As fast-food workers demonstrate nationwide for a $15 hourly wage, and congressional Republicans fight off a $10 federal minimum, little SeaTac has something to offer the debate. Its neighbor, Seattle, was the first big city to approve a $15 wage, this spring, but that doesn’t start phasing in until next year. SeaTac did it all at once. And, though there’s nothing definitive, this much is clear: The sky did not fall.
“SeaTac is proving trickle-down economics wrong,” says David Rolf, the Service Employees International Union official who helped lead the $15 effort in SeaTac and Seattle, “because when workers prosper, so do communities and businesses.”
In fairness, SeaTac is a small community and the number of affected workers is quite modest, making this a difficult test case. Still, as Milbank’s piece noted, the owner of a SeaTac hotel, who had strongly opposed the minimum-wage increase during the 2013 debate, said the hike would invariably lead to local layoffs and eliminated jobs.
That was last year. This year, with the $15 minimum wage in effect, the hotel is moving forward with a multi-million dollar expansion anyway.
And what of Seattle, which will soon have easily the highest minimum wage of any major U.S. city?
In Seattle last week, I stopped in at the jammed Palace Kitchen, flagship of Seattle restaurateur Tom Douglas, who runs upward of 15 establishments. He warned in April that the $15 wage could “be the most serious threat to our ability to compete,” and he predicted that “we would lose maybe a quarter of the restaurants in town.” Yet Douglas has opened, or announced, five new restaurants this year.
Likewise, the International Franchise Association has sued to block implementation of the law, arguing that nobody “in their right mind” would become a franchisee in Seattle. Yet Togo’s sandwiches, a franchise chain, is expanding into Seattle, saying the $15 wage isn’t a deterrent.
And a spokesman for Weyerhaeuser, the venerable wood and paper company, says the $15 wage didn’t factor into its decision, announced last month, to move its headquarters and 800 employees to Seattle from outside Tacoma.
It’s against this backdrop that the political debate continues to unfold. The White House made a minimum-wage increase the subject of its official weekly address over the weekend, and just last week, two Republican opponents of a wage hike – Senate Minority Leader Mitch McConnell and Senate hopeful Rep. Tom Cotton – both started hedging on whether an increase is a good idea.
As cities and counties across the country increasingly debate whether to establish their own minimum wage laws, policymakers are understandably asking a host of questions. How are existing laws designed? What do we know about the impacts of local wage mandates on workers and their families? What does research tell us about the effect of local wage mandates on employment, and, in particular, do businesses move outside city or county borders in response? In this report, we address these and related questions.
Existing local minimum wage laws
• Nine localities in the United States currently have enacted minimum wage laws: Albuquerque, NM; Bernalillo County, NM; Montgomery County, MD; Prince George’s County, MD; San Francisco, CA; San Jose, CA; Santa Fe, NM; Santa Fe County, NM; and Washington DC. (Richmond, CA, just voted to raise its minimum wage to $12.30 an hour by 2017, and a final vote is pending to pass the law.)
• Current mandated wage levels range from $8.50 in Bernalillo County to $10.74 an hour in San Francisco. (New wage mandates in Washington DC and Santa Fe, Montgomery, and Prince George’s Counties go into effect later this year.)
• On average, the existing local minimum wage laws have mandated total wage increases of 41.4 percent, many of them in multiple steps and the majority indexed to inflation thereafter. Localities with larger increases have been more likely to implement them in several steps. Across the localities, the average per-step minimum wage increase is 16.7 percent.
• The nine laws are similar in covering the large majority of work that is performed within the boundaries of their cities or counties. San Francisco delayed coverage of nonprofits and small businesses (less than 10 employees) for one year. Santa Fe initially exempted small businesses but later amended its law to cover all establishments.
• Two of the nine laws (San Francisco and San Jose) follow their state’s law in treating tipped workers the same as non-tipped workers, maintaining a uniform minimum wage for both groups. The other seven laws follow their states’ laws in maintaining a lower minimum wage for tipped workers (even as some increased the base wage for tipped workers). Several of the laws make similar provisions for commissioned workers.
How San Francisco enforces its minimum wage law
• San Francisco uses a variety of high-impact enforcement and education strategies to ensure that the city’s minimum wage law has its intended effect.
• From the beginning of 2004 to mid-2012, San Francisco’s enforcement agency processed 616 worker complaints related to the minimum wage and recovered $5.8 million in back wages on behalf of 3,004 workers. These are higher benchmarks than typically achieved by state and federal enforcement agencies.
• San Francisco’s Office of Labor Standards Enforcement assigns 7.5 compliance officers to minimum wage enforcement on behalf of approximately 611,000 people employed in the city. These officers share responsibility for enforcement of the city’s paid sick leave law as well.
• Approximately $979,000 supports the 7.5 positions devoted to minimum wage enforcement. In addition, $462,125 is contracted to community organizations that provide education, outreach, and case referrals, largely focused on minimum wage violations.
Effects of minimum wage laws on workers and families
• Researchers consistently find that minimum wage laws raise pay for workers at the bottom rungs of the labor market. These increases include both directly affected workers (those earning between the old and the new minimum wage) as well as those indirectly affected (those earning above, but near, the new minimum wage).
• Raising the minimum wage also pushes up the wage floor relative to the median wage, thereby reducing pay inequality.
• Researchers consistently find that the affected workers are largely adults and disproportionately women and people of color.
• New research on the effect of minimum wage increases documents important reductions in family poverty rates and enrollments in public assistance programs, such as food stamps.
• Researchers have not estimated the amount of economic stimulus actually created by the new spending power of low-wage workers after minimum wage increases. We do know that low-wage workers and their families are likely to spend a significant portion of those increased earnings.
Effects of minimum wage laws on businesses
Economists have increasingly recognized that raising the minimum wage does not automatically mean that employment will fall. Increased labor costs can be absorbed through a variety of other channels, including savings from reduced worker turnover and improved efficiency, higher prices, and lower profits. Modern economics therefore regards the employment effect of a minimum wage increase as a question that is not decided by theory, but by empirical testing. 3
• Labor economists continue to debate the actual impacts of the minimum wage on employment and hours. We discuss in our assessment the most rigorous studies and offer a non-technical explanation of the nature of the disagreements in the research literature.
• To date, three rigorous studies have examined the employment impacts of San Francisco’s and Santa Fe’s local minimum wage laws. Each finds no statistically significant negative effects on employment or hours (including in low-wage industries such as restaurants).
• A larger body of economic research investigates the effects of state and federal minimum wage increases. These studies compare employment trends for states or counties that have different minimum wages. The best studies make comparisons to nearby states or counties to control for regional economic trends. These studies also find no statistically significant negative effects on employment or hours at an aggregate level or for low-wage industries such as restaurants and retail stores, or for specific groups of workers such as teens. These studies also do not find substitution effects (such as shifts in hiring away from black and Latino teens).
• Studies of the impact of minimum wage increases on restaurants’ operating costs find that an increase of 10 percent in the minimum wage increases operating costs by about 1 to 2 percent.
• Researchers find small one-time price increases in the restaurant industry (of about 0.7 percent following a 10 percent minimum wage increase), but not in other industries.
• Researchers find that increases in the minimum wage reduce employee turnover, translating into a reduction in direct costs (recruitment, selection, and training of new workers) and a reduction in indirect costs (lost sales, lower quality service, and lost productivity as the new workers learn on the job). Some studies have also identified additional benefits of higher wages, including improved morale, improved work performance, and reductions in absenteeism.
• Researchers have not found evidence that employers absorbed minimum wage increases by reducing health benefits or pensions.
In summary, our assessment of the research evidence indicates that minimum wage mandates raise the incomes of low-wage workers and their families, and that the costs to businesses are absorbed largely by reduced turnover costs and by small price increases among restaurants. That said, it is important to emphasize that existing research is necessarily limited to the range of minimum wage increases that have been implemented to date. While these studies are suggestive, they cannot tell us what is likely to happen when minimum wages are increased significantly beyond current local, state, or general.
“Fast food workers are walking out on their jobs today to once again protest low wages, demand the right to unionize and fight for better working conditions. The strikes are occurring in 50 cities including New York City, where there are multiple walk-outs plus a rally planned.
The first walkout was at the McDonald’s at 341 Fifth Avenue in Manhattan. City Council Speaker and mayoral hopeful Christine Quinn was there, as was City Council Member and Public Advocate hopeful Letitia James. James invoked Martin Luther King Jr., quoting the civil rights leader, “It is a crime for people to live in this rich nation and receive starvation wages.””
“NEW YORK (Reuters) – Fast-food workers staged strikes at McDonald’s and Burger Kings and demonstrated at other stores in sixty U.S. cities on Thursday in their latest action in a nearly year-long campaign to raise wages in the service sector.
The strikes spread quickly across the country and have shut down restaurants in New York, Chicago, Detroit, Milwaukee, St. Louis, Raleigh and Seattle, according to organizers.”
“Less than two weeks after filing a City of SeaTac initiative that would assure better wages and working conditions for thousands of low-wage SeaTac Airport workers, backers have announced that they have already surpassed the signature threshold.”
The initiative if passed will raise the minimum wage for these 5,000 workers to $15 an hour along with other reforms.
There are thousands of poverty-wage workers at our airport. Let’s make every airport job a good job.
Let’s make every job at Sea-Tac a good job.
These baggage handlers, fuelers, passenger service workers, ground transportation workers, taxicab drivers, and cargo workers do work critical to the successful operations of Alaska and other airlines at our airport. However, they do not actually work for these large corporations.
Instead their jobs are contracted out to the lowest bidder. Most of these airline contractors pay poverty wages.
Workers across the airport report that benefits, if offered at all, are usually unaffordable for workers bringing home at or near the minimum wage for the long and onerous hours worked. And most of these workers are immigrants that have come from Africa, Asia, and Latin America to pursue a better life in Seattle. Their work is vital to keeping Sea-Tac running and providing good service for the more than 32 million passengers that pass through our airport. They work hard – sometimes holding down two or three jobs.
They deserve to be treated with respect, dignity and to a make a living wage.
“For the past several days, a proposal by an outside group to raise some minimum salaries almost $6 an hour above the state minimum and impose mandatory paid sick leave for transportation and hospitality workers in have caused some concerns in the city.”
“The proposed ordinance would raise minimum wages from the state’s current $9.19 per hour to $15 an hour for all workers defined to be in the hospitality and transportation businesses inside SeaTac.”
“The company website declares that “a job at Walmart opens the door to a better life” and “the chance to grow and build a career.” But interviews with 31 hourly workers and one former store manager reveal lives beset by paychecks too small to handle the bills, difficult to manage part-time schedules with hours subject to constant change, and little reason to hope for career advancement. Citing fear of losing their jobs, most spoke on the condition of anonymity.
The testimonials of these workers are confirmed by Walmart’s official compensation policy, an internal company document obtained by The Huffington Post, titled the “Field Non-Exempt Associate Pay Plan Fiscal Year 2013.” The plan details a rigid pay structure for hourly employees that makes it difficult for most to rise much beyond poverty-level wages.
Low-level workers typically start near minimum wage, and have the potential to earn raises of 20 to 40 cents an hour through incremental promotions. Flawless performance merits a 60 cent raise per year under the policy, regardless of how much time an employee has worked for the company. As a result, a “solid performer” who starts at Walmart as a cart pusher making $8 an hour and receives one promotion, about the average rate, can expect to make $10.60 after working at the company for 6 years.
The Walmart pay plan is organized around seven levels of job difficulty for hourly workers, called Position Pay Grades (PPGs), ranging from cart-pushers (Level 1) and cashiers (Level 3), to cake decorators (Level 4) and customer service managers (Level 6). Each subsequent pay grade offers 20 to 40 cents more than the previous level, according to the document. This means that the base rate of pay for a top hourly position at Walmart, like a check-out supervisor, is $1.70 more than that of the lowest paying job.”
update fri 11/16 Wal-Mart filed an unfair labor practice charge against the United Food and Commercial Workers International Union, or UFCW, asking the National Labor Relations Board to halt what the retailer says are unlawful attempts to disrupt its business.
Strikes and protests aimed at disrupting the retail giant Walmart during next week’s Black Friday sales events began on Thursday with walk-outs at a number of stores and the promise of more actions in the lead-up to what is traditionally the busiest shopping day of the year.
The news comes amid controversy about plans by Walmart and other large chains to open on Thanksgiving evening, kicking off Black Friday a day early. It also comes as another strike has hit part of Walmart’s warehouse supply chain in southern California.
At least 30 workers from six different Seattle-area Walmarts have gone on strike, organisers and Walmart staff from the OUR Walmart group said. The group, which is not a union but has close ties with the labour movement, is seeking to protest what it says is low pay, too few hours and retaliation by managers against workers who speak out.
Outside a Walmart distribution center in Mira Loma, Calif. yesterday, a few dozen striking workers were joined by throngs of chanting supporters to protest alleged retaliation against workers who complained about safety hazards.
Today, hundreds of supporters joined them at the warehouse, where law enforcement officers arrested six community leaders for acts of non-violent civil disobedience. Among those arrested was a local clergyman who sat down in the road in front of the warehouse, temporarily blocking trucks approaching the loading docks.
The strike is one of more than a thousand protests, walkouts, and other actions workers in the Walmart retail empire are planning over the next week, culminating on the big “Black Friday” shopping day. After an initial round of lengthy warehouse strikes and quick retail strikes in late September, a new surge started with one store in Richmond, Calif.; then three stores last week in Dallas. Yesterday, workers walked out at one store in San Leandro, Calif., followed today by workers at six stores in Seattle.
Strikers at the southern California warehouse allege that the staffing agency Warestaff retaliated against participants in a two-week strike over safety issues in late September and early October. According to Warehouse Workers United (a workers’ center in the Inland Empire complex of southern California distribution centers), Warestaff has shortened many strikers’ work weeks from the usual 30 to 40 hours down to as little as 8 hours, even as it hires new workers. Organizers believe Warestaff was acting under orders from Walmart; Warestaff is contracted by NFI Transportation, which operates the giant Mira Loma transportation hub exclusively for Walmart.
Yesterday’s strike was launched a day early in response to what organizers saw as a new round of retaliation by Warestaff. On Monday, Warestaff sent a large group of workers home early, even though workers estimated there was a sizeable line-up of 150 trailers that needed unloading. Then the company told most of the strike cadre to stay home Tuesday. When they learned about the lost workday, the core of the strike leaders decided to start their walkout a day early but to continue with a strike and supporter rally on Thursday.
Speaking up for workers’ rights gets you straight-up fired, warehouse employees say
A September full of direct action and progress for workers’ rights group Warehouse Workers United (WWU) came at a high cost for the outspoken David Garcia.
“I was fired for trying to make the warehouse where I worked safer,” Garcia tells the Weekly. “It’s been tough. My kids need food, school supplies and an apartment to sleep at night, but right now it is difficult to provide them these basic things.”
Garcia—a father of five sons who already struggles to make ends meet when duly employed—was among the dozen on-strike Walmart-subcontracted employees at NFI Industries in Mira Loma who picketed and participated in a 50-mile, six-day march from the Inland Empire to Downtown Los Angeles last month. “WalMarch” brought international awareness to the ongoing plight of warehouse workers caught in a white-collar web that allows the world’s largest corporation to exploit supply chain workers through the questionable—sometimes illegal—practices of logistic firms and temporary staffing agencies.
The emerging leader in the warehouse worker movement was passionate as he spoke to supporters and media before the launch of WalMarch in the WWU parking lot. Garcia told the crowd he understood the risk he is taking for speaking up, but he had determined the decision had to be made for the betterment of his future.